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NFT finance Leveraging Non-Fungible Tokens

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NFT finance Leveraging Non-Fungible Tokens ( nft-finance-leveraging-non-fungible-tokens )

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2.2.4 Trading ERC-721 tokens Similarly to ERC-20 tokens, ERC-721 tokens can also exchange ownership and be traded for other tokens or Ether. However, the way this is done is different. Since all ERC-721 tokens have unique properties, Automated Market Making algorithms are not feasible to be imple- mented. The accepted way to trade them at the moment is to auction or sell them on peer- to-peer marketplaces specific to NFTs, the largest at the moment being OpenSea. This creates new economies for digital collectibles with impressive statistics for a new type of asset: [29] • 7 day trading volume of the top 3 kinds of NFTs is over 1,000 Ether. • Decentraland, another VR simulation has a total volume of 44,000 Ether split amongst 3,662 owners. This gives an average ownership of LAND properties of around 12 Ether. • The most expensive NFT sold in 2019 has been an F1 gaming item worth 415.9 Ether. [11] Figure 2.3: ENS name being sold on OpenSea marketplace. 2.2.5 ERC-1155 tokens The ERC-1155 is a new token proposal standard aimed at creating both fungible and non-fugible tokens in the same contract. This could be particularly useful for games that want to create more complex in-game economies. 2.3 Decentralized Finance (DeFi) Decentralized Finance protocols are DApps that enable interoperable protocols for leveraging and trading exclusively ERC-20 tokens. Currently there is close to 1bn USD of capital locked in DeFi, as of June 2020, with the largest protocol being Maker. [13] 14

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