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Trade to Earn 101: Part 1 – Understanding the Liquid NFT Marketplace
Written By: ShadowThorn Studios
Dated: December 12th, 2024
Would you like NFTs that grow in value and provide a safety net? Imagine owning an NFT that you can cash out at any time without needing a buyer. That’s what the Liquid NFT Marketplace offers—NFTs with built-in liquidity, designed for sustainable growth and minimal risk.
This article breaks down how the Liquid NFT Marketplace works, why it’s revolutionary, and how it solves the problems of traditional NFT systems. Let’s dive into the world of liquidity-backed NFTs!
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What Are NFTs, and How Do They Work?
NFTs (Non-Fungible Tokens) are unique digital assets stored on the blockchain. Think of them like collectible trading cards, but digital. They represent ownership of digital or physical assets such as art, music, videos, or real estate.
Example: Imagine owning a signed photograph from a famous celebrity. That photograph is unique and can’t be swapped for another of equal value—this is how NFTs work digitally.
Traditional NFTs rely on someone wanting to buy your NFT for you to profit. But what happens if no one wants to buy it? Your NFT’s value plummets, leaving you stuck.
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How Does the Liquid NFT Marketplace Work?
The Liquid NFT Marketplace revolutionizes NFTs by introducing liquidity-backed NFTs.
1. Built-in Liquidity: Every NFT has an intrinsic value that grows over time.
2. Burn-to-Exit: If you don’t want to sell, you can burn (destroy) your NFT to unlock its liquidity value.
3. Continuous Growth: A portion of every sale on the platform adds to the liquidity pool, increasing the value of all NFTs over time.
Example: Imagine owning a $100 savings bond that grows in value over the years. Even if no one wants to buy it, you can cash it out for its intrinsic value. That’s how Liquid NFTs work.
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Why Is NFT Liquidity Important?
Liquidity ensures that an asset can be easily converted into cash without a significant loss in value. Traditional NFTs lack this feature, making them high-risk investments.
Example: Think of a house with no buyers—it’s a valuable asset, but without liquidity, you’re stuck. Liquid NFTs solve this by always giving you a way to cash out.
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How Do Liquid NFTs Solve Traditional NFT Problems?
1. Prevents Underpricing: Since each NFT has growing liquidity, owners are unlikely to sell below its liquidity value.
2. Anti-Rug Pull Mechanisms: Developers earn sustainable income through residual sales, incentivizing them to maintain the project.
3. No Reliance on Buyers: You can burn your NFT for its liquidity value anytime, ensuring a safety net for investors.
Example: Traditional NFT collections often crash in value because sellers compete to undercut each other. Liquid NFTs, with their built-in liquidity, prevent this race-to-the-bottom scenario.
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How Does the Burn Function Work?
The burn function allows you to destroy your NFT and withdraw its liquidity value. This reduces the supply of the collection, increasing the value of the remaining NFTs.
Real-World Analogy: Think of it like a limited-edition watch. If some watches are destroyed, the value of the remaining ones increases due to scarcity.
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What Are the Benefits of Liquidity-Backed NFTs?
For Investors:
Exit Strategy: Cash out whenever you want, without needing a buyer.
Value Growth: Liquidity increases over time, raising the floor price of your NFT.
For Creators:
Sustainable Revenue: Earn residuals from every secondary sale.
Incentives to Maintain Projects: Continuous income encourages creators to invest in their collections.
For the Ecosystem:
Fair Trading: Buyers and sellers benefit from increasing liquidity.
Community Growth: Everyone shares in the platform’s success.
Example: Once you make a purchase of an NFT 50% of that gets locked in, and 5% goes to the community growth pool, which pays out to every NFT on the platform.
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How Does the Liquidity Pool Work?
Minting Example:
A $100 NFT contributes $50 to its liquidity locked inside at the time of purchase. $5 is distributed to the liquidity pool of all existing NFTs. 40$ goes directly to the creator, and LiquidNFTs as a platform makes $5.
Secondary Sale Example:
A $200 resale adds $10 to the liquidity pool and $10 to existing NFTs’ liquidity as well as gives the creator $20.
Impact: Liquidity-backed NFTs grow steadily in value over time, unlike traditional NFTs, which often lose value.
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How Does Liquid Compare to Traditional NFTs?
Example: Traditional NFTs are like speculative hype with no actual backing for value or way to exit or easily create, Liquid NFTs on the other hand have an easy creation system, and are designed with 50% of the purchase price to be locked immediately and 5% of the purchase price to go to the community value pool that distributes to all NFTs on the platform to create a growing liquidity model for all NFTs.
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Why Are Liquid NFTs the Future?
Liquid NFTs combine the creative freedom of digital collectibles with the stability of traditional investments. They bridge the gap between Web3 and traditional finance, offering:
Democratized Access: Anyone can invest or create without advanced technical knowledge. The smart contract for the collection is created for you as you fill out the boxes and upload your images and socials, and then they are automatically added to a bubblegum machine style minting system where when someone buys one, just like a bubblegum machine, it randomly drops one of the NFTs inside that collection to the buyer.
Financial Security: Built-in safety nets protect against complete loss.
Sustainable Growth: Continuous liquidity increases ensure long-term value.
Example: Imagine a digital art collection where the art appreciates in value and can also be cashed out anytime like a savings account.
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How Liquid NFTs Revolutionize Web3
Empowering Creators: Sustainable income through ongoing sales from easy minting and liquidity growth from the 5% fee pool that is distributed to every held NFT on the platform.
Protecting Investors: Built-in exit strategies and anti-rug measures using locking in value at time of purchase and a community fee pool to increase every NFTs locked value over time.
Fostering Inclusion: Accessible platform for users of all expertise levels. With an easy to use creation system and a bubblegum minting system, anyone can make a collection on The Liquid NFT Marketplace.
Reshaping Digital Assets: Turning NFTs into dynamic, real-world-backed assets.
The Liquid NFT Marketplace solves the biggest problems with traditional NFTs by introducing liquidity-backed assets. With intrinsic value, steady growth, and a built-in safety net, Liquid NFTs are redefining how we view digital ownership.
Join the revolution and turn your NFTs into secure, growing investments today!
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Some Common Questions about the Liquid NFT Marketplace:
1. What are NFTs?
NFTs are unique digital assets stored on the blockchain, representing ownership of art, music, or other assets.
2. How do Liquid NFTs differ from traditional NFTs?
Liquid NFTs have built-in liquidity, continuous growth, and a burn-to-exit function, ensuring value stability.
3. Why is liquidity important in NFTs?
Liquidity allows NFTs to be cashed out easily, protecting against value loss and ensuring investor confidence.
4. How does Liquid increase NFT value over time?
A portion of each sale adds to liquidity pools, raising the liquidity value of all NFTs on the platform. An NFT marketplace where everyone wins together.
5. What’s the burn function?
The burn function lets you destroy your NFT to unlock its liquidity, reducing supply and raising value while sending that liquidity value directly to your wallet.
6. How do LiquidNFTs protect against rug pulls?
Residual growth fees incentivize creators to maintain their projects and ensure long-term viability. Locking 50% of the purchase price also contributes to this anti-loss mechanism by ensuring that no NFT can go to 0.
7. What’s the future of NFTs with Liquid?
Liquid NFTs turn digital collectibles into secure, growing assets, bridging the gap between Web3 and traditional finance.
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