We're so pleased to meet you as our ambassadors and have your support to expand the ecosystem of SeaCows.

First of all, we guess you are wondering what exactly is SeaCows? The following links will help you to know more about us: Official Website: https://seacows.io/ Twitter: https://twitter.com/SeaCowsNFT Discord: https://discord.com/invite/JsPUwfAk3m Mirror: https://mirror.xyz/0xfD541c8A6710006a63C83eC32B9F2D7b3291eFa3

The overall platform is now currently under a fast speed of development period and is estimated to be launched very soon. Thus, we are now calling for SeaCows Ambassadors.

You can check the tasks for Ambassadors below and complete them to receive our rewards:

Marketing Tasks & Rewards

1. AMA Partnership: Contact NFT Projects or game projects with NFTs to let SeaCows do the AMA activity and introduce us to their communities.

   • Rewards: Community members <10k, $15/AMA Community members >10k, $40/AMA

2. Invite Twitter Space Guests: Invite NFT Projects or game projects with NFTs to join the Twitter Space of SeaCows and share their ideas.

   1. Rewards: Twitter Fo <100K, $15/twitter space Twitter Fo >100K, $40/twitter space

3. Invite Partnership & Twitter Promotion: Invite NFT projects to announce the partnership on Twitter and introduce SeaCows by posting a tweet, mentioning seaCows twitter account and attaching seacows official links.

   1. Rewards: Twitter Fo <100K, $15 Twitter Fo >100K, $40

4. Invite Partnership & website promotion (not open): Invite NFT projects to announce the partnership on Twitter and add SeaCows link & logo to the official website

   1. Rewards: Twitter Fo <100K, $15 Twitter Fo >100K, $40

5. Discord Trading Info: Invite NFT projects to Integrate NFTs from seacows swap into the NFT trading channel on the Discord server

   1. Rewards: Community members <5k, $15/AMA Community members >5k, $40/AMA

Link of SeaCows Ambassadors group:

https://t.me/+jxLqurkYGmthZGE1

You can join in to know more and contact the SeaCows Team.

About SeaCows

SeaCows is the most liquidity-effective NFT AMM protocol. We aim to help everyone improve their NFT liquidity efficiency.

What is an NFT AMM?

An NFT AMM is the decentralised alternative to centralised marketplaces such as Opensea. As opposed to a bid-and-buy model it utilises liquidity pools to allow for frictionless, and low-cost trading.

Greetings pioneers, traders, and NFT enthusiasts,

Another week has flown by, and we're back with some exciting developments in our journey to revolutionize the NFT space. We're thrilled to share our latest product updates and strides forward.

1. Trade Position NFT Launch: We've successfully launched our Trade Position NFT, a unique tokens that represent a user's position within a specific trading pool. When a user creates a pool or adds liquidity, a unique Trade Position NFT is minted. This NFT then tracks important information about the position, such as the pool address, position owner address, trading pair, pair ID, swap fee, and the LP share, providing full transparency for the user.

   At the same time, Position NFTs can be bought and sold, allowing users to easily transfer ownership of their pool positions. This adds a new level of dynamism to our platform, as it allows for the easy trading of pool positions in addition to the assets within the pools themselves.

   Check out our announcement tweet below.

   https://twitter.com/SeaCowsNFT/status/1658578070377299973

2. Subgraph Completion: Another significant milestone we've achieved is finalizing our subgraph. This enables us to track the transaction history of all our pools, providing a comprehensive overview of swaps, deposits, and withdrawals. This feature allows you, our users, to have a bird's eye view of all pool transactions, thereby empowering you with more control and information.

3.     Front-end Development: Our tireless tech wizards are putting the finishing touches on our front-end development, and it'll be all systems go by the end of this week. This means we're edging closer to the testnet launch of our V1.5 - it's like waiting for your favorite band's new album to drop!

As you can see, we're not just sitting around. We've got the pedal to the metal with our Trade Position NFT launch, the wrap up of our subgraph, and, of course, the front-end development. All these are not just buzzwords, but real, tangible progress in making our NFT exchange the go-to place for you.

Your support and feedback have been the fuel to our fire. We're stoked to keep building, improving, and expanding alongside you. We’ll keep these weekly updates coming, like postcards from the road on this crazy adventure.

If you're not already a part of this journey, we're throwing you an invite. This is your chance to jump on the bandwagon, and trust us, it's a ride you don't want to miss. Together, we can shake up the NFT scene.

That's it for this week. Stay tuned for more exciting updates and keep on trading, you legends!

discord.gg/JsPUwfAk3m

Hello to all our dedicated builders, traders, and NFT enthusiasts out there!

