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The traditional financial Future Market has an inherent limitation, that is, it has a settlement date and limited leverage trading capacity, which cannot adapt to this 7x24-hour sleepless trading crypto market. Therefore, BitMEX launched perpetual contracts on May 13, 2016, using an innovative funding rate to regulate the price of the spot and the contract to be as consistent as possible, unlocking the opportunity to go long/short with up to 100x leverage. Its emergence forever changed Cryptocurrency and the entire financial field. Later, excellent DEX Perp products such as Perpetual Protocol, dYdX, GMX, and Gains Network emerged one after another, further enriching the pattern of financial derivatives transactions on the chain.
From CEX to DEX, from centralisation to decentralisation, with the perpetual contract protocol of the DeFi market as a reference, the perpetual contract platform that can leverage long/short NFT is here, which can solve the following problems in the current NFT market:
Unable to short NFT and hedging risk.
Most people cannot buy expensive blue-chip NFTs, and they cannot enjoy the rising benefits of blue chips.
There is no simple and capital-efficient way to conduct leveraged trading.
DEX in DeFi eliminates intermediaries and allows users to trade directly from their wallets in a non-custodial manner. At the same time, DEX also provides a unique design in terms of transaction execution models. The two most commonly used models of trading platforms are automatic market makers (AMM) and order book models, which are also used in nftperp and NFEX, the two mainstream NFT perpetual contract protocols currently on the market.

Product Design Essentials
Built on Arbitrum Networks only.
Adopt vAMM (Virtual Automated Market Maker) mechanism to match NFT perpetual contract transactions, without the need for a real liquidity provider and without the use of order books.
Users can use ETH as collateral to trade perpetual contracts with a maximum leverage of 10 times on a total of 7 NFT projects such as BAYC and CryptoPunk.
The protocol uses the NFT price evaluation protocol Upshot to integrate real-time NFT price data on the Chainlink oracle feed chain based on the floor price of blue-chip NFTs.
Team and Funding Rounds

On November 25 last year, nftperp announced the completion of a $1.70 million seed round of financing at a valuation of $17 million. This round of financing was funded by Dialectic, Maven 11, Flow Ventures, DCV Capital, Gagra Ventures, AscendEX Ventures, Perridon Ventures, Caballeros Capital, Cogitent Ventures, Nothing Research, Apollo Capital, Tykhe Block Ventures, OP Crypto and other institutions.
There is less information about the team, only that the founder of the team is Joseph Liu . In addition, several investment analysts and researchers Mckenna , Nick Chong , Ben Roy and Ben Lakoff serve as team advisors.

Product Design Essentials
Built on the Ethereum Mainnet
Adopt the decentralised order book (DLOB) model.
It also allows users to use ETH as collateral to trade perpetual contracts for NFT projects. Currently, a total of 19 NFT projects are supported, with a leverage ratio of up to 50 times.
The agreement calculates the "NFEXI Price Index" on the floor price and Bid price of blue-chip NFTs to track the NFT price in real-time, helping to achieve price discovery and reduce manipulation of the NFT market.
Team and Funding Rounds

On February 15, 2023, NFEX announced that it had completed a 3 million USD seed round of financing. This round of financing was led by ABCDE Capital, with participation from Amber Group and Firestone Ventures. The founders of ABCDE Fund are Du Jun and BMAN. Du Jun is the co-founder of Huobi and a partner of Huobi Ecological Fund. He has invested in many well-known blockchain projects, such as Filecoin, Polkadot, Solana, etc. BMAN is a veteran blockchain investor and entrepreneur who has founded several successful blockchain projects such as BitMart and BitKeep.
BMAN, the co-founder of ABCDE Capital, has praised the founders of the NFEX team for their extensive experience in building exchanges and providing liquidity for new asset classes and believes they are the most capable candidates for the product. GP BMAN believes that NFTs are still in their early stages, and about 99.99% of NFT projects do not have enough liquidity. Innovative products like NFEX have the potential to turn things around and are also confident that innovative products such as NFEX will bring change to the industry.
NFTPerp and NFEX use different trading models, nftperp uses a virtual automated market maker (vAMM) model, while NFEX uses a decentralised order book (DLOB) model.
NFTPerp: Use vAMM to match deals and pricing with robust and tamper-proof real floor pricing

