Nftfy: Why we Invested
Cryptocurrency has drastically risen in popularity, the DeFi Summer of 2020 leading us into the explosive rise of NFTs in early 2021. The NFT movement has seen billions of dollars flowing in and out of the space daily, sparking an overwhelming amount of interest from various industries looking to integrate and profit from this trend. These industries of interest have spanned from music to digital art, sports, pop culture, attracting creators, investors, corporations and collectors alike to become a part of this revolutionary new market. However, the NFT market is plagued with some fundamental problems, including (1) low liquidity, (2) high investment risk and (3) difficulty in monetizing assets.
An NFT’s value is subjective and ultimately based upon what an individual is willing to pay for it. This is in stark contrast to cryptocurrency, whose value is established by the buying and selling behaviour of the entire market. As supply is limited by the very nature of the token being non-fungible, this type of market creates an environment where subjective prices can introduce a very severe risk on one’s NFT investment.
This low liquidity and investment risk is one reason why NFT’s attract a particular type of investor, as one can only monetize the asset through a single buyer if there is a demand. This leaves NFT investors often feeling stuck as there is an ‘all or nothing approach to selling their NFT’s and making a profit. This type of market also poses a high barrier to entry for many potential participants, as the most desired NFTs are priced out of reach for many.
Nftfy will utilize the concept of fractionalization in order to create brand new markets for NFT creators, collectors and investors. Fractionalization is the process of splitting an NFT into smaller units and allowing multiple people to own a piece of the asset instead of one single entity. This will bring creators, collectors and investors the opportunity to generate liquidity by launching their NFT’s through fractions on a Balancer Liquidity Bootstrapping Pool (LPB). The LBP process will essentially act as a pseudo-launchpad to generate liquidity as well as provide a platform to market the NFT fraction offering. This will solve the price subjectivity problem, as an NFT’s price will not be determined solely by one person but rather determined by the sum value many investors place on each fraction.
Fractionalization on Nftfy will give investors multiple methods to monetize and extract value from their NFTs on top of the traditional one-buyer approach. These include arbitrage, speculative trading, and yield farming opportunities made available through other DeFi applications within the cryptocurrency market. This can completely disrupt the NFT market as these assets can become democratized tokens that can behave similarly to regular crypto assets and provide NFT investors with vast amounts of ways to realize profits. On top of this, fractionalization through Nftfy will allow investors of all financial capabilities to participate in the premium NFT market.
GD10’s decision to invest in Nftfy was highly strategic, as evidenced by the collection of high-profile supporters of the project, including AU21, Petrock Capital, Magnus Capital, and Three M Capital.
Nftfy’s revolutionary approach to fractionalizing NFTs positions the protocol as a market disruptor with solid growth potential. Their vision looks to provide NFT market accessibility to an entirely new wave of investors, empowering creators and collectors like never before. GD10 is excited to add this project to our portfolio, and we look forward to offering support as the project blossoms.
For information on the team, economics and more, check out our First Look article here.
Graphic Design by Caelan Flemmings