Time flies, and here we are with another exciting community update. Your continuous support helps us progress and refine our platform even further. So, let's dive into the significant developments we've been working on this past week:

1. We identified that the Goerli Testnet gas fees have skyrocketed, primarily due to the rise of &PEPE among other reasons. So, we decided to launch our contracts on Polygon Mumbai as well. This will enable our users to enjoy a faster, more cost-effective experience. At the same time, we are experimenting with Tenderly to help in smart contract monitoring and testing.

2. Our Trading Pair Contract has successfully passed the internal review, and we've deployed it on both Polygon Mumbai Testnet and Goerli Testnet. This is a major milestone for us, as it allows NFT owners to concentrate NFT liquidity within one pool and earn LP rewards, making the NFT exchange more efficient for the industry.

3. We've revamped our UI/UX to make it easier for users to navigate and use our platform. We have also launched a video tutorial guiding you through the buying process. Watch it here:

   https://twitter.com/SeaCowsNFT/status/1656591893474705408

   This will help users understand the simplified steps and have a better overall experience with our product.

Our progress over these past weeks has been great and yet we still have room to improve and build more efficiently. Your feedback has helped us shape and grow SeaCows into what it is today. We'll keep providing regular updates and look forward to seeing the platform and our community continue to flourish.

To further get in touch with all of you, we will organise our first twitter space on the 23rd of May. Check out this poll, to let us know what you would like to talk about:

https://twitter.com/SeaCowsNFT/status/1656598068102574081

If you haven't joined us yet, now's the time! Connect with us and be part of the journey.

https://discord.com/invite/JsPUwfAk3m

Hey there fellow builders, traders and NFT enthusiasts,

It's been a while since our last update, but we're excited to share some exciting news with you. In the past few months, we've been working hard to deploy our core smart contracts on the Goerli testnet, which includes some exciting developments:

• LinearCurve Contract: This new contract allows us to determine NFT prices based on a linear price bonding curve.

• ExponentialCurve: This contract helps us determine NFT prices based on an exponential price bonding curve.

• SeacowsPairERC721Factory: This smart contract is responsible for creating a NFT & Token pool pair.

• SeacowsPairERC721: This contract manages all owner interactions with the NFT & Token pair.

• SeacowsERC721Router: This contract manages all swaps with the pair.

We've also made significant progress in finalizing the Landing Page and Pool Creation Front-end flow, which now includes smart contract and subgraph integration. With this new integration, our users can now experience a seamless and efficient process when creating new pools.

Our Landing Page focusses on our top pools to enable liquidity concentration.

Our Pool Creation flow enables easy creation.

Finally, we're thrilled to announce that the Trading Pair contract has entered the review and testing stage. This new contract enables NFT owners to concentrate NFT liquidity within one pool and earn LP rewards.

This is the core to what SeaCows enables our users to do. Concentrate the largest amount of NFT liquidity to build the most efficient NFT exchange for the entire industry.

It has been awesome so far to build this product alongside our community. Your feedback has been valuable and we’ll continue to keep up these kind of weekly updates.

For those that are not part of our community yet, join us!

https://discord.com/invite/JsPUwfAk3m

Central limited order book marketplaces like Blur and NFT AMMs like Sudoswap aim to address this issue. However, SeaCows has the potential to be the ultimate solution for NFT liquidity provision in the Web3 world and can transform the current landscape in NFT finance.

Exogenous incentives for NFT liquidity provision

Blur Marketplace aims to reduce the liquidity gap by providing exogenous rewards. It has been successful in attracting daily average users of over 10,000 after the airdrop of $BLUR. On February 15th, Blur surpassed Opensea on transaction volume by a large margin for the first time, and on February 22nd, it had a daily transaction volume of 62,341 ETH, 7.42 times that of its competitors.

One feature that promotes greater participation is the collection-level bidding pool, which helps to generate more liquidity for sellers by driving up bids towards and even above floor prices of collections via $BLUR airdrops.

However, this situation is unsustainable because these incentives are heavily reliant on the lubricating effect of $BLUR. When its price is down and airdrops are unattractive, NFTs devour the bidding wall, and low liquidity depth comes back. Such a situation can lead to challenges in price discovery, potentially stagnating the overall growth and adoption of the NFT ecosystem.

Endogenous solution for NFT liquidity depth

To provide better liquidity and narrow the gap between buyers and sellers, the Sudoswap NFT AMM uses a Smart Order Route over individual pools to aggregate NFT liquidity. To better understand how Sudoswap works, check out this article.

Sudoswap

Sudoswap provides a Smart Order Route(SOR) on each individual NFT pool. When NFT consumers open up an order with 5 CloneX NFT, SOR will automatically calculate the first five advantageous asking prices from these individual pools. This mechanism leads to several shortcomings:

• Competition among NFT liquidity providers: Competition among NFT liquidity providers results in lower profits for them as they have to offer lower prices to secure advantageous positions on SOR, leading to a deviation of the actual market price from the true price expressed by suppliers. This kind of cost is called Price of Anarchy(POA) in game theory. Since a federated decision-making is always more favorable than selfish behavior games(i.e. POA ≥ 1), competitions among individual pools result in profit loss.

