NFTs as an Emerging Asset Class
Markets for crypto-based collectibles and unique digital assets have come a long way since Crypto Kitties famously bottlenecked the Ethereum network in late-2017. Simply put, Non-fungible tokens (NFTs) have exploded: trade volumes on NFT markets nearly quadrupled in 2020 and have continued to grow at a healthy clip this year. Hundreds of projects offering a myriad of use cases beyond collectibles populate the sector, which now has a total market cap of $1.36B.
What are NFTs?
Generated by smart-contracts, non-fungible tokens (NFTs) use blockchain technologies to link to non-replicable digital assets. Individual and unique, NFTs accrue value through scarcity and utility. They are transferable, they preserve ownership rights and, on the immutable blockchain ledger, they establish authenticity. Among leading decentralized networks, Ethereum, Zilliqa, and EOS support NFT marketplaces and protocols.
NFTs as industry disruptors
NFTs are being widely adopted across several industries including art, collectibles, games, and domain/wallet name services. In these areas, the NBA and Christies auction house are just two of the major brands that have begun to offer NFT assets.
But NFTs promise even greater disruptive potential. If, as seems likely, intellectual property rights migrate to blockchain as NFTs, countless units of digital content — music, photos, video, essays/articles and beyond — will move to secondary markets. In such a case, one could imagine NFTs becoming the biggest asset class in blockchain.
NFTs as an asset class
Lending protocols have begun to accept NFTS as collateral, and projects like NIFTEX now allow for the division of NFTs into fungible ERC20 tokens that permit buyers to assume fractional ownership of NFTs that might otherwise have been out of reach. Yet newer projects like NFTX allow for the creation of ERC20 tokens as funds representing sets of NTFs. These funds enable investors to diversify exposure without the requirement that they hold multiple tokens.
Kairon Labs offers unparalleled market making services for assets in the NFT sector, like NFTX, that are traded on centralized- and decentralized-exchanges. Our automated systems maintain price support and stability, order-book depth, and tight bid/ask spreads. When organic volume and liquidity has been secured on centralized exchanges, clients can leverage Kairon Labs’ services to capitalize on arbitrage opportunities. These arbitrage opportunities can arise from capital inefficiencies on new established centralized exchanges and from large market buys/sells that are common on DEXs like Uniswap. Come chat with us to learn more.