With this post we’re proud to release Inventory Staking on NFTX, opening up the floodgates for NFT inventory to be deposited into NFTX vaults to earn yield without the traditional risks associated with liquidity providing.
We’ll run down what Inventory Staking is, what the benefits are, how to become an inventory provider, and more. Let’s dive in.
What is Inventory Staking?
Inventory Staking is a brand new feature added to the NFTX V2 Protocol, allowing anyone to add their floor-priced NFTs to a vault and stake their position on the Stake page to receive part of the vault fees. This allows you to receive a passive income on all your floor NFTs which you otherwise would have forgotten about!
Being a protocol-wide upgrade, Inventory Staking is directly available for all vaults on Ethereum Mainnet that have been deployed using the NFTX V2 Protocol. To get started, jump to How do I use Inventory Staking and read more on the different types of NFTX Staking here.
Why are we rolling out Inventory Staking and what are the benefits?
Over the past months, we’ve received many questions surrounding the risks of staking liquidity positions on NFTX. While Liquidity Providing has been proven to be very lucrative for a handful of larger players in the game, adding liquidity to a vault comes with some downsides that you need to be aware of, mainly Impermanent Losses (IL). TL;DR - The more one asset of your liquidity position grows comparative to the other (i.e. floor going up in ETH ratio), the better it would’ve been to just hold the NFT.
To take this barrier away for the group of users that are waiting to provide NFTs into the vault but do not want (or can’t) provide the required liquidity (ETH), we have invented Inventory Staking. With this staking option you gain upside to all of your NFTs that you aren’t actively using by providing them as inventory to the vault, fetching up to 3 to 4 digit yearly yield based on vault activity. When you’re done staking, you can take out (close to) the original amount of supplied NFTs depending on vault-specific redeem fees. As redeeming NFTs from NFTX vaults come with a redeem fee, always make sure to double-check fees on the vault info page.
Aside from benefits for yield farmers, Inventory Staking is primed to suck in many more NFTs to all the currently active vaults, growing the available picks for Marketplace shoppers to buy and/or swap NFTs, further boosting utility of NFTX as the primary NFT liquidity protocol.
Lastly, having Inventory Staking available to any vault opens up the ability for new, to-be-released NFT projects to utilize NFTX Vaults as a distribution and treasury mechanism, bootstrapping a vault filled with floor assets to be directly integrated into any projects that connect to NFTX vaults, such as Gem, Genie, and other future NFT aggregators.
A change to protocol rewards
As Inventory stakers are rewarded from the same protocol vault fees as Liquidity stakers, some changes apply.
Originally, 100% of all fees associated with vault activity (i.e. Mint, Redeem, Swap) were distributed to Liquidity stakers. This changes to:
- 80% of all fees are distributed to Liquidity stakers.
- 20% of all fees are distributed to Inventory stakers.
This fee split is set protocol-wide and can not be changed per vault. The ratio Liquidity-to-Inventory will be closely monitored by the core team and contributors over the following weeks to make sure staking rewards end up well balanced.
In the event that there is only liquidity staked, the remaining 20% fees generated will automatically flow back to the NFTX DAO treasury until there is at least one inventory staker.
Has this been audited?
Yes, the entire codebase has gone through an additional Code 4rena contest. All results are disclosed here: https://code4rena.com/contests/2021-12-nftx-contest
Why can I not use the CryptoPunks vault?
As part of a secure launch process, the CryptoPunks vault has been paused for a 24-hour time period. The CryptoPunks vault will be fully operational again on January 21st at 17:30 CET.