• Unfair treatment to smaller NFT liquidity providers: Pools with smaller NFT depth and ETH will be effectively detached from SOR. Smaller pools with limited maket-making ability will have a bigger delta to hedge price volatility. After receiving several large orders, their bonding curve reaches an unattainable position, and it is depleted.

• Low efficiency in tail liquidity: fragmented ETH liquidity in individual pools cannot be shared to give liquidity to additional transactions in the market. As shown below, the first pool has a balance of 2,909 ETH, which cannot support a price of 4,058. The same issue exists for another pool. If they can be shared, a total ETH of 2.909+2.253 is enough to pay for another CloneX.

• Obfuscation between liquidity providers and sellers: In reality, Sudoswap effectively disguises sellers as liquidity providers. The key difference is, providers, gain from pro-rata policy. Think of a mining pool or the Lido protocol. You provide something(computing power or ETH) to the aggregated pool. When you withdraw from it, you receive a pro-rata profit.

SeaCows

SeaCows provide a genuine peer-to-pool AMM NFT marketplace. When you provide asset pairs to the SeaCows pool, you share liquidity and become the LP (Liquidity Provider) for the pool. The price is discovered utilising the constant product market maker (CPMM) first adopted by Uniswap. Additionally, the model is uniquely designed for NFTs (i.e. avoid fractional NFT trading) and offers the following benefits:

• Higher market-making efficiency by providing a consistent price formation: When the first pool in an NFT collection is created by a market maker, they can provide a reasonable asset pair (NFT-ERC20 pair), and liquidity providers follow a consistent price formation and gain from a pro-rata approach. Without inside competition, liquidity providers benefit from a consistent asking price and gain more.

• Less stress across pools and lower market friction: Imagine being able to deposit into a shared pool without having to compete with other pools. This would result in easier returns and less stress.

• Arbitrageurs make the price right: when prices fluctuate within several markets(i.e. Opensea, Blur, Sudoswap and SeaCows) and arbitrage opportunities arise, arbitrageurs will enter the market promptly and make the price at an appropriate level.

Why SeaCows solves NFT Liquidity?

SeaCows has introduced a novel approach to federated decision-making among NFT liquidity providers, similar to the one used by Uniswap. This method is expected to result in market-making efficiency that is 1.5x to 2x higher than alternative platforms.

• A rightful successor of Uniswap in NFTfi: SeaCows has adopted the proven mechanisms of Uniswap in the realm of NFT finance. By implementing a peer-to-pool model and leveraging constant product market maker (CPMM), SeaCows has positioned itself as a major player in the NFTfi space. Its unique approach to liquidity provision and market-making efficiency sets it apart from other NFT marketplaces.

• Enhanced accessibility and user experience: SeaCows offers a more streamlined user experience for both liquidity providers and traders. Its intuitive design and user-friendly interface make it easy for users to navigate the platform and take advantage of the features it provides. This ease of use can lead to increased adoption and greater overall growth of the NFT ecosystem.

• Inclusive platform for all Liquidity Providers: SeaCows ensures a level playing field for providers of all sizes, unlike platforms that may favour larger liquidity providers. This inclusivity fosters a more diverse and robust marketplace, leading to a healthier ecosystem and increased opportunities for all participants.

Conclusion

In conclusion, SeaCows presents a groundbreaking solution to the challenges faced by NFT liquidity providers. The team behind SeaCows is continuously refining and expanding its offerings, ensuring the platform remains relevant and beneficial to liquidity providers, traders, and the broader NFT community.

Follow our Twitter @SeaCowsNFT. Written by @HarrierHarrier4.

https://discord.com/invite/KSfmSkgmMb

While current marketplaces provide a heavy, albeit necessary emphasis on the trading experience, a decentralised AMM (Automated Market Maker)-based NFT marketplace offers more independence and control to the creator.

Follow along with our insights and thoughts about how an NFT AMM can change the landscape.

Existing problems for NFT creators

To identify solutions, one must understand the problems that NFT creators are facing today.

1. High/Inconsistent transaction fees: Traditional NFT marketplaces charge high transaction fees that can eat into the profits of NFT creators. Variables fees make it difficult for creators to price their NFTs competitively and can result in lower sales.

2. Lack of ownership: NFT creators often have limited control over the pricing, marketing, and distribution of their work in traditional NFT marketplaces. As a result, NFTs get delisted, undervalued or overlooked and generally negatively impacted, despite the efforts of the creators.

3. Slow transaction times: Some NFT marketplaces can be slow and inefficient, resulting in delayed transactions that frustrate both creators and collectors.

