Flooring Protocol: Liquidity Pools and Premium Value Tranches for NFTs
new method to fractionalize NFTs and separate premium trait values from the floor
The Flooring Protocol launched earlier in October. From the DeepNews headlines:
Rather than going into all the details on the protocol — which you can do on the Flooring Protocol website, or from a more detailed WuBlockchain article — I wanted to describe what Flooring is doing, in simple terms, and show why it might be getting traction.
In 🌰
Flooring allows you to deposit an NFT into a per-collection vault
You receive 1,000,000 fractional tokens for say μDOODLE (in the Doodles pool)
Any 1,000,000 tokens can then be redeemed for a random NFT in the pool
So far this is like NFTX…
If your NFT is a premium, worth above floor — you can instead deposit it into a “Safebox”
You still get 1,000,000 fractional tokens
You also get a unique “key” unlocking that specific NFT
Your NFT does not go into the general pool
You can sell or transfer the key
You can get the NFT back with 1,000,000 fungible μ tokens, plus the key
As a final twist, the fungible per-collection vaults are perpetual pools. However the “Safebox” is something you have to rent — ie you pay a (small) fee for exclusive access to the premium NFT. If you stop paying, forget, the key gets lost or it otherwise expires… then Flooring runs an automated auction to sell your “key” to the highest bidder. If nobody bids… then the NFT goes into the general pool, where it can be redeemed (randomly) by anyone with enough fractional tokens.
There is also staking, a utility token, and other details.
But essentially, you can do two things
deposit your NFT into a pool for fractional tokens
deposit your premium NFT for fractional tokens AND keep the option of buying back the premium NFT OR sell the premium part of the NFT (and exclusive rights to buy it back) having already received the fractional tokens for the “floor” part it its value
The premium / Safebox play means that you can buy premium NFTs on margin, basically for the marginal cost of the premium on floor — since you can immediately get back 1,000,000 μX tokens, and presumably sell those back into the market for the floor value of the NFT. All without having to take a loan on the “floor” part of the price.
To kick-start the protocol, NFT whale and Flooring co-founder FLC (Free Lunch Capital) also seeded the NFT pools with some premium items.
In the first days of the protocol, you had a chance to deposit a floor Azuki Elemental, get 1,000,000 μELEM tokens, deposit those back in the protocol, and roll the dice on getting a premium back.
The protocol disallowed bots (which BLUR does as well, I believe) — encouraging users to seek these arbitrage opportunities by hand, while getting to know the protocol.
As of October 26 2023, Flooring supports 13 NFT collections, each with pools and μ token.
Each collection token also has staking, which you can read about on their website, and I won’t get into here.
Looking at a collection on Flooring, you will notice that NFTs in the vault have price estimates. These prices are from our API at DeepNFTValue.
Most of the value estimates you see are close to the collection floor — as premium NFTs are more likely to be deposited in a Safebox [Safeboxes are private on the site — at least for now, although you can see them in wallet contexts — see below].
When you try to deposit a premium NFT into Flooring, the UI will warn you, and suggest a Safebox instead of the Vault pool.
Disclosure
We are an API partner for Flooring Protocol. This is the extent of our involvement (as of the writing of this article). We have not validated the contract nor the claims on the website. Although auditing firms have.
We have not looked into how the FLC token works. It is described on the Flooring website. According to Coinmarketcap, as of October 26th 2023 the FLC token has a fully diluted market cap of $188M.
How it’s going
Two weeks in, there a couple thousand NFTs deposited in the collection Vaults:
Pudgy Penguins — 266 in vault — 5.09 Pudgy Penguin floor on DeepNFTValue
Azuki — 233 in vault — 4.84 Azuki floor on DeepNFTValue
DeGods — 188 in vault — 3.35 DeGods floor on DeepNFTValue
Azuki Elementals — 836 in vault — 0.495 Elementals floor on DeepNFTValue
Y00ts — 516 in vault — 0.690 floor on DeepNFTValue
CloneX — 74 in vault — 1.31 floor on DeepNFTValue
Moonbirds — 33 in vault — 1.86 floor on DeepNFTValue
Beanz — 158 in vault — 0.364 floor on DeepNFTValue
0N1 Force — 53 in vault — 0.89 floor on DeepNFTValue
Doodles — 32 in vault — 1.49 floor on DeepNFTValue
Sappy Seals — 63 in vault — 0.439 floor on DeepNFTValue
The Flooring Protocol contract wallet contains 2804 NFTs worth approximately 10,900 ETH — the #11 NFT wallet by value according to our leaderboards on DeepNFTValue.
Much of this value is from premium NFTS — grail Azukis, Bored Apes, Y00ts etc — locked away in Safeboxes, but visible in the contract. But even just the floor vaults (listed above) would rival BLUR’s BLEND contract by total NFT value.
Impressive! For a protocol that just got off the ground, even if the initial pools were seeded with parts by FLC’s legendary NFT collection.
That’s all for now, folks!
Some of you have been asking about how Flooring Protocol works, given our involvement as the pricing API partner. Thought I’d write a brief overview, and summarize how it’s going.
Happy to see new tech in the NFT space. I believe this is the first protocol to seriously get after the “premium NFTs” space while still giving users the benefits of larger liquidity pools like those on BLUR and NFTX.
Meanwhile, back to DeepNews and NFT Pricing.