Breaking the Paradox between NFT Pricing and Liquidity Insufficiency, will Bytom’s Radical Trading Protocol be the Future of NFT?
If you have traded NFT assets, then you may have this feeling: when you hold it, you are always worried about not being able to sell it, and when you sell it, you immediately feel that you are selling at a loss.
When you want to buy a certain NFT, you also worry about whether it is worth the price, so you only dare to buy the floor price NFT. But if you have an old player by your side, he might tell you: Buy if you like it, don’t ask the price.
Pricing and liquidity have always been an issue for NFT traders. As a result, various derivatives emerged. Fractional and Unicly focused on NFT fragmentation protocols, while Paradigm proposed the concept of Floor Price Perps (Floor Perps). In order for NFT to better meet the expectations of the market and traders,.
Today, we are going to introduce a project that is a bit bold. Instead of using a new protocol to make up for the shortcomings of the original NFT protocol, can we create a new NFT protocol to further develop the NFT technology? One step forward?
This is the “radical trading protocol” based on the radical market theory proposed by Bytom, in which Bytom defines a new NFT standard-excited state NFT.
What is this, and how does it open up a new direction for NFT pricing and trading?
What is this, and how does it open up a new direction for NFT pricing and trading?
“Radical market” theory, blockchain is the best testing ground
The book “The Radical Market” was published in 2019, and some people call it “a dangerous book of the year.” It describes a sci-fi tax policy proposition that is considered “essentially impossible, but instructive.”
The radical market theory has two prominent points: never-ending asset auctions and Harberger tax.
The endless asset auction means that in a “radical market”, there is no monopolistic private ownership, and all items are permanently in the state of price auctions. Ownership of items.
The Harberger tax refers to a unique property right model. If all asset holders want to sell their assets publicly, they need to pay tax in accordance with the percentage of the valuation each year. This is a “cost” that defines the value. Once the price is priced, there is no mechanism that can hinder others’ transactions.
What is the significance of this hypothetical “radical market”? It allows assets to complete efficient price discovery and value circulation.
Imagine that the game result of this theory is that if the price is too high, the more taxes will be paid, and the lower the price, anyone can easily buy the asset, which will force every reasonable asset holder to price in a reasonable range.
This theory is difficult to realize in real life, but if it is transplanted to the blockchain. Bingo, everything seems so logical. The closed-loop and contractual nature of the crypto-economy gives a way to achieve endless auctions and Harberger taxes on the chain. Especially for the pricing, auction, trading and circulation of NFTs, it can accelerate the approach of NFT items to reasonable prices.
“Bytom Maz Metaverse Protocol WhitePaper” describes it as: Let NFT assets be permanently in a state of overall circulation, with the simplest and most powerful basic rules and consensus, fair to all participants, and make NFT real price and The needs are quickly reflected.
Radical trading protocol, a new gameplay of NFT transaction pioneered by Bytom
How does the radical market theory apply to the blockchain, especially the NFT field? Bytom has proposed a “Radical trading protocol.” The protocois mainly divided into three key concepts: excited state NFT, margin and radical trading.
Let’s take a look at the excited state NFT first. This is a brand new NFT standard. The excited state NFT assets will always be in the state of public auction. The excited NFT asset will have a certain price. At this time, anyone can purchase the NFT asset at that price.
However, if the owner of the NFT asset wants to make the NFT asset into the excited state, he must first price the NFT asset, and at the same time, he must deposit a certain percentage of the margin. Margin is the cost of “bid” and “hold” for asset holders. In other words, the NFT asset cannot complete the bid without depositing the margin.
How is this pricing process achieved? If our price is $100 for the purchase price of an NFT asset. Take a look at the formula below.
Among them, D is the amount of pledge deposit, a is the pledge rate (leverage factor, 10% as defined in the protocol, P is the bid price, and 100 is the purchase price of the NFT.
This means that if the NFT owner pledges $10, the NFT asset bid is $100. If 100 USD is pledged, the NFT asset bids 1000 USD.
This means that if the bid is too high and no one buys the NFT, the NFT holder will pay the cost of funds. Assuming that the annual interest rate of the risk-free deposit in the crypto world is 10%, the cost of quoting $1,000 is $10.