The fully decentralised NFT vending machine

Throughout the FTX crisis, Uniswap has been the stronghold of DeFi, single-handedly carrying the industry on its back while proving the crypto paradigm. To compare existing NFT marketplaces with FTX would be a stretch, however, more importantly, the AMM model that makes Uniswap unique showed its reliability and effectiveness.

While a traditional NFT marketplace can be compared to a traditional auction house where bidders compete to purchase an item by offering higher and higher bids until a final price is reached, an AMM-based NFT marketplace can be compared to a vending machine. The price of the item is fixed, and the buyer can simply insert the required amount of money to purchase it. While the marketplace acts as an intermediary, facilitating the transaction, the AMM acts as a decentralized platform in form of a smart contract.

This allows for the following benefits:

1. Higher earnings: NFT AMMs cut out the need for the middleman, which implies that you earn more per sale. You not only earn through the actual sale but also receive the swap fee that is determined by yourself.

2. Faster transactions: NFT AMMs allow for near-instantaneous transactions. This means your community and collectors can get their hands on your creations as soon as they want them.

3. Access to a broader audience: NFT AMMs are designed to be accessible to everyone. Don’t be at the mercy of massive marketplaces but be enabled to independently create.

4. Automated Pricing: The AMM algorithm whose parameters can be tuned by yourself ensures that your NFTs are priced fairly and competitively.

5. More engagement with your community: With more control, you can more easily engage with your community by designing unique experiences.

The promised land

We are building an AMM-based NFT marketplace with the NFT creators at its core. From PFPs to gaming and music collections, we believe that a decentralised marketplace needs to consider all verticals and do things right.

Talk to us and share your thoughts with us as we are building SeaCows.

https://discord.com/invite/KSfmSkgmMb

With that, we have slightly adjusted our product vision. Starting from our current product, we are going to build a professional NFT trading platform that supports both NFT spot and perpetual futures trading.

The Status Quo

2022 will be remembered as a bear market. Many financially suffered, and regulators saw the proof they needed to justify regulation. However, through it, the industry entered a feedback loop, is evolving and keeps getting stronger. The Merge and technological breakthroughs led by ZK innovations showed the potential of crypto.

While the total NFT trading volume decreased, a core and professional NFT trader base established itself. This development was further strengthened by NFT trading tools such as Blur to enable fast trades across marketplaces.

SeaCows in 2023

On Binance the futures market is dominating the spot market with an approximate share of 65% (futures) to 35% (spot) in trading volume. We foresee the NFT market to follow a similar pattern. Futures are a great financial innovation to hedge against future price changes and speculate with leverage.

To enable more NFT traders to participate in the market, we are building the most efficient NFT futures trading tool for professional traders. Not only will this positively impact NFT liquidity but also provide a powerful tool to price NFTs across any vertical.

With the launch of our V2 product, we will also prepare for Token Launch to distribute rewards across all traders.

We thank you for sticking with us over the entire year. To stay updated and to get in touch join our discord:

https://discord.com/invite/KSfmSkgmMb

Should we care? Let’s dive in.

The paradigm of NFT games

NFT games launched gaming into the blockchain space. With the key premise of asset ownership, players are enabled to purchase & own in-game items as NFTs. These can be employed inside the game to win games and accrue awards. Generally, rewards are paid out in the platform currency, which sparked the hype around play-to-earn, led by popular games such as Axie Infinity. As a gamer, you now have the option to sell your items & tokens to other players. Ultimately, the in-game item with gameplay utility transforms into a digital asset. And with that, the player transforms into a trader.

From this category of games, we have seen the most development in blockchain gaming so far. With juggernauts such as Illuvium, Star Atlas or Big Time, we got a glimpse into actual gameplay. While some haven’t been fully released it can objectively be stated that the gameplay is comparable to some of the great web2 games that we have seen.

While asset ownership is recorded on-chain, the gameplay, however, is still on a private server. Illuvium has its entire back-end infrastructure built using Amazon Web Services (AWS) serverless architecture. If the server is taken down, the game goes down. While your assets are left untouched, their usability and value dramatically decrease. You are not only unable to play the game, but you also potentially lose a lot of money.

With this, let’s dive into the potential of fully on-chain games.

On-chain games as an alternative

On-chain games are games that not only record their assets on-chain but also program their game logic and game objects inside a smart contract. Every time the player makes an action interacting with any game object, it is recorded as a transaction on-chain. The entire code is transparent, and anyone could launch their own replica, and even make changes by adding game objects to the smart contract (in this article I dived deeper into examples of on-chain games, their potentials & limitations).

Let’s discuss why a separation of the two types might be necessary:

1. In-Game Items: In both cases, unique in-game items such as Characters or Lands are typically upholding the ERC721 Standard. In-game resources such as wood, cotton or iron (depending on the type of game) are normally denoted as semi-fungible ERC1155 tokens. Lastly, the in-game currency is an ERC20 token. This makes all of them “ownable” as their ownership can be tracked on the blockchain.

