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Today we are talking about 👇

Sodium Fi

• They are looking to raise funds & launching next week

• Please reach out to me if you find them interesting on twitter

What we’ll cover today?

• What is Sodium?

• What does Sodium offer?

• How does it work?

• What is the workflow?

• What makes is different?

• Different components of the product

  • Fair Price Engine

  • NFT Collections

  • SOD Tokens

  • Governance

• Closing thoughts & how to get involved

What’s Sodium?

Sodium is the first hybrid liquidity protocol for borrowing & lending your NFTs as collateral.

What does Sodium offer?

• It allows users to get access to a combination of the instant liquidity market and the peer liquidity market for efficient loan fulfillment and high collateral valuation for a wide variety of whitelisted collections.

• In simple words there is an unique automated lending function via which:

  • Lenders earn interest on provided liquidity

  • Borrowers can actually use the NFT to it's full potential

How does it work?

• By combining P2P flexibility with P2Pool efficiency, Sodium enables rapid loan fulfillment and high collateral valuation for a wide number of whitelisted collections.

• Lenders provide liquidity according to their own risk-reward tolerance, while Borrowers can choose the loan offers that best suit their needs

Let’s understand this better with the workflow break down below

What is the workflow?

• To use the protocol, holders of whitelisted NFTs can collateralize their NFTs and take out an ETH loan by issuing a ‘Loan Request’.

• Lenders who provide ETH to a Loan Request are placed, in order, into the Lending Queue. Their place in the queue signifies the amount of risk they are willing to take

• Lenders who don’t wish to manage their funds actively can ideally “stake” them

• The Borrower can partially / fully accept a loan at any time during the Loan Request fulfillment process by choosing the one that fits their preferences

• The Borrower will partially repay / fully repay the loan before the end of the agreed upon period

So, what’s in it for each party? 🤔

Lenders:

• Leverage their NFT expertise and maximize gains by being active in the Peer market

• Based on the collaterals value, they can get to define their own strategy & plan of action

• Stake funds into any existing lending pool based on their strategy & goals

• Initiate, manage and earn via dedicated Liquidity Pools for specific collections

Borrowers:

• Borrow hybrid liquidity against 100+ available collections and get access to instant liquidity

• Get access high LTV offers from the peer liquidity market

• Enjoy the NFT's exclusive utilities during the loan term, e.g. connecting to Twitter PFP, Collab Land and more

• Using Sodium’s unique collateral valuation metric you can get a pricing for your NFT based on traits, rarity & social factor

Creators:

• Can make a liquidity market for their community, encouraging them to hold the assets by allowing them to release liquidity

• It helps to decrease the secondary sell pressure and can help create a long-term sustainability of the project

What’s different about Sodium?

• Wide Number of Whitelisted Collections

• Highest Collateral Valuation Industry-wide

• Innovative Loan Fulfillment Process

Different components of the product

Now let’s learn about the core components of what makes up Sodium

1. Lending AMM

2. Fair Price Engine

3. NFT Collections

4. SOD Tokens

5. Governance

Lending AMM

• Liquidity providers can stake funds into any existing Lending Pools or can initiate the creation of dedicated pools for a specific collection

• When a request meets the requirements for the Pool, the funds will be allocated automatically

• Here’s a liquidity map based on hypothetical pools set by the platform

Fair Price Engine

• It’s sodium’s proprietary, automatic NFT asset price evaluation system with the goal of ensuring that the borrowers LTV ratio is always up to date

• The engine uses machine learning techniques like gradient boosting & deep neural networks to analyse the historical trades and prices of similar assets

• The goal is to continuously estimate the highest price which could be immediately accepted by the market

• Check out this visualisation for the BAYC collection

NFT Collections

• To reduce the risk, only accepted NFT collections would be accepted as collaterals

• A community driven approach would be adopted, where the news collections can be added based on communities votes

SOD Tokens

• They’ll be released once the platform goes live, and will be distributed based on the liquidity mining campaign by the team

• The goal is to achieve the following metrics:

  • Total Value Locked (TVL) growth

  • Increase platform's utilization rate.

• SOD Tokens will be used as a part of the DAO to:

  • create / submit proposals

  • vote on issues to steer the direction of platform

• Distribution of SOD’s

• Circulation supply

  • SOD total supply: 1,000,000,000.

  • 50% given as incentives for lenders and borrowers, released over a period of five years

  • 20% allocated to Angel, Seed and later investors

  • 20% allocated to the team, 12 month cliff, released linearly over 3 years

  • 10% treasury

• SOD Rewards

  • Borrowers & lenders directly become a part of the liquidity mining program

  • Initial rewards will be vested for three months.

  • If a user does not wish to wait that long, they can receive their rewards immediately by taking a 50% exit penalty.

Governance

• Will be following a progressive decentralisation structure by having an eventual goal of becoming a DAO, governed by SOD tokens

• A few cool examples of what the users could get to vote on are:

  • Interest Rate Model

  • The addition of NFT collections

  • Risk parameters for over-collateralization and liquidation

  • Changes to the Liquidity Mining Program to adjust incentives depending on market conditions

  • Improvements to the protocol, such as changes to smart contracts and governance processes

Closing thoughts & how to get involved

• With the recent Bend DAO fiasco, there’s a need for better strategies and principles to make the NFT lending market a safe and smooth ecosystem.

• The team at Sodium has been working hard for the last year to bring this platform to us, am excited for the launch coming up soon (definitely a new territory for me explore into as well)

• You can follow the journey and check them out below:

  • Twitter

  • Discord

  • Website

  • Docs

• They are looking to raise funds - so please reach out to me if you’re interested to connect with the team via Twitter

That’s all fam, I hope it was a great time reading! It’s a new ecosystem for me to venture into, so I hope I was able to justice to it :)

If you liked learning about Sodium please do support me, would mean a lot!