Same as ordinary AMM, vAMM also uses x * y = k for automatic price discovery. The difference is vAMM does not require a real liquidity provider After users deposit real assets as collateral in the smart contract vault, they will cast virtual assets, and then trade and quote in the liquidity pool according to x * y = k, which also provides the functions of short-selling and leveraged trading, and avoids impermanent losses. As an independent settlement market, all profits and losses are settled directly in the guarantee vault, that is, a trader's profit in vAMM is the loss of other traders.
On the basis of vAMM, nftperp borrows from the dynamic vAMM mechanism of Drift, the perpetual contract protocol of Solana, and adopts DVL (Dynamic Virtual Liquidity, dynamic virtual liquidity), so that the virtual assets x and y in the x * y = k equation can be adjusted according to the price offset. Dynamic adjustment ( refer to nftperp doc ). Through this model, nftperp ensures that the price always trades in the deepest part of the vAMM liquidity curve, and the available virtual liquidity corresponds to the trading demand, allowing traders to obtain the best slippage and available liquidity.
In addition, in order to ensure that nftperp vAMM still maintains high availability in abnormal market conditions, the following two optimisations have been carried out:
• Dynamic funding rate: The standard funding rate takes into account position size, contract mark price and oracle price, while nftperp takes into account the total ratio between long and short to better balance non-position squaring contracts. Additionally, the funding rate is updated hourly to ensure that the contract price does not deviate too much from the NFT trading market floor.
• Volatility limit: A change limit of ± 2% is set for the contract price of each block to protect the protocol from flash loan attacks and manipulation of insurance fund losses during high volatility. Drift v1 has experienced this situation, where large fluctuations in LUNA prices lead to unrealised losses and gains imbalances within the system, and excess gains can be withdrawn from insurance funds without restrictions.

The floor price is a widely used indicator for evaluating NFTs, which represents the lowest asking price of NFTs in a specific set across markets. However, the current market is prone to manipulating the floor price, which can lead to significant differences between the NFT perpetual contract price and the spot price.
NFEX adopts the Decentralized Order Book (DLOB) model, and at the same time created the NFEXI (NFEX Index), which calculates a fair spot price index by obtaining price data from the four major NFT markets of Blur, Opensea, LooksRare and X2Y2. NFT prices can be tracked in real-time to help achieve price discovery and reduce manipulation of the NFT market. NFEX currently calculates and updates index prices every 3 seconds.
The NFEXI (NFEX Index) can be used for hedging risk, speculating on future price changes of the underlying NFT, and calculating the underlying price, which takes into account the reasonable value of the underlying asset and is designed to prevent unexplained liquidations due to market manipulation or illiquidity.
Nftperp is built on Arbitrum One network. Compared with the Ethereum gas fee of a single transaction of NFEX built on the Ethereum mainnet, NFEX chooses to trade without repeated authorise after a single authorised deposit, that is, placing orders and pending orders are not on the chain. Executing transactions in centralised servers, although it can simplify operations and save some Ethereum gas fees, also exposes the problem of insufficient decentralisation.
In terms of the trading model, nftperp superimposed dynamic funding rates and volatility limits on the basis of vAMM, and used the time-weighted average price (TWAP) algorithm to calculate the "real floor price" and then fed the oracle. Although this can avoid the problem of price manipulation to a certain extent, it also makes it unable to respond to extreme market conditions in a timely manner.
(On price manipulation: For example, in November last year, BAYC's seventh largest position holder Franklin "manipulated" the floor price to trigger BendDAO to trigger auction liquidation to achieve his "smash and arbitrage" strategy, see "BAYC Crash: One Man in Control, Ten Thousand Liquidation" article)