2. Gameplay: The game logic containing its rules, physics and game objects are what makes the game unique. It defines the possible actions a player can take. A web2 game as well as an NFT game utilize a game engine such as Unity or Unreal Engine to develop all components off-chain. In the case of an on-chain game, all game objects that exist in the game as well as the possible actions a player can take to influence them are programmed in solidity inside a smart contract. In the example of Dark Forest, their game logic developed in solidity can be seen here.

3. Front-End: The gamer interface is accessed through the game client (browser, console or mobile) to connect with the game server. As long as the code is available anyone could run the game client to play the game. This usually is the case for fully on-chain games, as their whole purpose is to be accessible by anyone, but most likely impossible for NFT games, as open-sourcing the entire code would allow anyone to instantly copy their game.

The blockchain as a gaming server

While I might have put forward favourable arguments for fully on-chain games, it must be emphasised that it’s virtually impossible to create a triple-A that is fully on-chain. This is mainly because the blockchain as a gaming server sucks. Why?

• It is slow, as the block time (average time needed to mine a new block) generally dictates the pace of the game, as each player's action needs to be processed as a transaction.

• On-chain game engines need more time to develop and have not yet come close to providing the performance that unity and unreal engine are offering.

• It can be costly, and further innovations in blockchain scaling solutions are needed to process the required amount of transactions quickly and cheaply.

• Solidity is probably not a programming language suited to develop entire games.

Nevertheless, it is also important to recognise that NFT games are not to gaming, what DeFi is to Finance. A more appropriate Finance-Gaming comparison for an NFT game would be a centralised exchange.

Conclusion

My goal with this article was to highlight the core differences between NFT and on-chain games and illustrate potential risks. Not to criticise on or the other. I am a big supporter of many NFT & on-chain games and will continue to do my part to push the industry forward.

Article written by me. With SeaCows we build infrastructure for both NFT games and on-chain games in form of an AMM for in-game NFT items.

The premise of on-chain gaming

Imagine a game where the entire back end sits on the blockchain. We are talking about every single game object, every single game interaction, and every single change to the state of the game to be recorded and executed on-chain. The entire low-level ruleset that defines the in-game digital physics and gameplay is defined within a smart contract.

Such a degree of on-chain gaming, not only makes the game fully decentralised but as a result, also provides full autonomy to each individual player. The game becomes the property of the active player base, and anyone can build on top of it, or fork it to generate entirely different game experiences all within the limit of the defined rules. The player base decides on the dominant fork, and so the game lives on.

The first game to ever achieve such a vision is called DarkForest. Dark Forest is a massively multiplayer (MMO) real-time strategy (RTS) game. It resolves around the idea of exploring the universe and conquering planets and is built entirely on-chain, specifically on the Gnosis Chain, a Proof-of-Stake Ethereum fork.

After 1 year of its creation in 2020, it not only established a loyal player base but also led to the making of several community DAOs solely focussing on playing and advancing the game. dfdao not only plays, but also creates entirely different game modes that have been adopted by the player base. And yet, Dark Forest is only scratching the potential of on-chain gaming.

Beyond on-chain gaming

With Dark Forest paving the way, several organizations are taking this even further. What Topology is terming as an on-chain reality and Lattice as autonomous worlds, is the coming of a parallel digital world. A world that serves as the foundation for coexisting digital realities with their unique digital physics and low-level rules. Each digital reality may be its own autonomous game or community space.

With our industry having slaughtered the term “metaverse” I, for the first, feel that this would be the appropriate term to define what the future of this innovation may look like. Do not get me wrong. We are still far from that, however, I firmly believe that this is where it starts.

The limitations of on-chain gaming

Being overly excited, I have not forgotten to get into the current limitations. Back when Dark Forest launched publicly for the first time as a project to test and push the boundaries of the Ethereum blockchain 2 years ago, it broke the ropsten testnet. Also, it had a higher gas usage than the entire Ethereum mainnet combined. All that with 300 beta players. Since then our scaling solutions (rollups, sidechains, plasma chains etc.) have improved.

However, the issue still stands. If any player interaction is recorded on-chain would this not be expensive and awfully slow? Partly yes. As of now, the level of gameplay that is possible fully on-chain is limited. However, exemplary games such as DarkForest, Sky Strife or OPCraft prove that within these limits gameplay can still be fun.

To further advance the space requires more infrastructure and standards to make the development of games & autonomous more scaleable and easier. More tooling that handles the blockchain back-end and solves simple issues such as hiding information on-chain (can be solved by zk snarks) is needed.

This is exactly what MUD (engine for autonomous worlds) and MatchboxDAO (infrastructure of on-chain games on StarkNet) are working on.

Why does this matter?

I have always searched for the answer to the question: Why do we need a blockchain for gaming?