If you’d want to cover any projects/events, or just chat, please feel free to connect with me on Twitter : @darshang_ would love to chat!

If you’ve made it so far, please do share this with your community would mean the world to me :)

Website: darshang.xyz/futurex

Idea is to bring on-chain reputation & community led project discoveries.

Currently I scout & work with early stage projects, pretty much sector agnostic & help them out with product, tech, investor relations & partnerships.

I write a weekly newsletter, breaking down a top upcoming project & share my thoughts on it.

Will be adding all the projects covered below for ease of referencing.

• The current market size is $104bn with $1.3bn funded across creator economy startups in 2021 alone [ref]

• The 50mn creator pool is expected to reach a massive 404mn by 2024; an increase of 808% [ref1, ref2]

• 46% of creators who have been building an audience for 4+ years earn over $20k annually across their monetized channels. [ref]

• 4 out of 7 platforms listed Engagement Rate as their top measure of success4 out of 7 platforms listed Engagement Rate as their top measure of success [ref]

A creators journey can be broken down into the following four significant segments:

The major categories in the creator economy include platforms across:

1. Content Creation: Creators are leveraging the power of these tech-driven tools to create better and more efficient content. Platforms include PhotoRoom, Mojo, Streamerloot

2. Analytics & Operations: These platforms allow the creators to reduce the operational dependency of managing multiple accounts and links across social channels. Platforms include Qoohoo, Linktree, Stir

3. Courses: The platforms provide an opportunity for the creator to interact or educate their audience closely. Platforms include Maven, Kajabi, Questbook

4. Payments & Finance: These platforms offer the creator to accept/manage their finances. Platforms include Karat, Indifi, Pry

5. Community Management: The creator uses these platforms to have more intimate interactions with their supporters. Platforms include Circle, Beacons, Geneva

6. Merchandising: The creators use these platforms to carry out their supply chain and logistics of their offline merchandise. Platforms include Cala, Printify, Spreadshirt

7. Fan Interactions: The creators use these platforms to host/interact with their fans via events and ticketing. Platforms include Moment House, Buy Me a Coffee, Myfanpark

8. Subscriptions: The creators use these platforms to monetize their audience via running subscriptions. Platforms include Substack, Patreon, Onlyfans

9. Blockchain-based: These offer the creator an opportunity to sell their digital goods online. Platforms include Mirror, Opensea, Rarible

Overall Investment Landscape:

Key highlights :

• The total funding in 2021 has been more than the previous five years combined and is expected to increase in 2022. [ref]

• The top-funded startups include Kajabi, Hopin, Patreon, Cameo

Companies have been funded across stages (Source: Antler):

Top VC’s investing in creator economy include (Source: CBinsights & Influencers.in ) :

Notable Acquisitions

One of the companies I am excited about in this space is Qoohoo

One of the startups I am looking forward to in this ecosystem is Qoohoo. It is a one-stop platform for creators in India to grow, engage and monetize their community with actionable insights

Product:

• A no-code SaaS service built primarily to provide the creators a tool to an opportunity to set up their digital presence in 60 seconds to grow, engage and monetize their audience

• Features include conducting workshops, running subscriptions, interacting with communities

• Built-in analytics tool would help the creators strategize better

Sales/Marketing Strategy:

• Connecting with creators across social and media networks to help them educate about the platform

• Looking to make the product better for the first 1000 creators and 100,000 users by the end of the year [ref]

Traction:

• Have onboarded more than 300+ creators till now on the platform

• Creators are earning as high as ₹18,00,000 per year

Management & Team:

• Vimal Rathore: He has built Coursavy, scaled it to 70,000 paid users; which he sold to Unacademy. Previously, he has worked at Unacademy, UPSC

• Aseem Gupta: He comes in with a strong technology background with experience working at RazorPay

Reasons to Invest:

• Huge market: The team is solving problems across community management, monetization, and education which covers a massive chunk of the $100bn+ creator economy

• Renowned angel investors: The startup is backed by some of the top investors and creators including Tanmay Bhatt, Kalyan Krishnamurthy, Sujeet Kumar, Kunal Shah, Gaurav Munjal, Kunal Bahl

• Technology: Qoohoo is making heavy use of advanced technology such as AI/ML and developing no-code services to offer a one-stop solution. Further, integration of NFTs, Crypto can also be an excellent possibility

• Timing: With the creator economy on the rise and as reported by Beebom YouTube Creators Contributed ₹6,800 Crores to the Indian economy, the timing is perfect for building such a product for helping the creators

Competitive Landscape:

Qoohoo is operating in a highly competitive market, with many large companies already present and multiple startups which have been funded by investors including Sequoia, Google, YC.

• Direct competitors: CreatorOS, CreatorStack, Nocolo

• Indirect competitors: Skillshare, Maven, Circle, Beacons, Stir, Geneva

Revenue Streams:

• Subscription-based: Where the creators buy a subscription for using advanced features/ offerings

• Commission based: Will take a % from the payments received by the creators on the platform

Risks:

• Network effects: It would be difficult to get the creators who have a massive audience to the platform.

• Crowded market: With specialized products already being developed in specific segments qoohoo is building across, it’ll be challenging to capture a significant stake in the market.

• Privacy: Lack of privacy protocols in the application for monitoring and regulating the creator’s content

Exit Analysis :

• IPO: The company has to ideally grow almost ~1000x for a profitable return

• Acquisition by big players: Can consider an exit to big players out there such as Kajabi, Gumroad, Jellysmack who do not have a prominent presence in India currently