API3 is pleased to announce a partnership with MetaQuants, a machine learning based NFT price data provider. MetaQuants will be running Airnode, API3’s oracle, to make their data on valuations and risk management solutions for NFTs available to developers on all of API3’s supported chains.
Developers looking to build projects that use NFT price data will be aware of the potential problems around choosing a single metric to use. Many conventional price metrics put dapps at risk of manipulation of pricing data, allowing attacks on protocols consuming it.
A couple of simplified examples of various attacks on price data are:
- A dapp using average price of an NFT collection — high listings could be used to skew the average price higher, making NFT lending protocols vulnerable to incurring bad debt. This is still possible even if only settled trades rather than listings are used, because attackers could still trade to other wallets they own to achieve the same outcome.
- A dapp using floor price — Floor price should be harder to manipulate, because excessively low listings will normally be bought quickly. Floor price can also be manipulated upwards in less liquid collections to exploit protocols consuming it.
MetaQuants aims to solve the problems associated with consuming NFT price data by using a machine learning created model that produces accurate NFT price analytics. While other data providers take a similar approach, MetaQuants provides detailed information about their methodology in their documentation. They put great emphasis on penalising overestimates to protect NFT loan originators, risk management & alpha generation for investors, as well as model interpretability in order to provide a gateway for institutions.
Different dapps will have different degrees of risk tolerance when consuming NFT price data. MetaQuants allows dapps to both use default metrics that are tailored to fit each collection, and to alter these if their requirements differ. For example, NFT loan originators can hedge their risk by relying on NFT pricing data with a high level of confidence that it is not an overestimation. On the other hand, degens can leverage NFT appraisals with a lower level of confidence but a bigger potential for profit generation from a trade. Dapps looking to make the price of a specific NFT collection harder to manipulate could extend the time the average price is determined over, with the trade-off being a more delayed response to price movements.
By using Airnode to bring data directly on chain, MetaQuants allows dapps to use their NFT price data without it being vulnerable to manipulation by third party intermediaries. Airnode also supports over twenty EVM compatible chains, which MetaQuants now has the ability to provide data to. Examples of dapp use cases unlocked by NFT pricing data becoming available include NFT lending protocols, which allow people to borrow against their NFT, and perpetual swap protocols, where users can hedge the value of their NFTs, or speculate on price of NFT collections.
Quotes
“As NFTs become more popular, the demand for reliable price data about NFT collections increases dramatically. People want to hedge their exposure, unlock some of the value of the NFT without selling it, and more. The machine learning based approach that MetaQuants has taken will help enable these use cases, while reducing the price manipulation risks associated with this unique asset class”
-Dave Connor, API3 BD Lead
“MetaQuants was born from the need for a reliable pricing tool that could be leveraged in the nascent domain of NFT lending. Bringing NFT price data on-chain in a decentralised and secure manner via oracles such as API3’s Airnode is crucial for NFT protocols. However, the demand for accurate and interpretable NFT valuations is growing on the web2 side, as CeFi, lenders, investors and insurers are entering the domain. At MetaQuants, we are driven by the narrative of NFT financialization and are building the analytics infrastructure for the future of finance.”
-Martin Palazov, MetaQuants Co-Founder
About MetaQuants
MetaQuants is a project focused on the need for an accurate and transparent mechanism for NFT pricing. The team identified several limitations of existing solutions, including asset overpricing, lack of transparency on value drivers, and inability to choose one’s risk tolerance. MetaQuants provides a one-stop solution to these issues, featuring an NFT evaluation mechanism with a wash trading filter, and a breakdown of the model’s variables and their impact on individual assets. Dapps are further able to customise these parameters to accommodate different risk appetites.
About API3
The API3 Foundation is a Decentralized Autonomous Organization (DAO) leading the movement from legacy third-party oracle networks to first-party oracle solutions that deliver more security, efficiency, and regulatory compliance. Powered by Airnode first-party oracles, API3’s Decentralized APIs (dAPIs) are decentrally controlled and blockchain-native data feeds with quantifiable security.