1. NOPE - Digital asset ownership was simply not good enough of an argument for me. Who the hell cares if I own items of a game that is not playable anymore because their servers have shut down?

2. NOPE - Play-to-earn is only an unsustainable growth marketing driver and does not contribute to the gaming experience. In the end, there needs to be a balance between token earning and burning.

3. NOPE - Data availability might be great for investors and data scientists but how does the gamer benefit? Indirectly, through more money flowing into the industry? That can’t be the way.

YES - I believe that true on-chain gaming is the answer. This is a blockchain-only innovation, that could not be duplicated by a centralised organization with centralised servers. It is an absolutely new form of gaming that we have never seen and allows for completely novel gaming experiences.

We still require more time and more innovation to get there, however, I am convinced that this could finally convince my web2 gamer friends to recognise blockchain as the superior master race.

Article written by me. With SeaCows we build infrastructure for both NFT games and on-chain games in form of an AMM for in-game NFT items.

Zoom out, and zoom back into a web3 version of that. The gameplay is on a AAA level, however, your in-game NFT items are stuck and accumulating inside your wallet. To get rid of unwanted items, you have to find a seller. To acquire desired items, you have to find a buyer. Both through either an in-game or secondary NFT marketplace.

Especially for less investment-savvy gamers this process sucks, adds friction and negatively impacts the gaming experience. The aspect of NFT ownership that makes Blockchain Gaming great and unique becomes its greatest shortcoming.

NFT ownership should be easily tradable and built upon the gaming experience. This is what an NFT AMM can enable.

The purpose of an AMM

The core purpose of an AMM (Automated Market Maker) is to allow digital assets to be traded without permission and automatically. Not only is it a decentralised solution, but also increases the liquidity and ease of trading because it processes trades instantly and frictionless. It provides a superior alternative to the order book model, where a trade can only be executed when a buyer is matched with a seller.

The underlying concept to make this work is called a liquidity pool, essentially a smart contract that is able to hold and manage financial assets. Buyers and sellers interact directly with the smart contract and receive instant price quotes that can be executed right away. Not only does this reduce price slippage but more importantly avoids having to wait for a buyer or seller to accept your offer.

The AMM model has already proven itself in the market and enabled the tradability and liquidity of cryptocurrencies (i.e. ERC20 Tokens) with protocols such as uniswap gaining popularity. However, NFTs remained illiquid.

The emergence of an NFT AMM

NFT AMMs aim to apply the AMM concept to non-fungible tokens. With this, they take the concept of liquidity pools even further and enable them to additionally also hold and manage NFTs (i.e. ERC721 Tokens).

While this initially sounds theoretically sound, there are various challenges. As indicated by their name, NFTs are non-fungible. Oppositely to ERC20 tokens, they cannot be interchangeably traded. Each has its individual price and rarity. An NFT AMM has to account for that while still being able to provide real-time price quotes to accommodate permissionless and automatic trading.

At current, no system has yet been developed to provide a full solution. However, various teams including SeaCows are tackling this problem from different angles.

A GameFi NFT AMM

As of August 2022, almost 60% of all blockchain transactions can be contributed to Gaming. Thus the biggest use case for NFT AMMs is to serve as an automatic market maker in GameFi. More specifically, a market engine that drives the transfer of any kind of NFT ownership and sits at the core of a Blockchain Game/Metaverse.

The fundamental idea of SeaCows is to build a white-label NFT AMM protocol that is fully on-chain and can be utilised and integrated by any game to build an in-game NFT marketplace that provides a seamless buying, selling and trading experience. The protocol enables the game to create a liquidity pool that manages in-game NFTs and native ERC20 Tokens.

We expect this to not only upgrade the play-to-own experience but also increase in-game transactions. The game can self-determine a transaction fee, which can be reinvested into the project.

What does an NFT AMM-enabled game economy look like?

An NFT AMM-enabled game economy complements the gameplay. Players can more easily interact with the game economy, make risk-free investments and can at any point further sell or reinvest. All while playing the game.

Liquidity pools allow games to more effectively control the prices of in-game NFT items. As a result, this partly removes the speculative nature of NFT trading that has been the cause of rise and doom of previous Blockchain Games.

Clearly, we still expect secondary marketplaces to support the trade of speculative high-value items, however, each game will be able to capture the value of most in-game transactions, earn a trading fee and increase the utility of their native token in the process.

Last but not least, a fully on-chain marketplace leaves space for further innovation. Cross-game and cross-chain NFT item transfers will become possible and enable the entire GameFi market. With increasing liquidity the possibilities become endless.

Conclusion

My goal with this article was to look forward and predict possible challenges the GameFi industry will be facing as a whole, and describe the concept of an NFT AMM as a solution.

With further adoption, and the launch of their core gameplay, Blockchain Games will have to find solutions to effectively manage their game economy.

