Gem Hunting: NFTX

Updated: Sep 27, 2021

Gem Hunting is a series where I compile research on interesting small cap crypto projects.

 

Ticker: $NFTX

Launched: January 4th, 2021

Market cap: $66 million

Circulating supply: 420,000

Max supply: 650,000

Sector: NFT / DeFi



What is NFTX?


NFTX protocol allows users to create NFT-based index funds built on Ethereum. This opens the opportunity for investors to add portfolio exposure to NFT markets without actually owning the underlying NFT.


For example: if you are bullish on CryptoPunks, you can purchase $PUNK tokens on the open market to gain exposure to the CryptoPunks in that fund.


How does it work?


Users deposit their NFT(s) into a fund on NFTX protocol to mint vault tokens.


Example: Joe deposits 1 CryptoPunk into the $PUNK fund --> Joe receives 1 newly minted $PUNK token


$PUNK tokens can be traded on the open market and broken down into fractional shares.


Each $PUNK token allows the holder to redeem a CryptoPunk from the fund at any time. Since the $PUNK tokens are backed 1:1 by each deposited Punk, this ensures that the token is pegged to the market value of the NFTs in the fund.


Why is this useful?


This adds liquidity to NFT markets - meaning if you purchase an NFT, you have the ability to immediately deposit it into an NFTX fund and receive a tradable token in return. Think of it like "NFT as collateral".


Benefits:

  • Allows liquid exposure to NFT markets; easily enter or exit the NFT space

  • Gives speculators the ability to gain exposure to NFTs


What does the NFTX token do?


$NFTX is the governance token for the NFTX Dao. This gives NFTX token holders the power to change the NFTX smart contract if consensus is reached.


Where can I buy NFTX?


Currently NFTX is only available through Uniswap and Sushiswap.


Potential features being discussed

  • NFT loans

  • Randomized packs & gift cards

  • Fee share from mint/burn operations


Analysis


NFTX is at the forefront of innovators in the NFT space with the goal of becoming a "DeFi black hole for NFT assets." This project is only 3 months old but has very solid fundamentals - sitting at a unique intersection between NFTs and DeFi. It will be important for NFTX to quickly grow the Total Value Locked on their platform if they want to distance themselves from future competition. There is already a solid community backing this project which is seen through the +5,000 holders of the NFTX token.


We've seen everybody from Paris Hilton to Tom Brady get in on the NFT hype and I can confidently say NFTs are here to stay. This space will grow exponentially over the next few years as these new projects have time to grow, develop, and innovate. NFTX has massive upside potential if they can deliver on their ambitious goals.

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