We are excited to announce that NFTX now takes advantage of the 0x protocol and allows you to set up concentrated liquidity positions on protocols like Uniswap to improve prices, decrease spreads, and earn more yield.
What is 0x protocol?
The 0x protocol is an open-source, permissionless protocol that allows for the decentralized exchange of tokens on the Ethereum blockchain. It enables the aggregation of decentralized exchanges, or DEXs, which can route the best price for buying and selling NFTs on NFTX.
Uniswap is an example of a decentralized exchange aggregated into the 0x protocol. It allows users to provide liquidity to the platform in exchange for a share of the trading fees.
Our new feature will enable users to take advantage of these protocols by setting up concentrated liquidity positions on Uniswap and other DEXs (currently, 29 sources are supported on mainnet). This allows users to earn yield on their tokens while providing liquidity to the platform.
Why have we integrated the 0x protocol into NFTX, and what are the benefits?
The current model for the NFTX pools is infinite range Sushi pools based on the UniswapV2 model (x*y=k). This works well for socialised pools, however, when the liquidity for a pair is low, the spread between the buy and sell prices and the price impact on large buys becomes unusable.
Integrating the 0x protocol allows NFTX to continue distributing fees to users staking their Sushi positions. It also ensures users can get tighter spreads and reduce slippage when buying NFTs from vaults backed with concentrated liquidity positions.
Let’s look at the price impact when creating concentrated liquidity positions for the PUNK and GLYPH vaults as a result of the 2023 Treasury Management LP proposal.
Punk vault updates
As part of the treasury management proposal, the NFTX DAO has taken 25 PUNK from the treasury and added them to a single-sided concentrated liquidity position on Uniswap with a range of 66.67 <> 298.78 (see the pool here).
The pool is currently out of range for any dollar-cost average buys, but once you start buying Punks from the vault, you can see the benefit, especially across multiple buys compared with just an infinite range.
Updates to the Glyph vault
As part of an earlier treasury rebalance proposal the NFTX DAO removed liquidity from the Glyph pool. The removal of ~6 GLYPH tokens and the corresponding ETH caused the vault to become illiquid (insufficient liquidity to allow a buy).
After integrating the 0x protocol, the NFTX DAO created a single-sided GLYPH position on Uniswap with six GLYPH tokens and a concentrated range between ~180 ETH <> 400 ETH (see the pool here).
The new position brought the GLYPH vault back to life with a buy price at ~200ETH (albeit the sell price was only 5ETH). Within a week, the first GLYPH token was purchased, securing the owner a claim on an AutoGlyph for ~190ETH when the “floor” is at 339 ETH.
The table shows the increasing cost on NFTX if each AutoGlyph was purchased in separate transactions. If you were to buy four Glyphs in a single transaction from NFTX, it would cost you 1150.69 ETH at an average cost of 287.67 ETH per AutoGlyph. If you only wanted a random item from the vault, you could bring that down to 1,122.46 ETH and just 280 ETH per AutoGlyph.
It’s not just the NFTX DAO that is taking advantage of the new protocol updates; our friends over at Floor DAO have set up additional positions on the Milady vault through Charm — a managed UniswapV3 position.
The table below shows how the slippage/price impact improves over a large number of buys
Has this been audited?
Yes, these updates (and new features on the horizon) have gone through an audit with SECBIT. You can find the full audit report here https://docs.nftx.io/smart-contracts/bug-bounty/secbit-audit.
How do I get started?
We’ve created step-by-step instructions on getting started using Goerli, which will allow you to test out the process before getting involved with mainnet.
Once you’re comfortable, the same process will work on the mainnet.
If you want to learn more about the concepts of concentrated liquidity, you can read more about the fundamentals on the Uniswap website.
Ready, set, go!
We are excited to offer this new feature to our users and believe it will provide a great way to earn yield on their tokens while also contributing to the growth and liquidity of the DeFi ecosystem.
As always, we highly recommend that users do their own research and understand the risks involved before participating in any financial activity.
Thank you for choosing our platform!