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NFT strategy

The vault of an NFT strategy is a standing buyer for one ERC-721 collection. Trading in the strategy token pays for its bid, it resells every piece above cost, and each resale is spent on burning the token.

  1. With every second that passes without a purchase, the vault offers a bit more.
  2. Someone brings it a listing priced within the bid; the vault buys and inspects the piece.
  3. The piece is put up for sale by the vault at 1.2 times its cost.
  4. A buyer takes it, and all of that payment goes into buying the token for the dead address.

The bid

The price the vault offers is capped three ways: by how far it has risen since the last purchase, by a ceiling (1 ETH for a strategy created at the start of the beta, never above 100 ETH), and by the treasury. The launcher chooses the rate of rise, from 0.0036 to 36 ETH an hour. A slow rate may never catch up with the floor; a fast one can overshoot it before any seller notices. Adding or removing a marketplace starts every NFT bid again from zero, so no purchase collects a rise built up before the change.

Each purchase subtracts what it cost. A purchase at the full bid resets the rise to zero, a cheaper one keeps what was left over.

How a purchase happens

Any wallet can hand the vault a listing within its bid. In practice that is the seller or the keeper, which reads the cheapest OpenSea listings every 15 seconds. The vault pays through Seaport and then verifies:

  • its holding of the collection went up by one, and the new piece is the one it paid for;
  • the piece already existed and did not come out of the collection contract, which rules out a collection minting into its own bid;
  • some ETH was spent, and not more than the bid.

Should anything fail, the whole purchase unwinds and the treasury is untouched. When a marketplace refunds change, the recorded cost is the ETH that really left the vault.

The shelf

Pieces are for sale from the moment they arrive, each at its cost plus 20%. A buyer pays that exact amount and receives the piece directly, with no marketplace listing involved. The multisig can lower the markup for the whole shelf, down to 1.05 times cost, and never raise it.

The burn

A shelf sale adds its full price to the burn queue. Passes convert the queue into burnt tokens: none larger than 1 ETH or than the market beneath the token can take, each at its full size once the burn budget covers it, and by default none within 5 minutes of the previous one. Whoever calls a pass keeps 0.5%. More on how it works.

Example

Made-up figures. The collection and the ticker are invented.

  1. Someone launches $CRABSTR, an NFT strategy on a collection called Harbor Crabs, with the wizard's bid growth of 0.5 ETH an hour.
  2. In its first day the token trades 25 ETH on its Pons curve, buys and sells together. About 10.7% of that, 2.675 ETH, reaches the vault: 2.14 ETH for the treasury, 0.2675 ETH for the launcher, 0.2675 ETH for the platform.
  3. Harbor Crabs has a floor of 0.42 ETH. Rising from zero at launch, the bid gets there after 3,025 seconds, about 50 minutes. Crab #77 is listed at 0.42 ETH, and the keeper points the vault at it.
  4. Crab #77 is put up at 0.504 ETH.
  5. The floor climbs past 0.504 ETH. A collector buys Crab #77 from the vault, and 0.504 ETH enters the burn queue.
  6. Buying net of selling has left about 3 ETH in the curve. At that depth a pass may spend about 0.234 ETH, and the first pass spends that at once. The budget then refills at about one such pass an hour, so a second pass of about 0.246 ETH follows an hour later and the last 0.024 ETH about 6 minutes after that. Their callers keep about 0.0025 ETH between them.
  7. The passes are taxed like any buy, so about 0.054 ETH of them flows back to the vault, 80% of it into the treasury for the next bid.

Launching one

Any wallet can start an NFT strategy on any ERC-721 collection, and nothing limits how many one collection has. They compete for the same floor. A check next to the collection means its address is the real one, not a copy; see the FAQ. When OpenSea has neither verified nor approved the collection, the site says so, since copies of known collections exist. If the collection contract names the launcher as its owner, the strategy page warns in red: “The launcher owns this collection's contract and can change it.” Such a launcher may be able to mint new pieces to a wallet of their own and sell them to the vault at the bid. The launcher's 10% goes to the launching wallet. See launching a strategy.

When it goes quiet

Listings cost more than the ceiling
The treasury grows while the bid stays capped below every listing. The multisig can raise the ceiling, up to 100 ETH, 48 hours after a public proposal.
Shelf prices sit above the floor
Nobody buys from the shelf, so nothing burns. The multisig can lower the markup.
No listings come near the bid
The bid rises until the treasury or the ceiling stops it, then holds there.
The token stops trading
Rewards stop arriving. The vault goes on bidding with what it has.