NFT AMMs are actively being researched and developed, and I strive to be as close to the industry as I can be and am therefore in close discussion with GameFi projects on a daily basis.

Follow me and reach out if you would like to chat!

The following assumed a good understanding of AMMs and liquidity pools.

The status quo

To automate NFT trades two things are required. Essential liquidity and automated pricing. To provide the former existing NFT AMMs have adopted the now common notion of liquidity pools. In regards to the latter, other protocols such as sudoswap have suggested bonding curves to provide immediate price quotes.

Bonding Curves

The concept of bonding curves is the following. All NFTs within one pool have the same price. Whenever a buyer or seller interacts with the liquidity pool and conducts a trade, the price for all NFTs inside the pool changes. Every purchase results in an increase, while every sale results in a decrease in the price. The starting price and price change variable are set by the liquidity provider(LP). Generally, the LP can decide between a constant, linear and exponential bonding curve.

Benefits & Drawbacks

• Benefits:

  1. It’s fully on-chain which makes it easier to integrate with other protocols.

  2. It provides the LP with a high degree of control over the prices within the pool (i.e. starting price, price range, delta).

  3. Prices behave predictably.

  4. Immediate quotes optimally allow traders to avoid unexpected slippage.

• Drawbacks:

  1. Since it’s fully on-chain, computation is limited and does not allow for a more sophisticated pricing strategy. “If all NFTs within one pool have the same price, how am I supposed to account for a different level of rarity within one collection?”

  2. Tied to the point above, it assumes homogeneity between NFTs. All NFTs within one pool are treated the same, going against the non-fungibility of NFTs.

A hybrid model

This entire year we have been researching and developing a hybrid NFT AMM protocol that provides essential liquidity via on-chain liquidity pools and automates pricing via a combination of on-chain bonding curves and off-chain machine learning models.

With such a new hybrid model, we are now able to offer the best of both worlds. Highly liquid NFT markets that are able to adopt a flexible pricing strategy.

How does it work?

1. Data Collection: Upon creation of the liquidity pool, all related transaction history and metadata of the selected collection are collected and analysed.

2. Classification: The off-chain model classifies the entire collection into up to 5 tiers based on their rarity and utility.

3. Pricing: A different set of pricing parameters (i.e. starting price, price range, delta) for all 5 tiers is automatically suggested, and can be adjusted by the LP.

4. Pool Creation: Once set, a pool with different tier levels is created.

AI-driven pricing

In order to make tier-based pricing work, we have built a model that is able to generalise across different NFT gaming collections. Based on the in-game stats and previous transaction prices, the model is capable to observe a pattern. This can be used to evaluate all NFTs within the collection, and increase price transparency, as it can highlight what features of the NFT make it valuable in-game.

Conclusion

We believe that in order to properly enable the adoption of NFT AMMs, a hybrid model utilising off-chain pricing computations to account for the non-fungibility of NFTs is needed. At current we are collaborating with many GameFi projects to test its viability and usefulness. At the same time, we also recognise that our approach has its own drawbacks such as the additional waiting time that is required when creating the liquidity pool as we collect data and classify the NFT collection. Our main objective is to learn quickly and build a protocol that can provide substantial value to all players involved.

In GameFi, NFT ownership is crucial, yet the play-to-earn experience is broken. High Illiquidity and low price transparency of in-game assets cause players to be hesitant to invest and trade in the game economy. Additionally, secondary NFT marketplaces with trading fees further undermine NFT ownership.

Is this what the future of play-to-earn is supposed to look like? As gamers ourselves, we want to trade our assets, frictionless and instantaneously. NFT trading should be part of the gaming experience, while simultaneously being secure and price transparent. It should be cross-game, cross-chain.

This is what we are advocating for.

What we do to make GameFi great

SeaCows is an NFT AMM protocol built for instant, low-cost and decentralised NFT trades inside any game. We work directly with GameFi projects to test and natively integrate a peer-to-pool in-game marketplace, become a liquidity provider and earn a trading fee. Let’s dive into specifics.

How does an NFT AMM help GameFi projects?

Add liquidity and increase in-game transactions

An in-game NFT AMM marketplace increases asset liquidity and allows your players to instantly buy and sell NFTs. Players interact with a pool that holds NFT (ERC721s) and token (ERC20) pairs and either swap an NFT for tokens, or the other way around. This pool is accessible right within your ecosystem.

Create your own pool and earn a trading fee

Avoid trading fees of secondary marketplaces (i.e. Opensea, MagicEden), and instead set and earn your own that belong to your GameFi project and community. Upon liquidity pool creation, you can flexibly choose a trading fee that can also be adjusted post-pool creation.

Use the price oracle to enable transparent pricing

A price quote is provided during the entire transaction process to enable full price transparency. Our AI-driven price oracle suggests an optimal starting price for different NFTs part of the same pool. This price is derived by careful analysis of the in-game utility and the transaction history.

