Thanks for the nice feedback.
- As a general principle, I am fine with “good enough” to test user demand - if people like the jpeg baskets, we could refine the baskets in future iterations. If we could safely get to $10-15M TVL with the “simple” approach, the management fees from that alone could support the additional resources required to develop a V2 with more active liquidity and inventory management.
I fully agree 1000%. I see a lot of value in launching with a simple product and then building it as we go. I see roughly 3 levels of maturity:
Level 1 - “Simple”. Swaps only. $10-15M TVL
Level 2 - Above plus buying/selling NFTs to minimize price impact. $15-$50M TVL
Level 3 - Above plus creating and investing in our own vaults (eg, Fidenza, VeeFriends, Hirst) and then include the vault tokens in our index. This could be done by delegating to a purchasing DAO like PleasrDao, FlamingoDAO, Jenny Metaverse DAO, etc. . >$50M TVL
The one subtlety is that even for Level 1 we’ll probably need to buy NFTs to establish our positions.
- I think it would be good to scope out the resources required for the more “hands-on” approach, but that could be done in parallel to shipping the simple index to market.
This will be done in PRD.
- My sense is that users would be willing to pay a higher management fee (e.g. 3-5%) given the complexity of the more active mgmt approach, but this needs to be tested with the market.
Fully agreed. I think we undervalue ourselves and we could charge a lot more for our products.
- Co-incentivize liquidity with NFTX and NFT20
Yes we’re working closely with NFTX on coordinating LM, and will engage NFT20 and possibly Fractional soon. The main topic is that NFTX plans to stay in un-concentrated liquidity while it may make more sense for us to use automated, concentrated liquidity. We’d then have separate LM programs which is not ideal. Any thoughts here are welcome.
- Permit a % of the overall index (e.g. ~10%) to be temporarily comprised of synthetic assets → sell the synthetic and acquire the underlying once slippage conditions improve
I’m still undecided but I’m inclined not to use synthetic derivatives, e.g., uPunks from YAM synths. The pro is that they’re inventoriless. The cons are that they undermine the message that investors own claims to the underlying NFTs, there’s a hypothetical risk of depegging, and they track statistics other than the floor price. It also costs a lot of price impact for us to build/leave positions so I’d prefer to only build a position if we’re going to stick around.Chainlink is working on a pricing Oracle for the punk floor price with JPEG’d and I expect people will synth off of it.
- (Temporarily) remove an asset from the Index if the underlying vault inventory drops below a certain threshold for some period of time
Yes, this is more of an issue than people tend to realize in particular because it goes into a negative feedback loop as the vault token drops due to the declining inventory.
You could get a run on the vault inventory even if there’s token liquidity. In NFVTI for example, the CyberKongz vault went from 6 items to 1 quickly and I had to switch from the NFTX to the NFT20 vault. If the TVL was bigger it would have been very expensive on the price impact. It’s also prone to manipulation since a whale could short the vault token and then deplete the vault. That’s maybe the strong argument for having some synths.