- Loot NFT’s innovative new metaverse is targeting to democratize the NFT space.
- It will do so by implementing its own bid unit (BUNs), in limited supply and allowing single-only auctions.
- Loot NFT aims to solve liquidity problems via gamified methods to place bids on NFTs.
From March to April 2021, NFT sales generated an aggregated value of nearly $US 64 million. By October, sales hit $US 336.6 million. While NFTs have been all the rage recently, just like any novel technology, they also face several challenges. Unfortunately, some of these issues have led to many critics pointing to NFTs as a bubble waiting to burst.
The lack of liquidity is perhaps the biggest issue that worries most investors, so much so that some investors believe NFTs are a riskier investment than most altcoins. Moreover, as the history of NFTs has shown, very few collections and pieces make it through the test of time, and unfortunately, most lose their value within a few months. As a result, NFTs become illiquid – meaning they are not easily sold or exchanged for cash without a substantial loss in value – leaving owners in an unfavorable financial situation.
For example, when a holder wants to sell their ETH, they can easily do so on any centralized or decentralized exchange and at any given time. However, when it comes to NFTs, matching buyers and sellers can be a lot more challenging. Rather than trading on speculative markets, collectors typically prefer HODLing their NFTs. Moreover, they are sold bilaterally on markets, with just a few potential buyers for each transaction. For example, an in-game NFT card might only be in demand by a small group of buyers.
Due to this, the prospect of re-selling an NFT remains grim despite the Grey Market Value (GMV) of NFT transactions having increased dramatically since 2020. As a result, NFT holders must either accept the highest bid received in a set period (potentially leaving money on the table) or wait eternally for liquidity until a bidder meets the ask. However, it is not all grim, as several upcoming projects aim to solve the issue of NFT liquidity and the price discovery problems, thereby enabling creators to access deeper liquidity. For example, revolutionary projects like Loot NFT seek to solve the liquidity problem by introducing a gamified method to place bids on NFTs.
Loot NFT’s innovative new metaverse is aiming to democratize the NFT space, through not only providing a platform where users can trade their NFTs but also an entire blockchain ecosystem—from its own token to its e-commerce store, to its Loot Arena where users can battle it out to outbid each other.
Not only is this helping solve the liquidity issue in the NFT space, but it is also democratizing the industry by levelling the playing field in the way its auctions are run. In traditional auctions, the wealthy can outbid any bidder mainly because the currency used in bids is inflationary. By implementing its own bid unit (BUNs), in limited supply and allowing single-only in auctions, the purchasing power disparity in auctions is greatly reduced. This approach also makes winning NFTs more gamified and hence more engaging for users, encouraging more trading in the NFT space. Players are also able to win NFTs at a fraction of the price this way.
Since Loot NFT’s bid units are tokens of limited supply and capped per account and have single-use only in auctions, the purchasing power disparity is greatly reduced. It also ensures that implementing a strategy can make winning NFTs more gamified and hence more engaging for users, encouraging more continuous trading in the NFT space. They are also able to win NFTs at a fraction of the price this way.
Aside from Loot NFT, projects such as Momento combine NFTs + DeFi and enable NFT owners to earn rewards while HODLing their NFTs until they can find a buyer that matches their asking price.
Moreover, new-age platforms like Mintverse allow users to create, collect, and even crowdfund NFT art. Furthermore, projects like Sphynx offer interesting DeFi-NFT use cases like loans against NFT collateral, NFT yield farming, and co-ownership of NFTs, among others. Such projects are launched intending to provide products and services to tackle the current issues faced in the NFT industry.
Although the burgeoning NFT space has many upsides, liquidity is inherently an ongoing issue in the sector. However, as the nascent industry continues to evolve, companies are working to create innovative ways to solve this problem. Trailblazers like Loot NFT provide exciting new ways of gamifying the world of NFT trading, increasing engagement with players and hence increasing the volume of trading. The future is bright for NFTs, and it will be interesting to see how the space evolves.
Disclaimer: The views and opinions expressed in this article are solely the author’s and do not necessarily reflect the views of CoinQuora. No information in this article should be interpreted as investment advice. CoinQuora encourages all users to do their own research before investing in cryptocurrencies.