LD Capital: NFTFi lacks new narrative and new money. When will the dilemma turn?

Original article by Yuuki Yang and LD Capital Research

Introduction:

2023  A surname NFT  The market can be based on 2  Month   14  Day   Blur  On-line as a watershed. 2  Month   14  Before the day; NFT  The prices of the three core trading objects, projects, trading platforms and lending products, kept rising; Blur  After the launch of the whole. NFT  The market quickly turned from bull to bear. Floor prices are falling, trading platform tokens Looks  Compared with X2Y2. 2  Monthly price highs have fallen. 80%  , Bend, Jpeg  Such a loan agreement is due to NFT  The adoption rate of declining collateral prices, TVL  And the price of the currency has also entered the declining channel. At present   NFTFi  How is it going? Recently   Blur  New products have been released. Blend  Enter   NFT  Loan track, again may be on. NFT  What are the ecological impacts?

Abstract:

NFT  At present, the lack of a new narrative with the entry of new funds, high transaction pumping makes the present. NFT  Funds on the floor are shrinking. 2022  After the market turned from bull to bear in 2005. NFT  The core gameplay remains focused   PFP, the header item has not been changed. The number of traders is falling, and the overall market is short of new ways to play and new money. NFT  The high intermediate fees (royalties + platform fees) of the transaction make it possible. NFT  In the process of transaction, a large amount of funds are withdrawn by the project side and the trading platform; According to nbsp; NFTGO  Data, Estimation   NFT  Transaction costs have reached... NFT  Total market value 24%  ; In this perspective can also partly explain why. Blur  After the market is   NFT  Markets providing ample liquidity have led to the loss of liquidity. NFT  Project volume rise price fall this situation (high change hands lead to the market capital contraction; Repricing of liquid assets). Overall, against the backdrop of a lack of new players entering the market, The stock of funds in the field is shrinking to become the current. NFT  One of the main reasons for falling prices; The entry of incremental funds, the decline of pseudo-buyer liquidity in the market, or the reduction of transaction costs. NFT  An indicator of price stabilization.

NFT  The vicious competition of trading platform has reached the second half of the course, but the inflection point of the track is not present. The concentrated selling pressure brought by the accumulated token deficit is. Blur  The difficult problem facing. At present   NFT  The trading platform circuit is still in the stage of vicious competition, the mainstream platform trading rates have been reduced to. 0  "Came to the most intense stage. New Comprehensive   NFT  The market grab by trading platforms has improved significantly, but it comes from NFT  Real transaction demand has not yet seen growth, the overall track turning point has not yet appeared. To   Blur has seized most of the current market share by effectively motivating the buyer's liquidity. However, the anticipated incentive of airdrop has covered up the accumulated deficit at the token level since the launch of Blur's product. Blur  The centralized release of liquidity incentive cost may have a great impact on its price; According to current information, Blur Season  2  Overshoot will be dropped. 3  Hundred million tokens, accounting for the current flow. 65%  . Core needs attention   Blur  Whether an effective economic model can be developed to achieve continuous binding to liquidity providers while avoiding mass selling of tokens.

Lack of real demand for lending products in bear market, wait. NFT  The overall recovery of the market. Equity type   NFT, semi-homogeneous token, Ai+NFT  Etc may become the new direction. Blend  On-line pair   Bend  And   Jpeg  Price has a large short-term impact, but has little impact on its business at present; Mainly due to the present. NFT  Lack of real demand for lending, driven by Blend  The main reason for the improvement of business volume is the integral excitation, Bend dao  High interest rate subsidies. Medium   Peth  nbsp; eth  Is also supported by the positive premium. NFT  A lack of demand for credit. To   Blur, Blend  At present, the essence of the loan product is the agreement expenditure rather than the income. At the same time, there is an order of magnitude difference between the valuation of the loan track and the valuation of the transaction track. Blend  At present, for   Blur  The currency's boost is limited. Since the demand for loan products will be amplified in the bull market and leverage, the rise in the underlying collateral price and the expansion of the collateral range are important indicators to observe the outbreak of the loan circuit.

Risk: ETH  Increasing yield on the chain Extrusion   NFT  Loan demand, Blur  The concentrated release of liquidity costs affects price, team and contract risk.