Set native token as the payment currency and add token utility

By setting your native token as the required payment currency to purchase in-game items you increase its utility and trading value. Players will be required to purchase your native token before acquiring NFT assets.

Apply as a beta tester

If you are a GameFi project interested to explore any of the functions and features above, reach out to us via Telegram.

We are at the forefront of reimagining what in-game NFT ownership may look like. To join in on the fun, and learn more about us follow our Twitter and join our Discord.

You can also check out: seacows.io/usecase/gamefi

AMMs can be powerful. Protocols such as Uniswap, Curve, and Balancer have defined DeFi, yet NFT AMMs are an entirely different beast and offer innovation in entirely new ways. But how…?

The mechanics of an NFT AMM

The Seacows AMM connects two groups: traders and liquidity providers (LPs). These groups can buy and sell NFT assets or add and remove liquidity from the protocol.

Buying and selling NFTs

In order to acquire an NFT asset, traders can explore available pools as can be seen below. These pools contain at least one NFT along with ERC20 Tokens. Liquidity pools not only allow traders to make an instant purchase decision at a predetermined price but also enable fully decentralised peer-to-pool transactions.

Once decided on the desired pool, the buying process is as easy as selecting an arbitrary amount of NFTs, confirming the swap and ultimately paying for it/them. NFT tokens are taken out and ERC20 tokens are deposited into the pool.

Similarly, the selling process is equally simple. In case you own NFTs that are part of a collection of a created pool, you can select and instantly sell an arbitrary amount of NFTs. As a return, you will receive an indicated amount of ERC20 tokens that are part of the pool. ERC20 tokens are taken out and NFT tokens are deposited into the pool.

In case there is no available pool to which your NFTs can be sold, you can become a liquidity provider and earn.

Adding and removing liquidity

Liquidity providers (LP) create the liquidity pools that traders can interact with. As a result, they receive trading fees as traders swap with their pool.

LPs add liquidity by depositing a token pair of ERC20 tokens and NFT tokens. In the process, they define a price range within which the NFTs are being traded. Whenever traders interact with the pool, the price is affected. However, it cannot go past the set price range. This enables a high amount of liquidity while protecting the liquidity provider. After creating the pool, any LP can add additional liquidity, or remove the liquidity they have contributed.

In order to remove liquidity, the LP can simply select the items inside the pool to be taken out and deposited back in their wallet. Important to note, that when removing liquidity LPs have to consider the pool’s balance in order for it to function (i.e. when taking out 5 NFTs only the corresponding amount of ETH can be taken out).

The core features explained above define an NFT AMM. They offer a higher degree of liquidity as well as more ownership to liquidity providers. And this is just the start…

Its decentralised and permissionless nature will initiate a new era of NFT ownership and interoperability.

Want to test it out?

On the 30th of August, we will be launching our testnet version. As part of our selected test partners, you will be able to try out all the functionalities above. Make sure to follow our Twitter and reach out to us via Telegram.

You can also check out: seacows.io

NFT AMM??

Instead of an off-chain order book (i.e. Opensea, MagicEden), on-chain liquidity pools holding an ERC20/NFT pair enable truly decentralised NFT trading. Anyone can add and remove liquidity, anyone can buy and sell. Any developer can build on top of the permissionless protocol. All parties make up the AMM, and at its core lies an NFT price oracle.

Behind the AI price oracle

NFTs are different from ERC20 tokens. A commonly used bonding curve pricing strategy does not account for their unique traits and non-fungibility. An AI-based price evaluation mechanism is required that combines both on-chain and off-chain data for a specific pool pair. It provides a fair pricing quote for non-fungible tokens in real-time.

Use cases and utility

GameFi: NFTs are the cornerstone within Blockchain Gaming and provide utility in the form of in-game items, each with its unique trait. Our protocol enables games to easily build their own decentralised in-game marketplace centred around their native token to increase in-game transactions, and strengthen their game economy. Their own NFT AMM will handle the entire transaction process while being secure, instant and easy.

NFT Marketplaces: NFT holders interact with NFT marketplaces to buy and sell their assets. NFT liquidity pools would provide higher liquidity to users, enable faster NFT trades and allow added functionality such as NFT staking. Based on the value of the NFT staked, as estimated by the AI-driven price oracle, the liquidity provider would receive a proportionate reward instead of being rewarded based on the floor price.

The team

We have a core development team, consisting of gamers and NFT degens wanting to build a better and decentralised future for NFT ownership.

Find our Twitter: @siyunhe2 @JohnKaller_io

WEN LAUNCH?

In this blog, we only scratched the surface of what we are building and the future we envision. We just publicly announced our product and vision, and at the end of August, we will release our testnet demo to be used by partners and users, to gather feedback and reiterate.

If any of this made you feel excited, and want to know more, join our discord and follow our Twitter.

You can also check out: seacows.io