According to the introduction of the Bytom MAZ Metaverse Protocol WhitePaper, excited state NFT completes the definition of price and price cost through margin, which can stimulate the healthy development of NFT assets to the optimal price and supply-demand relationship, so that people who really need it can become holders. And promote the efficient circulation of NFT assets.
In the process of moving towards a reasonable price, the circulation rate of assets will reach the optimum, which maximizes the holding cost and income. Therefore, the radical market can bring a game equilibrium for the pricing and circulation of NFTs.
In summary, the radical trading market of Bytom has two core underlying logics:
1. It is under auction 24 hours a day, without stopping auctions, and there is no fixed auction place (platform).
2. Asset holders need to pay the cost (margin), and the margin rate needs to be consistent with everyone (fairness)
It is not difficult to find that around NFT, Bytom’s radical trading protocol has solved the two major dilemmas of current NFT assets:
First, price discovery. It can prompt sellers to choose a more reasonable pricing.
Second, the liquidity of NFT assets. In the traditional NFT market, sellers charge high prices and buyers pay low prices. It requires repeated games between the two parties to reach a transaction, resulting in low transaction efficiency. Bytom’s NFT can be in transaction all the time, with abundant liquidity.
What is the difference between Bytom’s excited state NFT transaction process and the current NFT? The general process is as follows:
1. The original user of the NFT deposits a certain amount of margin (equivalent to the selling price) into the margin account, and the NFT is in the state of public auction and will be activated at any time;
2. New users who want to purchase need to deposit “payment” + “new margin” into the NFT margin account at one time;
3. The original user will receive payment from the new user, the original deposit will be returned to the original user, and the NFT assets will be transferred to the new user;
4. The NFT asset obtains a new excited state under the excitation of the new user deposit, generates a new price, and waits for subsequent bidders.
According to the WhitePaper, in the specific transaction process, in order to stimulate the interests of creators and further achieve a balanced game, it introduces the concepts of royalties and platform fees respectively. The royalty ratio is 10% of the current selling price and the platform fee ratio is 1% of the current price (including GAS fee).
In fact, there are many ways to play NFT in the transaction protocol built around NFT by Bytom. For example, the transaction mode is like philatelic transaction, inquiry transaction, ring transaction, etc. In view of the length of the article, we will not introduce it in detail. These can be found in its white paper for specific introductions.
However, if the NFT asset owner does not intend to sell the NFT, can it not be pledged? The white paper defines this type of NFT as a ground-state NFT, which can be permanently owned without cost. How to realize the ground state NFT in the meta-universe constructed based on the excited state NFT requires the introduction of a special “medium”-the seal.
The seal is also a ground state NFT asset, but its owner can use the “seal” to convert the excited state NFT he owns into the ground state NFT, so as to break away from the radical trading market, that is, excited state NFT + seal = ground state NFT (not for sale).
Bytom Metaverse’s comprehensive protocol clusters, the “cornerstone” of Bytom Metaverse’
From POW consensus to POS consensus, from a single mainnet to a multi-side architecture, from a single DEX protocol to a MOV protocol, Bytom has been evolving.
Today, Bytom is fully embracing NFT and Metaverse. It combines radical market theory with NFT asset attributes to provide a brand new idea and practice for the efficient circulation and pricing of NFT. This article focuses on the aggressive trading agreement for NFT assets. But in fact, based on Bytom 2.0, the Bytom team will build a complete set of metaverse comprehensive protocol clusters composed of different protocols. They will be the cornerstone of the protocol of Bytom Metaverse.
At present, we can only get a glimpse of the meta-universe comprehensive protocol cluster from Bytom’s “Bytom Metaversal Protocol WhitePaper”. We have not seen specific protocols and new NFT assets based on Bytom 2.0. However, this new solution allows us to see new explorations and new directions for the development of NFT and metaverse.
According to the introduction of the white paper, the Bytom team believes that each public chain will form its own unique basic elements and functional relationships, and then establish a variety of crypto metaverse civilizations.
We may be able to look forward to the comprehensive protocol clusters of Bytom Metaverse, which allows us to see a different way of constructing the Metaverse.