A, the lack of new funds, trading high pumping result. NFT  Falling prices

NFT  At present, the lack of a new narrative with the entry of new funds, high transaction pumping makes the present. NFT  Funds on the floor are shrinking. 2022  The market has changed from bull to bear since 2005. NFT  The core gameplay remains focused   PFP, the header item has not been changed. The number of traders is falling, and the overall market is short of new ways to play and new money. Specifically:

In the past year NFT Traders  Has been falling since last year. 5  A surname Luna  After the crash triggered systemic risks across the market. Market. Sellers  Duration greater than   Buyers.

Chart   1: NFT  The number of people trading is falling

Source: NFTGo, LD Capital

NFT  The high intermediate fees (royalties + platform fees) of the transaction make it possible. NFT  In the process of transaction, a large amount of funds are withdrawn by the project side and the trading platform; According to nbsp; NFTGO  Data, NFT  Total market value   88  100 million, total turnover   418  100 million, in the total market value statistics exist. 45%  "Others" (non-mainstream   Of which there are plenty. NFT  Lack of active transactions, in a state of no market; Remove brush volume trading from total volume statistics; In the case of overvaluation of total market value and underestimation of total turnover, with   5%  , NFT  Transaction costs have reached... NFT  Total market value 24%  ; In this perspective can also partly explain why. Blur  After the market is   NFT  Markets providing ample liquidity have led to the loss of liquidity. NFT  The occurrence of project volume rise price fall (high change hands lead to the shrinkage of funds; Repricing of liquid assets). Overall, against the backdrop of a lack of new players entering the market, The stock of funds in the field is shrinking to become the current. NFT  One of the main reasons for falling prices.

Chart   2: NFT  Volume and price of the market as a whole

Source: NFTGo, LD Capital

Chart   3: Blur  After online, NFT  The present volume rises and the price falls

Source: NFTGo, LD Capital

Prediction at this Angle   NFT  The related indicators of price inflection point are as follows: the entry of new funds (new users entering or the expansion of stock user funds), Buyers> Sellers; A decrease in pseudo - buyer liquidity or transaction costs in the market.

2. NFT  The inflection point of the trading platform track is not present, and the concentrated selling pressure brought by the accumulated token deficit is. Blur  Difficulties faced

NFT  The effect of making money is declining. New trading platforms, especially nbsp; Blur  Eg. A spoiler would be NFT  Trading platform competition to the most heated stage. As a result of Blur  Execute   0  Commission policy and   Bid Pool  The ample liquidity provided quickly grabbed some of the highest volume in the market, even though. Opensea  Quickly took a series of measures to adjust the commission, optimize product functions and so on is still poor effect. And X2Y2 market share further shrink, from the point of view of the currency price has been compared. 2  Monthly high falls near 80%  .

Chart   4: NFT  Distribution of trading volume on trading platforms

Sources: Dune, LD Capital

The current mainstream NFT  Trading market fees: in   Blur  By virtue of   0  After fees and high buyer liquidity quickly took over the market, Opensea  Had the periodic adjustment transaction fee to   0  , after recovery   2.5% & have spent But the original   NFT  Aggregator   Gem  Build as a new product Opensea pro, execute with   Blur  Same   0  Commission, build   Blur  Similar front-end interface; Looksrare  Will also be affected by its original. 2%  The commission policy is adjusted to   0.5% & have spent ; NFT  The competition in the trading market is at its most intense.

Chart   5: Mainstream   NFT  Transaction market fees

Source: LD Capital

Focus on core objectives   Blur, the current market for   Blur  There is a big difference between the two. Some investors think that Blur  Has been comprehensively surpassed. Opensea  become NFT  The leader of the trading platform, while the project team and investment team confidence is strong, in the future. NFT  The case of the market is considered. Blur  Should enjoy a higher valuation premium; Another group of investors think that. Blur  The present   0  The economic model of fee policy and point incentive is not sustainable, Blur  There is great uncertainty if we want to achieve long-term development.

Let's start with a product perspective. Blur  And   The difference between Looksrare and X2Y2: Blur  in addition to the basic trading function; The biggest success so far has been the incentives for liquidity, particularly buy-side liquidity. Review   NFT  History of trading platform iterations: Fa  Token  Looksrare  At the earliest, it adopted the form of trading mining to encourage trading. At the beginning, X2Y2 was single mining mainly to stimulate the seller's liquidity, and then it changed to   Looksrare  Same deal mining, timeline further back. Looksrare  At first, the company started to pay for mining but encouraged both sides of the sale and purchase, and then switched to the main incentive seller, and finally appeared. Blur  The main incentive for buyer liquidity.