The real case can be referred to the incident of "Elon Musk's tweet of Milady image" at the beginning of the article: this tweet caused the floor price of Milady Maker to skyrocket from about 3.75 ETH to over 7 ETH in just one hour, and then quickly retreated.
During this period, although both nftperp and NFEX have a certain spread from the spot price (the spot price on Blur is 4.99 E, the price on nftperp is 4.06E, and the price on NFEX is 4.71E), the spread on NFEX is smaller than that., which better reflects the actual price of the market.
For a long time, the NFT market has been committed to solving the problem of "insufficient liquidity" of spot goods. Starting from the valuation and pricing of NFTs, matching methods, etc., many excellent products and innovative mechanisms have continued to emerge to promote the sustainable development of NFT refinancing risk. And a healthy Financial market needs to allow market participants to play the role of both long and short parties at any time, in order to achieve the purpose of hedging trading risks, increasing profit opportunities, and enriching trading strategies. Now the development of the NFT perpetual contract track will allow retail investors to not only implement the strategy of buying low and selling high on the NFT spot but also enrich the trading methods and meet the needs of NFT traders who have the leverage to do long/short NFTs and participate in blue-chip NFTs with small amounts of capital. demand.
But this track is still in its early stages, and there are still problems such as price manipulation and the inability to support long-tail NFT assets. In the final analysis, Upstream problems such as a small NFT market, poor liquidity, and difficulty in valuation and pricing have not been well resolved, which restricts the development of downstream NFTFi products and cannot release the potential of the NFTFi track If NFT technology can be adopted on a large scale as envisaged, and the NFT market will be "bigger", with DEX products such as dYdX and GMX in front, the NFT perpetual contract track will be a new value depression.
https://opensea.io/assets/ethereum/0x7AB2352b1D2e185560494D5e577F9D3c238b78C5/23922
Opinions are my own and not the views of my employer
The traditional financial Future Market has an inherent limitation, that is, it has a settlement date and limited leverage trading capacity, which cannot adapt to this 7x24-hour sleepless trading crypto market. Therefore, BitMEX launched perpetual contracts on May 13, 2016, using an innovative funding rate to regulate the price of the spot and the contract to be as consistent as possible, unlocking the opportunity to go long/short with up to 100x leverage. Its emergence forever changed Cryptocurrency and the entire financial field. Later, excellent DEX Perp products such as Perpetual Protocol, dYdX, GMX, and Gains Network emerged one after another, further enriching the pattern of financial derivatives transactions on the chain.
From CEX to DEX, from centralisation to decentralisation, with the perpetual contract protocol of the DeFi market as a reference, the perpetual contract platform that can leverage long/short NFT is here, which can solve the following problems in the current NFT market:
Unable to short NFT and hedging risk.
Most people cannot buy expensive blue-chip NFTs, and they cannot enjoy the rising benefits of blue chips.
There is no simple and capital-efficient way to conduct leveraged trading.
DEX in DeFi eliminates intermediaries and allows users to trade directly from their wallets in a non-custodial manner. At the same time, DEX also provides a unique design in terms of transaction execution models. The two most commonly used models of trading platforms are automatic market makers (AMM) and order book models, which are also used in nftperp and NFEX, the two mainstream NFT perpetual contract protocols currently on the market.

