Strudel R&D Update: The NFT Edition

Hello again, Strudel people! For the past few weeks, the brilliant minds at Strudel have been researching how to get involved in the booming NFT market. We’ve come up with a plan…

NFTs and DeFi

The NFT market is booming and for good reason. The main driving force for this is the Crypto Punk mania. Over the past seven days the Punk collection has moved over 25,000 ETH in sales, taking the floor of the collection to a new all-time high. This has been widely received by the market as proof that NFTs and NFT collections are valid stores of value. Smart money is positioning itself accordingly.

The consolidation of these collections has given rise to interest in combining the NFT space with DeFi. One of the most popular recent efforts is the “fractionalization” of NFTs into ERC-20 tokens that can be traded and utilized just like any other ERC20 tokens. Furthermore, efforts to use these tokens as DeFi collateral are nearly in place. This will soon seal the utility of the NFT class as a store of value.

There is an entire asset class waiting to be discovered. The “Rise of the Punks” will send the market towards other projects in the space that are adding value. We have explored many, but two other collections stand out as the most promising for the time being: Bored Ape Yacht Club and Cool Cats. These are newer projects which have achieved great success by building strong brands and engaged communities.

“Yeah, yeah, that’s all well and good, but how do we fit in?”, you ask. Well, if you continue reading, we’ll tell you.

The Strudel NFT Index

The Strudel NFT Index has just been launched as the newest addition to the growing line of Strudel utilities. Just like the Mare Imbrium Fund, we have created and added liquidity to a Balancer pool that auto-rebalances to hold even amounts (25%) of vBTC and the fractionalized versions of $PUNK, $BAYC, and $COOL. These tokens are created by depositing your NFTs into a vault and minting their fractionalized representation on NFTX. The $PUNK token is somewhat different because it’s an average of the several different Punk pools available on NFTX. Liquidity for these fractionalized NFTs is also available in various liquidity pools (Uniswap, Sushiswap, etc). As always, we recommend using an aggregator like 1inch to find the best price available. 1inch swap links are provided below.

Strudel NFT Index: Liquidity Mining

Furthermore, a Strudel NFT Index yield farm on Strudel Farms has been created to further increase the incentive for providing liquidity to the index. The current rate is set at 9.09% of TRDL rewards (at base rate: ~545.4 TRDL/day). Phase 2.0, to be implemented soon, will change the TRDL allocation to this new farm to a proposed 10% (see table below). We will of course discuss with the community what official liquidity incentive revisions are to be/should be made.

Current and proposed Strudel Farm incentive allocations

vBTC Value Proposition: Trustless Collateral

Strudel aims to create liquid markets to solidify vBTC as the best wrapped BTC available as it is 100% trustless, unlike most wrappers available today. This will be achieved by providing interesting opportunities for vBTC holders to diversify their basket, increasing exposure, and strengthening the peg. By including vBTC in the Strudel NFT Index fund, we provide a counterweight asset that can be used as an entry point to the fund. Depositing fractionalized NFTs to the Strudel NFT fund will also serve as consistent buy support for vBTC as arbitrage bots acquire vBTC from other sources to rebalance the pool. As we expand the available opportunities for vBTC holders, which includes already indexed products and passive income opportunities in multiple protocols, the real value of a truly decentralized asset will be apparent for the market.

How to Acquire Strudel NFT Index Tokens

Zerion

The easiest way to join the Strudel NFT Index is by purchasing BPT tokens on Zerion. By buying through Zerion, liquidity will be conveniently added by purchasing the indexed assets in the correct percentages, adding to the pool, and giving you BPT tokens representing your position in return. Zerion will accept any token that can be traded from their interface, making it very easy to gain exposure to the NFT market and vBTC with just one transaction. Another benefit of Zerion is that single-asset liquidity deposits are executed using external liquidity, unlike on Balancer, which should give better slippage.

Balancer

You can also be old-school and add to the Strudel NFT Index on Balancer by simply buying one of the four assets (links provided below) and depositing single-asset liquidity, just like in the Mare Imbrium Fund. When depositing a single asset in Balancer (see picture below), you will receive an equivalent value in Strudel NFT Index BPT tokens at the time of deposit.

Note: BPT tokens represent your liquidity in the Strudel NFT Index. You can trade them in on Zerion or remove them directly on Balancer by simply reversing the steps described above. Another cool thing about Balancer is you can remove any of the 4 assets in the Balancer fund. For example, you can add PUNK and remove vBTC if you’d like. You can also simply hold your BPT tokens to deposit in the upcoming Strudel yield farm. The choice is yours and yours alone!

Strudel Finance is the first and only one-way, trustless bridging protocol linking Bitcoin (BTC), Bitcoin Cash (BCH), and other centralized assets to DeFi.