The logic behind this is that, under the economic model of early fee collection and fee ownership of the platform, the economic model design of incentive-trading can allow teams and coin holders to achieve high income. Looksrare  Early through this measure to earn a lot of profits, but its essence is still disguised coin selling; X2Y2 did not grasp this point at the very beginning, the team and the Treasury had almost no income, and faced the situation of unsustainable development, so later it adjusted to mining for trading. However, the incentive effect of transaction mining on real users is very low, which is not conducive to the construction of network effects. Based on the dimension of development, the follow-up. Looksrare  Starting to single mining incentive liquidity, at the beginning of the trading bilateral incentive strength is the same; But because of NFT  The transaction mode is that the seller pays the commission and sells the floor price at the same time. The incentive for the seller is conducive to lowering the floor price. So in a market where aggregators have become traffic portals and buyers focus on the floor price, the incentive effect of buying and selling is not as good as just motivating sellers and then seeing. Looksrare  Adjusted single mining model as the main incentive seller; Until this year. 2  Mid-month   Blur  On-line, its through   Bid pool  The success of incentives for buy-side liquidity has a lot to do with the stage of market development. NFT  Trading platform has been within the volume to no charges, if. Blur  Still take charge. NFT  The transaction mining mode, which is subsidized by the same currency as the transaction commission, cannot escape. Looksrare  The old road of X2Y2 development; Of course. Blur  Can execute true   0  The commission policy is also related to its own resource endowment. Two rounds of funding allowed it to forego short-term team revenue and accelerate its market grab. The other is the whole. NFT  The market continued to cool so that this trading pain points from the previous to buy low prices. NFT  Become a general. NFT  Sell at the highest possible price (there is a clear gap between the power of the buyer and the seller, and the seller needs the liquidity of the buyer much more than the buyer needs the liquidity of the seller). Blur  Incentivizing buy-side liquidity fits right into this pain point; It is also true that in an order-book trading system, incentives for buyers and sellers need to be adjusted according to the market stage. Blur  The team's market sensitivity and mobility put forward higher requirements.

Reference   DEX  Compared with the development experience of other trading platforms, the core competitiveness of an excellent platform product capable of crossing the cycle is reflected in the construction of cross-side network effects (that is, the parties using the platform are based on a large number of counterparties providing options on the platform, diluting the similar functions and experiences of the platform) or forming a strong binding of interests on one or more parties of asset issuers, users or market makers. From this point of view. NFT  In the trading platform circuit, due to the high liquidity of users and asset issuers on the chain, the construction of cross-border network effects has not yet taken shape. At present   Blur  The integration of a number of liquidity providers in the form of points-based incentives is at the heart of its success in the current phase, but with a view to its sustainability.

In the perspective of economic model, for the core target at present. Blur  The biggest problem is that. Season  2  The huge amount of airdrop how to digest. Blur  The anticipated linear release through airdrop rather than traditional community incentives covers the platform's liquidity costs, from   2  It has yet to reveal its token-level deficit since launching in mid-January. Based on current public information, Blur Senson  2  Will issue more than   3  Hundreds of millions of tokens, accounting for the current circulation. 65%  , e.g.   Blur  If the economic model cannot be adjusted timely to control emissions and increase locking, its secondary market price may face greater pressure at that time. Here the core needs to be concerned. Blur  Whether an effective economic model can be developed to achieve continuous binding to liquidity providers while avoiding mass selling of tokens. There is one more thing to note. 6  Month   14  Day, Blur  There is a large unlock of investor and team share. 2  100 million pieces, accounting for the current circulation. 42%  , where the team unlocked about   1.2 & have spent Hundreds of millions of them account for the current circulation. 26%  ; Investors unlock about 0.8 & have spent Hundreds of millions of them account for the current circulation. 16%  .

Chart   6: 6  Month   14  Day, Blur  In the face of 2  Unlock hundreds of millions of coins

Source: Token.Unlocks, LD Capital

3. Lack of real demand for lending products under the bear market. NFT  The overall recovery of the market

As a result of 2  Since mid-month NFT  Falling prices, lending agreements. Bend dao, Jpegd  Such as the adoption rate of loan agreement, TVL  And the price of the currency has also entered the declining channel.