Product Design Essentials
Built on Arbitrum Networks only.
Adopt vAMM (Virtual Automated Market Maker) mechanism to match NFT perpetual contract transactions, without the need for a real liquidity provider and without the use of order books.
Users can use ETH as collateral to trade perpetual contracts with a maximum leverage of 10 times on a total of 7 NFT projects such as BAYC and CryptoPunk.
The protocol uses the NFT price evaluation protocol Upshot to integrate real-time NFT price data on the Chainlink oracle feed chain based on the floor price of blue-chip NFTs.
Team and Funding Rounds

On November 25 last year, nftperp announced the completion of a $1.70 million seed round of financing at a valuation of $17 million. This round of financing was funded by Dialectic, Maven 11, Flow Ventures, DCV Capital, Gagra Ventures, AscendEX Ventures, Perridon Ventures, Caballeros Capital, Cogitent Ventures, Nothing Research, Apollo Capital, Tykhe Block Ventures, OP Crypto and other institutions.
There is less information about the team, only that the founder of the team is Joseph Liu . In addition, several investment analysts and researchers Mckenna , Nick Chong , Ben Roy and Ben Lakoff serve as team advisors.

Product Design Essentials
Built on the Ethereum Mainnet
Adopt the decentralised order book (DLOB) model.
It also allows users to use ETH as collateral to trade perpetual contracts for NFT projects. Currently, a total of 19 NFT projects are supported, with a leverage ratio of up to 50 times.
The agreement calculates the "NFEXI Price Index" on the floor price and Bid price of blue-chip NFTs to track the NFT price in real-time, helping to achieve price discovery and reduce manipulation of the NFT market.
Team and Funding Rounds

On February 15, 2023, NFEX announced that it had completed a 3 million USD seed round of financing. This round of financing was led by ABCDE Capital, with participation from Amber Group and Firestone Ventures. The founders of ABCDE Fund are Du Jun and BMAN. Du Jun is the co-founder of Huobi and a partner of Huobi Ecological Fund. He has invested in many well-known blockchain projects, such as Filecoin, Polkadot, Solana, etc. BMAN is a veteran blockchain investor and entrepreneur who has founded several successful blockchain projects such as BitMart and BitKeep.
BMAN, the co-founder of ABCDE Capital, has praised the founders of the NFEX team for their extensive experience in building exchanges and providing liquidity for new asset classes and believes they are the most capable candidates for the product. GP BMAN believes that NFTs are still in their early stages, and about 99.99% of NFT projects do not have enough liquidity. Innovative products like NFEX have the potential to turn things around and are also confident that innovative products such as NFEX will bring change to the industry.
NFTPerp and NFEX use different trading models, nftperp uses a virtual automated market maker (vAMM) model, while NFEX uses a decentralised order book (DLOB) model.
NFTPerp: Use vAMM to match deals and pricing with robust and tamper-proof real floor pricing

Same as ordinary AMM, vAMM also uses x * y = k for automatic price discovery. The difference is vAMM does not require a real liquidity provider After users deposit real assets as collateral in the smart contract vault, they will cast virtual assets, and then trade and quote in the liquidity pool according to x * y = k, which also provides the functions of short-selling and leveraged trading, and avoids impermanent losses. As an independent settlement market, all profits and losses are settled directly in the guarantee vault, that is, a trader's profit in vAMM is the loss of other traders.
On the basis of vAMM, nftperp borrows from the dynamic vAMM mechanism of Drift, the perpetual contract protocol of Solana, and adopts DVL (Dynamic Virtual Liquidity, dynamic virtual liquidity), so that the virtual assets x and y in the x * y = k equation can be adjusted according to the price offset. Dynamic adjustment ( refer to nftperp doc ). Through this model, nftperp ensures that the price always trades in the deepest part of the vAMM liquidity curve, and the available virtual liquidity corresponds to the trading demand, allowing traders to obtain the best slippage and available liquidity.
In addition, in order to ensure that nftperp vAMM still maintains high availability in abnormal market conditions, the following two optimisations have been carried out:
• Dynamic funding rate: The standard funding rate takes into account position size, contract mark price and oracle price, while nftperp takes into account the total ratio between long and short to better balance non-position squaring contracts. Additionally, the funding rate is updated hourly to ensure that the contract price does not deviate too much from the NFT trading market floor.
• Volatility limit: A change limit of ± 2% is set for the contract price of each block to protect the protocol from flash loan attacks and manipulation of insurance fund losses during high volatility. Drift v1 has experienced this situation, where large fluctuations in LUNA prices lead to unrealised losses and gains imbalances within the system, and excess gains can be withdrawn from insurance funds without restrictions.

