What happens when buying or selling NFTs on Liquid Collectibles
Hey Monsters!
This article will be perfect for anyone looking to expand their knowledge into the tokenomics and mechanics that make Liquid Collectibles so… Liquid! Today, we’ll be taking a more in-depth look into what exactly happens when buying or selling NFTs using the Liquid Collectibles platform.
So, firstly let’s consider how the NFT indexes (NFTi) work. For every 100 NFTi in circulation, there has to be 1 NFT collateralized in the protocol. Whenever someone interacts with the protocol to buy or redeem an NFT, 100 NFTi are burned. The inverse has a similar impact: with 100 NFTi being minted, each time, the protocol sells or tokenizes an NFT. This means the market will remain fluid for buyers/sellers, preventing the NFTi from being inflationary and negatively impacting the NFT floor price.
How is this different from ‘traditional markets’?
Traditional markets require a party to ‘settle’ the trade. To put it simply, traditional markets require both a buyer and a seller; when they agree on a price, the trade can be completed. Traditionally this has worked the same way in NFT markets. Sellers list their pieces, and a buyer steps in to meet the offer. So, in order to raise the floor price of a collection, every single piece listed at that price must be bought.
What about ‘Liquid Collectibles’?
So what happens when people exchange BNB directly for an NFT? Whenever an NFT is bought with BNB, the NFTi are bought behind the scenes from the market as part of the transaction, which actually means there is regular buying pressure on NFTi, which subsequently raises the floor price of the collection. Unlike traditional markets, this means only ONE purchase would be needed to raise the floor!
Check out the picture below for an example.
Okay, buying is great but what about selling?
From each NFT sale, 5 NFTi of the 105 NFTi are taken as fees used to provide some of the fantastic APRs, providing passive income for our loyal stakers, liquidity providers, and giveaways. When selling NFTs, users will receive 95 NFTi; this is because 5 NFTi are charged as fees to keep the protocol up and running for all of our Monsters to enjoy.
We hope this article sheds a little more light on how the Liquid Collectibles platform works, and if you learned a thing or two, maybe share this article with a friend or fellow NFT enthusiast.
As always, thanks for being part of the journey! Follow our social networks to stay up to date.
Website: https://liquidcollectibles.io
Twitter: https://twitter.com/LiqCollectibles
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See you next time, monsters!