Chart   7: 6  Month   14  Today, mainstream lending products are available in 2  Business volume declined gradually after mid-month

Sources: Dune, LD Capital

Paraspace  Since coming online due to its   U  Standard lending function, Ape  Lending and the introduction of automatic compounding in   NFT  The loan track under the downward trend to obtain better results, become   Benddao  A serious competitor. 2  Since the middle of the month, Standard prices are falling. Prices are rising, which makes users mortgaged. NFT  Lend out ETH  As opposed to lending. USDT  Took on bigger losses; Bend dao  Previously only available   ETH  The amount of money borrowed from, and nbsp. Paraspace  On offer   ETH  As it borrows, it also provides. USDT  The diversified product structure in the current market environment has captured a lot for it. Paraspace  Recently, user funds were misappropriated and the team struggled for control.)

What remains to be watched is. ETH  The Shanghai upgrade brings about an increase on the chain. 5%  nbsp; ETH  Standard risk-free rate of return, lending products   ETH  The deposit pool is expected to take the hit and shrink until interest rates level. Bend dao  Is represented by NFT  The unfavorable situation of loan products. But these days. Bend dao  Approved a new stablecoin lending pool to fend off competition from industry risks and racetracks.

Jpegd  As   CPD  Credit agreement, on the chain. ETH  The impact of the rise in the standard risk-free rate of return is less, which is achieved through continuous accumulation. CVX  Obtain   Crv  The governance rights of the agreement reduce the long-term development of liquidity incentive costs, but because of its function with the product. Curve  The combination makes the product more complex than   Bend dao  And   Paraspace  Greatly improved, while using   Jpegd  Also produces higher   GAS  Fee. For the time being. Jpegd  By communicating with   Curve  The combination reduces the long-term operating cost of the protocol to some extent but makes the product structure slightly more complex.

Recently   Blur  Online   Blend NFT  Lending products NFT  Lending track also like Pinghu stone raised a lot of waves. Blend  After online, Bend  And   Jpeg  The price of the currency fell sharply. Eg. Prices began to recover but... Blur  The price of its own currency has not performed well, specifically:

Blend  Be different in nature. Bend dao  And   Jpeg  The peer-to-pool lending model is a peer-to-peer lending product with no maturity date. Under the assumption of rational lender, it designs an innovative refinancing auction mechanism, which realizes many functions to enhance user experience such as no external prediction machine feeding price, no maturity date, allowing the lender to withdraw at any time while protecting the interests of the borrower.

As a result of Blur  In   NFT  The combination of powerful influence in the market. Blend  A number of innovations, Blend  Since the launch of the product TVL  Rapidly rising, from an unpaid loan perspective, Blend  Two days after going online, outstanding loans had arrived. 1658  w  The dollar, up to   Bend dao  At the time. 73%  , Bend  And   Jpeg  Prices fell quickly as a result. But what needs attention is in. Blend  As the business expands so rapidly, Bend Dao. And   Paraspace  nbsp; TVL  There has been no decline. Eg. It seems so. Blend  To   NFT  The lending market, yes. Blend  Demand is created through points incentives, driven essentially by agreed spending rather than by real borrowing needs. Blend  Business development for which it generates profits. Combination   NFT  Loan track   NFT  The trading platform circuit currently has a huge valuation gap from   MC  From the point of view: current   Blur MC  2.1 & have spent 100 million, and before that. NFT  Loan head agreement Bend dao MC  Only   449  Jpegd MC  Only   1370  Ten thousand, there is an order of magnitude difference, so in the current stage. Blend  There is no pair. Blur  The rise in the value of the currency has contributed too much.

For   Blend  Credit products, to be wary of the current motivation of most lenders to brush. Blur  Points, the amount of funds on the real loan side is not sufficient, and the borrower's collateral is frequently launched by the lender for refinancing auction, resulting in the real interest rate of the borrower is too high, or NFT  Liquidation results in a loss.

summarize

Generally speaking, the essence of lending products is to long asset prices tool, bull market plus leverage, bear market can also be used as an alternative liquidity exit channel, lending products. NFT  A recovery in prices would complement each other, and a better lending infrastructure would help. NFT  Prices have held up, but the real driver has been the explosion of underlying assets, amplifying demand for lending products and driving the whole. NFTFi  Ecological prosperity. Some of the new directions to watch are. RWA  Derived equity class NFT, IP-3525&nbSP; Bring semi-homogeneous tokens, Ai+NFT  New ways to play, etc.

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