Investing in an index that holds popular NFTs is now possible with the Scalara NFT Index and the help of NFTX tokens!
Scalara, the index provider behind the DeFi Pulse Index (DPI), recently announced the launch of the Scalara NFT Index. The index is designed to track the performance of some of the most well-known and highly-valued NFT collections.
At inception, the index composition represents
- Cool Cats
- World of Women
- Chromie Squiggle
- CrypToadz by GREMPLIN
The index is floor market cap weighted with a cap on the CryptoPunk position to avoid concentration in a single collection. The index composition is rebalanced on a quarterly basis by Scalara following the index methodology. Any index changes will be implemented through Kuiper’s rebalancing mechanism that is based on a Dutch auction.
Without NFTX, getting exposure to the above list of collections would cost at least $250,000 at current floor prices. Creating an index that uses the NFTX platform completely removes that barrier of entry and makes top NFTs accessible to everyone.
In order to get exposure to these NFT collections, the index holds our respective NFTX tokens as they are fungible ERC-20 tokens. By using our recently launched xTokens, the index earns additional yield from our newly introduced Inventory Staking on top of the NFT price performance. The index is investable through the NFTI token that is based on the Kuiper asset management protocol.
How does it work?
NFTI utilizes the NFTX xTokens which are implicitly connected to the floor price of their respective NFT collection. This can be seen by looking at the two steps that convert an NFT into an xToken. Here these steps are shown for CryptoPunks:
- Convert a CryptoPunk NFT into a PUNK ERC-20 token by depositing the NFT into an NFTX vault. This PUNK token, called a vToken, represents a 1:1 claim on a random CryptoPunk in the vault.
- Convert the vToken PUNK into the xToken xPUNK by participating in NFTX Inventory Staking. Staking vTokens is reversible and when unstaking at least as many vTokens as used for staking are returned.
xToken holders are rewarded a share of the protocol fees that are generated from NFTX vault activity (minting, redeeming, swapping). Therefore, by effectively holding xTokens, NFTI holders receive this extra yield as the amount of vTokens one xToken represents grows.
For NFT collections that are currently part of the index, the NFTX vaults hold a large set of NFTs. This can serve as a proxy for current maximum availability of xTokens but of course, if there is more demand, more tokens can be minted at any time.
Data as of March 9, 2022
Where to buy NFTI?
NFTI can either be bought on a decentralized exchange or, as an option for more sophisticated users, it can be directly minted from its underlying constituents – the NFTX xTokens.
- Buy through Slingshot (Polygon)
- Buy through Slingshot (Arbitrum)
- Mint on Ethereum Mainnet (only for advanced users)
Having an index incorporating our NFTX tokens will further lower the barrier of entry to the NFT space, especially for highly-valued collections, and therefore make them accessible to a wider audience.
Following NFTI’s footsteps, we expect other indices to follow, that use our tokens as index constituents, or other DeFi projects to get inspired and integrate our v- or xTokens.