As most everyone is likely aware, the NFT market on Ethereum (and elsewhere) is exploding, with many speculating it could rise in popularity similar to DeFi’s recent ascent. Indexed is in a great position to capitalize on the NFT segment, as there are many people who do not want to collect NFTs but do want to speculate on their value.
An NFT-focused index could be comprised of multiple asset types:
- governance tokens
- tokens used within a project’s ecosystem
- NFTs themselves
Right now I am aware of three NFT projects that could fit into an index. There are likely others that are already in the market, more in stealth phase and even more that may be dropping tokens to decentralize in the future (looking at you OpenSea).
- Polyient Games
All three of these have governance tokens that could be included: $RARI, $NFTX and $PGT.
What could make this index very interesting are the unique characteristics of the NFTX and Polyient Games ecosystems (maybe Rarible as well but I am least familiar with their platform).
NFTX’s main products are also index funds but they are backed by NFT collectibles (ERC-721) instead of ERC-20 tokens. They are specifically designed to be used in other defi applications to allow for better NFT price discovery. For instance, funds can be created by supplying CryptoPunks or Axies directly. These funds backed by NFTs are then combined to form top-level funds. From their documentation https://docs.nftx.org/:
There are two types of funds on NFTX:
D1 funds (input) have a 1:1 backing between a single NFT contract and an ERC20 contract. For example, if Alice owns 2 PUNK-ZOMBIE, that means she can redeem exactly two random zombie CryptoPunks at any moment. Another example would be Alice owning 1 AXIE-MYSTIC-2, giving her the ability to redeem one random Axie with two Mystic parts.
D2 funds (top-level) are Balancer pools which combine D1 funds. For example, AVASTR will be a D2 fund which combines three different D1 Avastar input funds (AVASTR-BASIC, AVASTR-RANK-30 & AVASTR-RANK-60). The point of this is to offer more diverse exposure without requiring users to hold multiple tokens.
The index could use D1 funds only, D2 only or both. It could even allow the minting of the index tokens by directly supplying NFTs via the Indexed interface. For example, such as supplying CRV to get CC-10, you could supply a CryptoPunk to get this new NFT index token.
In the case of Polyient, they have a DEX (Uniswap clone) where most of the liquidity resides for their tokens, so an integration would be necessary. What makes them unique is they have created NFTs called PGFKs (Polyient Games Founder’s Keys) that provide rewards & access within their ecosystem. Further, they have developed what they call a “Particle Bridge” Particle Bridge - Polyient Games that allows the conversion of ERC-721 PGFKs to ERC-20 fungible tokens xPGFK.
The PGFK-xPGFK combo is a first of its kind, where a digital asset exists in two simultaneous states, each with unique use cases and reward structures. xPGFK will be available for trading via a decentralized swap protocol that will be accessible only within the Polyient Games Marketplace.
Use cases include:
Main transactional unit for all purchases made within the Polyient Games Ecosystem platform Main payment option for NFT pre-sales and auctions conducted within the PG Marketplace Main trading pair for all fungible tokens listed on the PG DEX
Therefore, this index could include xPGFK’s and the Indexed interface could enable the minting of the index from the NFT version PGFK directly (similar to the NFTX minting).
Obviously this is more complex than a normal index but I think it would open up a lot of opportunities by targeting an emerging asset class such as NFTs. I’d love to hear other’s thoughts on the viability of this idea and if it’s worth expanding upon. Thanks!