Any NFT holder has felt the pain of not being able to sell their illiquid NFTs.
What if there was a protocol where you could Buy, Sell, Stake, and take a Loan with Instant Liquidity?
Let’s talk about @GumBallProtocol
🧵
What if there was a protocol where you could Buy, Sell, Stake, and take a Loan with Instant Liquidity?
Let’s talk about @GumBallProtocol
🧵
1/ First some terms you should know
NFT- NFTs offered through Gumball.
GBT- Gumball Tokens.
xGBT- Staked GBT
Each Gumball NFT has a custom gNFT and GBT.
NFT- NFTs offered through Gumball.
GBT- Gumball Tokens.
xGBT- Staked GBT
Each Gumball NFT has a custom gNFT and GBT.
2/ @GumBallProtocol is a Deep Liquidity NFT x DeFi Hub that allows NFTs to be swapped seamlessly between gNFT and GBT. For every NFT collection that is launched, the same amount of GBTs are also created. Let’s say an NFT creator launches a 100 NFT collection.
3/ The trick is that GBTs are sold through a bonding curve. This means that every GBT purchase will push the GBT floor price up for the next purchaser. This creates a standard floor price for the GBT that is used to generate deep liquidity for the NFT.
4/ Once a user holds a GBT, they have three choices.
1. User swaps the GBT for a new gNFT
2. User stakes their GBT for xGBT and receives swap fees from the collection
3. User swaps the GBT for a gNFT that was returned by another user
1. User swaps the GBT for a new gNFT
2. User stakes their GBT for xGBT and receives swap fees from the collection
3. User swaps the GBT for a gNFT that was returned by another user
5/ Let’s go through scenario 1 first.
You swap your GBT and receive your gNFT which you can now trade. But what if you didn’t receive the NFT you wanted? You can return your gNFT for the GBT.
You swap your GBT and receive your gNFT which you can now trade. But what if you didn’t receive the NFT you wanted? You can return your gNFT for the GBT.
6/ When gNFTs are swapped back to GBTs, 5% of GBTs are burned in the transaction which pushes down the supply of the GBT collection. This helps keep the floor price of the GBT in a healthy state.
7 / For scenario two, you decide you want the swap fees instead and stake your GBT for xGBT. What’s interesting here is that you can actually borrow $ETH against your xGBT. Sounds a lot like taking a loan from the NFT doesn’t it?
8/ Now since xGBTs accrue swap fees, the value of xGBT can only be worth more or equal to the price of GBT. Technically, if the NFT collection continues to generate swap fees, the loan that you took out repays itself.
9/ The question here is that this only happens if users continue to swap for the collection over time. If users stop swapping, your xGBT is stuck unless you pay back the collateral. That said, it's still better than being liquidated off of your NFT loan on another platform.
10/ Fees
The main tool of value accrual for GBT is the fees. For every swap, there is a 2.5% fee that is divided between the treasury, the NFT creator, and xGBT holders. The treasury earns 0.5% while the NFT creator and xGBT holders receive 1% each.
The main tool of value accrual for GBT is the fees. For every swap, there is a 2.5% fee that is divided between the treasury, the NFT creator, and xGBT holders. The treasury earns 0.5% while the NFT creator and xGBT holders receive 1% each.
11/ While the idea is nifty by itself, I think the big potential for @GumballProtocol is building out an ecosystem for GBT tokens to be used through DeFi applications. One good example of this is Gumball’s recent proposal to @Spiritswap.
12/ The proposal aims to Whitelist selected GBT token collections on Spirit swap. Users could earn GBTs through emissions, stake GBT to earn FTM emissions, farm $Spirit with GBT/FTM LP tokens, and more.
13/ If there is a way to integrate GBT tokens to DeFi applications like yield farming, that could offer many possibilities that could expand innovation with NFTfi.
14/ Gumball is also looking to launch on @berachain, and this could provide a first mover's advantage for Berachain collections that launch on their platform. Less competition and more hype could cement @GumBallProtocol in the space.
15/ There are also some risks.
While Gumball is looking at ways to add existing NFT collections on the platform, their main focus seems to be on new NFT collections. Whether these new collections stand the test of time is something we just have to wait and see.
While Gumball is looking at ways to add existing NFT collections on the platform, their main focus seems to be on new NFT collections. Whether these new collections stand the test of time is something we just have to wait and see.
16/ The protocol also relies on consistent purchasing and selling for all the mechanisms to function correctly. At the end of the day, there still needs to be continued interest in the NFT collection for the floor to increase.
17/ Airdrops
It has recently been confirmed that active testnet users will be able to receive a Gumball airdrop. I looked through the discord messages and think it is still possible to get one through their trivia. The easiest way to find out is to join their discord.
It has recently been confirmed that active testnet users will be able to receive a Gumball airdrop. I looked through the discord messages and think it is still possible to get one through their trivia. The easiest way to find out is to join their discord.
18/ In Conclusion, @Gumballprotocol is definitely something worth looking out for. Its innovations with NFT & DeFi are to be respected, and I am excited to see how this experiment turns out with the actual launch collections.
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This thread is for entertainment purposes only. Not Financial Advice.
This thread is for entertainment purposes only. Not Financial Advice.
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