With the end of July in sight, and the V2 liquidity migration about to complete, we’re excited to announce that Vault Liquidity Staking is now live on Mainnet!
In this post we’re going to run you through which fees are changing, how this impacts you as a user of NFTX, and how you can start capturing protocol fees by becoming a liquidity provider for any of the V2 NFTX Vaults.
Let’s dive right in.
Vault Fees changed on all V2 Genesis Vaults
With version 2 of NFTX soft-launching earlier in June and being battletested on Mainnet, we’re confident to move ahead and take the protocol out of its beta period.
We’re doing this by switching on minting fees on all vaults (unless specifically asked not to) and rewarding staked liquidity providers (LPs) with 100% of all protocol fees generated as of today. This mechanism incentivizes users to grow vault inventory, liquidity and volume, bringing a highly scalable way for the NFTX ecosystem to increase its NFT offering.
The new fee structure, explained in detail below, is active as of right now.
What exactly changes for fees?
With NFTX V2 moving out of beta, all vaults are switched to the now preferred 5/0/5 fee structure. This structure is optimized for incentivizing liquidity providers to supply inventory to the vault, while also providing deeper liquidity on Sushi:
- 5% Minting Fee: Every time an NFT is minted into a vault, a fee is now charged to the user. In practice, for every NFT minted the user will receive 0.95 Vault tokens (i.e. $PUNK). This minting fee is waived for all users that are intending to become staked liquidity providers, by using our LP Staking Zaps (see below).
- 0% Random Redeem Fee: Random redemption fees remain set to zero, allowing anyone to 1:1 redeem a vault token for a random NFT from the vault.
- 5% Targeted Redeem Fee: Users that want a specific NFT from a vault, either for arbitraging or because of preferring aesthetics, can do so by paying an additional 5%. In practice, this results in all targeted redemptions costing 1.05 vault tokens (i.e. picking a specific NFT out of the CryptoPunks Vault costs 1.05 $PUNK).
100% of the minting and targeted redeem fees are distributed to LP Stakers of the respective vault, claimable on the NFTX Staking page.
Are fees changed for the vault I created?
The new 5/0/5 fee structure has been implemented on vaults that are originally created by the DAO, and all vaults that have used the default settings during beta. This was done to ensure vault owners remain flexible on setting fees for their own vaults if they want custom settings, tailored to their specific knowledge of their community and audience.
While multiple fee structures may be viable to increase inventory, liquidity and volume, we believe the 5/0/5 fee structure with the option to bypass minting fees through liquidity zaps will be optimal. If usage data shows otherwise, fee structures on DAO-created vaults are always subject to change with the goal to increase user experience.
If you have set up a vault with different settings and want the DAO to change your fees to the 5/0/5 structure, please reach out to any team member on Discord and/or send a request to firstname.lastname@example.org.
Earning rewards as a Staked Vault Liquidity Provider
As of today, all fees generated from vault activity are distributed to LP stakers, pro-rata to your weight in the pool. This means you can now earn yield on being a staked liquidity provider to any of the V2 NFTX Vaults!
To not punish liquidity providers when adding additional NFT inventory to a vault, minting fees are waived (0% fee) for liquidity providers that use Liquidity Zaps.
How should I set up my staked liquidity position?
To make it as easy as possible for you to start earning rewards, the NFTX team has created a Liquidity Zap tool that lets you mint NFTs into a vault without being charged minting fees, provide liquidity on Sushi, and stake* your SLP position on the NFTX platform - all in one transaction. An example of how this works is shown below.
*Note: Using the Liquidity Zap locks your staked SLP position for 48 hours.
To get started, head over to any of the vaults for which you want to become a staked liquidity provider. If you are unsure which of the NFTs you hold are applicable for staking in an existing vault, move to our general Mint page with your wallet connected.
For this example, we are using the Zenft Garden Society vault. With the Liquidity Zap, we will mint an NFT into the vault, provide liquidity for it on Sushi, and then stake the SLP on NFTX, all in one transaction.
Selecting your NFTs
The first step after is to select one or multiple NFTs that you want to provide as inventory to the vault. Providing inventory to an NFTX vault means that you are depositing your NFTs for anyone else to redeem against a small premium. If you do not want to lose your specific NFTs, do not deposit them as inventory.
Select the NFTs you want to provide by clicking on each NFT shown on the minting screen. If you want to provide all your NFTs, click on the “Select All” checkbox at the top right of the minting module.
Once you’re comfortable with the NFTs selected to provide as vault inventory, proceed by switching from Mint (5% fee) to Mint & Stake (0% Fee).
Click on Continue after.
Approving your Staked Liquidity Zap
After clicking on continue, an information module will prompt on the right side of your screen, showing important information about the Liquidity Zap you are about to approve. This information includes:
- Current projected APY% on your position
- NFT/ETH rates you are providing to Sushi
- Your share of the Sushi pool
- Mint fees (0%)
- Lock time (48 hours)
Before clicking the approve button, make sure you understand what you are about to approve and double check if the rates are in line with the current rates on alternative NFT platforms, such as floor prices on OpenSea. Be cautious, as for starting and/or illiquid vaults it may occur that rates are (slightly) off, due to arbitrage opportunities being too little.
When you are happy with all settings, click on the Approve button and execute the transaction prompted on your wallet.
Start earning rewards by executing the Liquidity Zap
After the approval is confirmed, you are now ready to Mint & Stake.
Clicking the Mint & Stake button will take your (previously selected) NFTs, mint them into the vault against 0% fees, add liquidity on SushiSwap, and stake the SLP position on the NFTX platform, returning an xToken (in our example xBONSAIETH) to your wallet and qualifying you to earn rewards on all future vault activity as long as you remain a staked liquidity provider.
You are now earning protocol rewards on your NFTs!
After the Liquidity Zap is successfully executed, your staked position now shows on the NFTX Staking page. Note that in the first 48 hours after Zapping your position is locked and cannot be unstaked.
Locked Zaps are still earning you rewards that will be claimable once the Zap is unlocked.
Below your staked positions, you will find all other pools that apply for earning rewards, including critical pool information such as TVL and APY.
To claim rewards or unstake your position, buttons will appear after the 48 hour cooldown period has commenced.
Migrating the remaining inventory from V1 to V2
With some of the non-DAO owned inventory still being in V1 vaults (i.e. Punk-Basic), we are working on creating migration contracts that further incentivizes late-comers to move over to V2, to participate in V2 staking and broaden the inventory available for use on V2.
These contracts will let you redeem V1 for V2 tokens of their respective vaults on a 1-to-1 basis, also waiving minting fees which would otherwise apply. We estimate these migration contracts to be ready in early July.