Tezos Commons :: A Closer Look at ArtDEX
February 27, 2023High frequency NFT minting and trading is here on Tezos.
We’re all likely familiar with NFTs at this stage of time. Equally so, the process in which we go through to buy or even sell them. While NFTs are by nature “tokens”, their market value is quite subjective. For instance, the price of tez at any point in time is agreed on with relative ease across the board.
With NFTs however, they can be priced a lot differently and move in price differently as their value isn’t as easily determinable due to the subjective nature of the market around them. Equally so, they are also notoriously illiquid.
What if there was a way to bootstrap liquidity for NFTs while making the market around them slightly less subjective?
There is now, meet ArtDEX.
What is ArtDEX?
ArtDEX is a mix between a normal NFT marketplace and a DEX (Decentralized Exchange). Simply stated, the marketplace allows trading NFTs for tez. The underlying marketplace contract behind it however is more like a DEX. There’s a pool that holds two separate assets and users can come in and trade NFTs for tez or they can trade tez for NFTs.
In the underlying technology, it’s a little bit different in terms of how the pools are set up. With DEXs like Quipuswap, Crunchy, Plenty, and SpicySwap and many others, you mostly have big liquidity pools that are shared.
So say for instance you have uUSD and tez, you’re not really going to want to make a pool as there’s already millions in liquidity for that specific pair so you drop it in the liquidity pool. The way that ArtDEX works is you actually have your own personal liquidity pools.
This is essentially programmable liquidity that’s personal. You can set up what the price is or the bonding curve and you can also pretty much do about anything else like buy or sell, provide liquidity for both NFTs and tez. In other words, you can make pools that sell NFTs to people, pools that buy NFTs from people or even pools that do both.
Speaking on how this concept works in practice at large, Arri Jabba of Genius Contracts shared a few words.
This makes more of a trading ecosystem for NFTs where you will have users come in and buy NFTs from a pool thus increasing the price and another user may sell that NFT back into the pool. All these users are different and this type of activity hasn’t really been seen in the NFT scene. I think DEXs could actually work this way in the future but it’s something that no one has really thought about yet or explored deeply.
NFTs have been notoriously slow and relatively illiquid. ArtDEX is effectively enabling the bootstrapping of liquidity towards NFTs and allowing users to be able to exercise a more active role beyond just merely ownership.
I for one find that pretty interesting.
Some Key Insights from Arri Jabba
I had the chance to sit down and chat with Genius Contracts founder and CEO, Arri Jabba. We discussed his background, ArtDEX, and more.
Tell us a bit more about your background and role at SalsaDAO.
Sure, I’m the founder, lead developer and CEO of Genius Contracts. Genius Contracts is the development group that makes SalsaDAO, SpicySwap, MatterDeFi and ArtDEX. So, I basically run and build mostly everything. It’s been a long journey developing on Tezos for 2 years.Basically, what we have at SalsaDAO is a full feature and utility rich ecosystem. We have our own in-house DEX, NFT marketplace and exchange with ArtDEX and that has really helped complete this ecosystem I’d say. We also have a fully functional DAO with governance and three different tokens each with their own role and different places served within the ecosystem.
What prompted you to create ArtDEX?
So, I saw the SudoSwap project from Ethereum. That’s really the inspiration for ArtDEX, a bit of a SudoSwap fork you might say. Obviously it’s not an actual fork as you can’t fork things from Ethereum to Tezos. These things have to be built from scratch. That’s essentially what ArtDEX is though, it’s an AMM style NFT marketplace where you can create pools and provide liquidity with trading via buying and selling in the marketplace.This is a bit of a different look towards traditional NFT marketplaces and that was something interesting to me. I initially thought NFT trading in general was something more slower and not really built for trading. We’re used to trading tokens, lending, using price oracles and have a lot of actual financial tech behind moving tokens from point A to B.SudoSwap was something I was eyeing for awhile and since I don’t really use Ethereum, I was looking to see if people were actually using it and if there was utility in the tool. Sometime around late summer in my conversations with a community member last year, I kind of floated this idea by them and they were very interested in it and started working on it.
Bootstrapping liquidity for NFTs is a very compelling concept, can you tell us more about how ArtDEX enables this?
That’s really the key to why token DEXs and AMMs took over “decentralized orderbooks”. It’s something you can technically can do, you can match orders over a blockchain even if its slow. That’s pretty much how decentralized trading started. It started with offers and listings where if you wanted to buy X token you would put up an order. A smart contract would the order and that process is fine but it’s also quite slow because users aren’t providing liquidity that can be traded against it at any time.When DEX’s like Uniswap and others first came out, they really started to take over the madness that is the XYK curve. In terms of smart contracts, if you compare how many DEXs use pools and how much TVL is in them to a decentralized or semi-centralized limit order book, you would probably see that the DEX pools are the correct way to trade in the crypto ecoystem.I feel like the same thing will happen with NFTs as well.
Looking Forward
As the Tezos ecosystem continues to evolve and grow with new protocol upgrades after another, we’re witnessing new and exciting ways for Tezos NFT artists and collectors to get more involved within the ecosystem. Taking inspiration from SudoSwap on Ethereum, ArtDEX is providing a new way to bootstrap liquidity for NFTs. Mixing the same elements of a traditional NFT marketplace and a DEX, it will be exciting to see how users adopt this new platform.
Head over to ArtDEX today and start creating your own pools!
A Closer Look at ArtDEX was originally published in Tezos Commons on Medium, where people are continuing the conversation by highlighting and responding to this story.
