The NFT market is in a state of turmoil. Not only is the trading volume at an annual low, but now a new marketplace, Sudoswap, is gaining market share by not paying royalties to NFT creators for secondary sales.
But those who blame Sudoswap’s sudden rise only on the lower fees are missing the real innovation!
We took another look under the hood and explain in simple words what makes Sudoswap so new and special.
SudoAMM – NFTs do meet Finance
Previous marketplaces like OpenSea follow a so-called order book model, but what is an order book model and how does it work?
How does the order book model work?
If you want to sell an NFT, you submit a sell order on OpenSea. OpenSea takes this sell order and stores it off-chain in its own database. An API taps into this database and visualizes your NFT as a listing on the marketplace.
This has the advantage that you do not have to pay any gas fees except for one-time fees.
The disadvantage of this order book model, however, is that I have to list each NFT I want to sell individually and cannot make the respective selling prices dynamically dependent on each other.
This is exactly where Sudoswap comes in.
Sudoswap is not an order book marketplace, but a so-called Automated Market Maker (AMM). Everything runs on-chain on a decentralized protocol.
How does SudoAMM work?
Let’s imagine we are Whales and besides August we have 5 Moonbirds with similar traits that we would like to sell.
On Sudoswap we can now open a Liquidity Pool and dump our 5 Moonbirds into this pool.
We also store the following 2 pieces of information:
Starting price: At what price should the first moonbird be sold?
Price adjustment: Should the price for each additional moonbird increase after each moonbird sold?
And if yes – linear or exponential?
For example, you could set that after each sold moonbird the selling price increases by another 0.5 ETH.
We are thus much more flexible and would only have to adjust the starting price of the pool even if the floor price of the collection changes, instead of relisting each individual moonbird on OpenSea.
The market gains NFT liquidity with Sudoswap
Buyers, by the way, can benefit from similar dynamics. If they wish to buy multiple NFTs in a collection, they can deposit a price for the first NFT and a linearly or exponentially decreasing bid trend for each subsequent NFT. Dollar cost averaging for NFTs!
So which problem does Sudoswap solve ?
Simply explained: It does try to solve the liquidity issue in the NFT space by allowing people to directly buy and sell NFTs from “pools and liquidity” without the need to wait for a manual counterpart, aka buyer to grab it from the open market.
When should one use Sudoswap as a trader?
- When you want to save fees (0.5% vs. 7.5% – 12.5%)
- If you want to sell several (similar) NFTs from one collection
- If one has enough experience
- If you understand the mentioned concept above
Future prediction on the NFT market
The NFT landscape will split.
Active traders will find their home in aggregators like Genie and gem, which are already working on Sudoswap integration. For NFT collectors, there will be curated marketplaces.
Pessimistic outlook for OpenSea, which can’t win the low-fee battle or, as a general store, provide the custom UX that creators and their collectors want. They are also not even able to win the community fight against other projects like LooksRare in the past for example.
Moritz Pindorek (Moritzpindorek.com)
Social Media, Marketing & Blockchain
Crypto/Web 3 Advisor, Top 10 Crypto Influencer 2022(Forbes Monaco) & Top 10 Entrepreneur 2022 (Forbes Monaco)
Owner and writer for Cryptouserguide.com