Learn how to buy and sell NFTs on cryptoâs first NFT automated market maker.
sudoswap is making NFT trading even easier.
Launched in May 2022, sudoswap is cryptoâs first NFT automated market maker. The Ethereum-based platform functions similarly to Uniswap, letting users trustlessly trade assets through user-funded liquidity pools. However, instead of trading between two fungible tokens, sudoswap users can trade between NFTs and ETH.
At first glance, it might be hard to see what advantages sudoswap offers the average user over conventional NFT trading platforms likeOpenSea, the worldâs biggest NFT marketplace with trading volumes that far surpass all of its competitors. Unlike OpenSea, sudoswapâs pools are completely decentralized and funded by its users. However, this doesnât mean that trading is freeâthe creator of the trading pool sets a swap fee of a few per cent paid to them from every successful NFT purchase or sale.
The fees generated when assets are traded through the platformâs pools return to those providing the NFT and ETH liquidity. This also means that sudoswap bypasses existing royalty fees placed on collections by their creators. Additionally, the lower the swap fees are on a specific pool, the more incentive users have to trade through it. This incentivizes a ârace to the bottomâ for pool creators to offer the lowest fees, resulting in better prices for end users.
A final benefit of sudoswap is that it lets NFT owners sell their assets instantly without having to wait for a buyer, in turn improving liquidity and efficiency in the NFT market.
However, arguably the most innovative part of sudoswap is how it manages the value of the NFTs traded through its pools. The platform uses bonding curves to automatically increase and decrease the bid and ask on each collection depending on how many NFTs are bought or sold. For example, when a user sells an NFT into a pool, increasing the supply, the buy price slightly declines. Depending on the delta value selected by the poolâs creator, the more NFTs sold, the lower the price per NFT becomes until market forces find its fair value. On the other hand, buying an NFT from a pool incrementally increases the cost of subsequent purchases, keeping the assetâs price in line with demand.
Over the past few weeks, the amount of users interacting with sudoswap has exploded. According toDune data compiled by 0xRob, the protocol had an average of 36 users a day in July. One month later, sudoswap has registered almost 2,000 daily users and a total trading volume of over $18 million.
Trading NFTs on sudoswap is no more difficult than interacting with other automated trading platforms. As with interacting with any blockchain protocol, make sure youâre onthe correct siteand connect your Web3 wallet using the on-screen prompts.
Once connected, navigate over to the collections page to see which NFT collections users have created liquidity pools for.The biggest and most active pools are for popular, well-established, and frequently traded collectionsâdonât expect to find pools for smaller and more obscure projects. After finding a collection to trade, click on it, then navigate to the âpoolsâ tab. This will show the user-created pools offering NFTs from the collection, how much liquidity there is for each one, the type of bonding curve used, and the Delta value (how much sales and purchases affect the price of NFTs in the pool). Weâll use the Webaverse Genesis Pass collection for this demonstration.
Webaverse Genesis Pass pools (Source: sudoswap)Most collections have one main pool where most of their liquidity is concentrated. However, itâs worth checking if there are other pools available offering lower swap feesâespecially if youâre looking to buy NFTs from higher value collections like Bored Ape Yacht Club or 0xmons. For Webaverse Genesis Passes, weâll look at the main pool with the liquidity of 226 NFTs and 16.522 ETH.
WEBA/ETH pool on sudoswap (Source: sudoswap)Here we can see the current price the pool sells an NFT for, the Delta (the amount NFT sales and purchases move the ask price), and the overall swap fee charged by the poolâs creator. Scrolling down, we can also see a graph that gives a visual representation of the poolâs bonding curve. Moving the sliders on the buy and sell sides can simulate how buying or selling multiple NFTs from the pool will increase or decrease the price and how much doing so would cost.
Example of a sudoswap bonding curve (Source: sudoswap)As pools increase the price of NFTs as they sell them, itâs often better to use multiple pools when buying multiple NFTs. sudoswapâs built-in âSweep Modeâ can be used to find the best combination of purchases. For example, if we wanted to buy 10 Webaverse Genesis Passes, the cheapest option would be selected for the first purchase. However, this would increase the price of other NFTs in the corresponding pool, meaning it could be cheaper to buy from other pools before returning to the first pool.
The same principles for buying multiple NFTs applies when selling them. If we needed to sell several NFTs from a collection quickly, we could likely get a better overall price by selling single NFTs to individual pools rather than selling all of them to the same one.
Using Sweep Mode (Source: sudoswap)Itâs also worth noting that users can select the exact NFT they receive when buying NFTs from sudoswap pools. While this isnât particularly significant for collections like Webaverse Genesis Passwhere each NFT is the same, it has an impact on collections with variable rarity.This is because it offers buyers a chance to buy NFTs with rare traits close to the collectionâs floor price.NFT holders looking to sell rarer pieces, meanwhile, may find they can get a better price for their grails on other marketplaces such as OpenSea.
While sudoswap is still in its infancy, it could potentially revolutionize NFT trading. Members of the NFT community have already started experimenting withdifferent uses for the protocolranging from raffle systems to GameFi marketplaces. At the same time, speculators are hoping to capitalize on the hype with derivative projects likeSudo LootandSudo Inu.While itâs unclear whether sudoswap will host more substantial collections in the future, that might not matter. Itâs already pushed NFT trading forward and looks set for a bright future.
https://cryptobriefing.com/how-trade-nfts-on-sudoswap-jpeg-markets-answer-uniswap/