The floor price is a widely used indicator for evaluating NFTs, which represents the lowest asking price of NFTs in a specific set across markets. However, the current market is prone to manipulating the floor price, which can lead to significant differences between the NFT perpetual contract price and the spot price.
NFEX adopts the Decentralized Order Book (DLOB) model, and at the same time created the NFEXI (NFEX Index), which calculates a fair spot price index by obtaining price data from the four major NFT markets of Blur, Opensea, LooksRare and X2Y2. NFT prices can be tracked in real-time to help achieve price discovery and reduce manipulation of the NFT market. NFEX currently calculates and updates index prices every 3 seconds.
The NFEXI (NFEX Index) can be used for hedging risk, speculating on future price changes of the underlying NFT, and calculating the underlying price, which takes into account the reasonable value of the underlying asset and is designed to prevent unexplained liquidations due to market manipulation or illiquidity.
Nftperp is built on Arbitrum One network. Compared with the Ethereum gas fee of a single transaction of NFEX built on the Ethereum mainnet, NFEX chooses to trade without repeated authorise after a single authorised deposit, that is, placing orders and pending orders are not on the chain. Executing transactions in centralised servers, although it can simplify operations and save some Ethereum gas fees, also exposes the problem of insufficient decentralisation.
In terms of the trading model, nftperp superimposed dynamic funding rates and volatility limits on the basis of vAMM, and used the time-weighted average price (TWAP) algorithm to calculate the "real floor price" and then fed the oracle. Although this can avoid the problem of price manipulation to a certain extent, it also makes it unable to respond to extreme market conditions in a timely manner.
(On price manipulation: For example, in November last year, BAYC's seventh largest position holder Franklin "manipulated" the floor price to trigger BendDAO to trigger auction liquidation to achieve his "smash and arbitrage" strategy, see "BAYC Crash: One Man in Control, Ten Thousand Liquidation" article)



The real case can be referred to the incident of "Elon Musk's tweet of Milady image" at the beginning of the article: this tweet caused the floor price of Milady Maker to skyrocket from about 3.75 ETH to over 7 ETH in just one hour, and then quickly retreated.
During this period, although both nftperp and NFEX have a certain spread from the spot price (the spot price on Blur is 4.99 E, the price on nftperp is 4.06E, and the price on NFEX is 4.71E), the spread on NFEX is smaller than that., which better reflects the actual price of the market.
For a long time, the NFT market has been committed to solving the problem of "insufficient liquidity" of spot goods. Starting from the valuation and pricing of NFTs, matching methods, etc., many excellent products and innovative mechanisms have continued to emerge to promote the sustainable development of NFT refinancing risk. And a healthy Financial market needs to allow market participants to play the role of both long and short parties at any time, in order to achieve the purpose of hedging trading risks, increasing profit opportunities, and enriching trading strategies. Now the development of the NFT perpetual contract track will allow retail investors to not only implement the strategy of buying low and selling high on the NFT spot but also enrich the trading methods and meet the needs of NFT traders who have the leverage to do long/short NFTs and participate in blue-chip NFTs with small amounts of capital. demand.
But this track is still in its early stages, and there are still problems such as price manipulation and the inability to support long-tail NFT assets. In the final analysis, Upstream problems such as a small NFT market, poor liquidity, and difficulty in valuation and pricing have not been well resolved, which restricts the development of downstream NFTFi products and cannot release the potential of the NFTFi track If NFT technology can be adopted on a large scale as envisaged, and the NFT market will be "bigger", with DEX products such as dYdX and GMX in front, the NFT perpetual contract track will be a new value depression.
https://opensea.io/assets/ethereum/0x7AB2352b1D2e185560494D5e577F9D3c238b78C5/23922
Opinions are my own and not the views of my employer
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