NFT-Fi Project Furion: Does It Have The Potential To Explode Into A New Trend?
- The demand for breaking the NFT-Fi trilemma is gradually taking over.
- NFT one-stop platform Furion combines the functions of mirror token, index token, AMM, peer-to-pool lending and other functions.
- Furion constructs the price curve of NFT by collecting historical transactions of all NFT markets.
As the NFT market moves toward DeFi, issues surrounding NFT pricing, capital utilization, and risk management have become increasingly prominent and have evolved into the NFT-Fi trilemma, restricting the development of the NFT financial market.
In particular, many NFT-Fi projects tend to overestimate the poor liquidity of NFT in the bear market at the beginning of their design, compromise risk management, provide high-interest rates to attract borrowers, and eventually have to face bad debts. However, although NFT is in a cold winter, the NFT trading market is still emerging.
The demand for breaking the NFT-Fi trilegmma, new liquidity solutions, and financial exploration has never weakened. NFT one-stop platform Furion combines the functions of mirror token, index token, AMM, peer-to-pool lending and other functions to give its own answer.
Mirror Token: NFT→F-X Token & Index Token: FFT
Separate NFT target liquidity pool
Furion provides a separate liquidity pool for each NFT target. Users can store or lock their NFT in the corresponding liquidity pool and cast F-X Token as the mirror token of the NFT in the ERC-20 protocol, where the “X” in “F-X Token” is the NFT target. For example, the mirror token obtained from Azuki’s liquidity is F-Azuki Token.
If you choose to store NFT in the corresponding liquidity pool, users can get 1000 corresponding F-X Tokens. After the 1,000 F-X Tokens are destroyed, the user can redeem any NFT in the corresponding liquidity pool instead of only getting back the one in the initial storage. When the F-X Token is destroyed and exchanged for NFT, a fixed fee of 100 platform tokens FUR will be charged as part of the platform revenue.
If you choose to lock the NFT in the corresponding liquidity pool, the locking time is specified by the user at the time of locking (up to 30 days, but you can get an extension), and the user will get half of the F-X Token at a discount, that is, 500 pieces. Locking will also incur a locking fee of 150 FUR per month. During the lock-up period, this NFT will not be used for exchange or sale and can only be redeemed after the user destroys 500 F-X Tokens.
If the NFT is not redeemed within the lock-up period, the platform will no longer lock the ownership of the NFT and release it to the public storage pool after the lock-up period ends. In addition, in the process, 300 F-X Tokens will be charged as a penalty, and the remaining 200 F-X Tokens will be sent to storage users.
Aggregate similar but different NFT target liquidity pools
Differentiating from using the NFT target itself as a liquidity pool and at the same time as a separate pool, the aggregation pool can use the mirrored tokens of multiple NFT targets as a pool to aggregate the liquidity of different but similar NFT targets. The standard of aggregation may be that the project party is a common family or multiple imitations of a certain project, etc.
For example, the aggregation of NFT targets under Yuga Labs as a pool may include F-BAYC, F-MAYC, F-BAKC, etc. Users deposit their F-X Token into the aggregation pool and mint to get FFT. FFT is supported by a package of NFTs and represents the index of the underlying NFTs combined.
By destroying FFT, users will be able to retrieve their combined F-X Token. There will be a flat fee of 100 FUR for burning FFT. The amount of minting or burning is determined by the reference price of F-X Token and the fair price of FFT.
The reference price of F-X Token is obtained by collecting the historical transaction data of NFT through Furion’s pricing oracle and combining time and space parameters; the fair price of FFT is equal to the total value of FFT divided by the circulating supply of FFT, where the total value of FFT The value is equal to its collateral. If the circulating supply of FFT is 0, the fair price of FFT is equal to 0.01 ETH, which also means that at the first casting, 1 FFT=0.01 ETH.
AMM exchange for F-X Token, FFT, FUR
When NFT is turned into an ERC-20 mirror token, the liquidity of transactions for ERC-20 is obviously much more efficient than that of NFT. Similar to the usual AMM trading grid, Furion Swap also combines every two Tokens to form a trading pair and then follows the formula x*y=k to have general traders and LP providers. Swap charges 0.3% of the transaction volume as a transaction fee, 99% of which is used as LP rewards, and 1% is used as platform income.
According to the F-X Token obtained by different NFT targets, there can be unlimited combinations to form the LP Token of Swap, providing direct transactions between different NFT pairs. In addition, in addition to transaction fees, LP providers can also use LP for liquidity mining to obtain platform token FUR rewards.
Users can earn interest income by lending F-X Token, FFT, or other ERC-20 tokens representing different NFTs or packages or use them as collateral for borrowing.
Unlike BendDAO, which is limited to blue-chip asset lending, Furion will first divide the lending pool into three layers from low to high risk according to the price level and liquidity transaction status of F-X Token/FFT: mortgage asset pool, cross-layer asset pool and isolated asset pool , covering as many assets as possible. The tokens in the low-risk pool can be used as collateral to borrow assets from the pool and pools with higher risks, but not vice versa.
In addition, according to the price fluctuation and liquidity of the token, the mortgage factor of different assets is allocated, and the mortgage factor does not exceed 0.9 at most, such as 0.9 for USDC, 0.85 for ETH, and 0.6 for blue-chip F-X Token.
The maximum borrowable amount of a user depends on the weighted collateral factor, but the collateral value can be increased by staking more FUR, the platform token. Every 1 million veFUR can increase the collateral value by 0.1%, up to 2.5%.
The lending rate depends on the asset utilization rate of the NFT target. Loan interest rate = base interest rate + asset utilization rate × given interest rate; loan interest rate = asset utilization rate × borrowing rate, where the base interest rate is 3% and the given interest rate is 20%.
Liquidation occurs when the loan amount plus all future interest exceeds the maximum amount of collateral. When liquidation occurs, the liquidator repays up to half of the loan for the borrower and receives a discount of 5%-10% of the collateral value from the borrower as an incentive.
In the actual liquidation, according to the level of risk of the loan pool, assets with better liquidity and lower risk will be liquidated first to reduce the bad debt rate of the platform, that is, the order of liquidation is mortgage asset pool > cross-layer asset pool > isolated asset pool.
To give an example, when user A borrows a certain amount of F-MAYC Token using 1000 F-BAYC Token as collateral.
At this time, according to the Furion pricing oracle, if the value of 1000 F-BAYC Tokens is 80 ETH, the mortgage factor of F-BAYC Token is 0.6, and the value of a certain F-MAYC is 30 ETH, the monthly interest payment is 0.8 ETH, when 1000 When the value of one F-BAYC Token drops from 80 ETH to 51 ETH, the loan plus interest (30+0.8=30.8 ETH) exceeds the maximum value of collateral (51*0.6=30.6 ETH), and the 1000 F-BAYC Tokens of user A -BAYC Token will face liquidation.
At this time, if the liquidator user B pays half of the loan interest and (30.8/2=15.4 ETH) of user A, he will be able to obtain F-BAYC Token collateral worth (15.41.05=16.17 – 15.41.1=16.94). At the same time, user A’s collateral value also recovered to (51-16.17=34.83 ETH – 51-16.94= 34.06 ETH) greater than the loan interest and 30.8 ETH, and the debt returned to a healthy state.
In addition, there is still a 24-hour protection procedure for liquidated assets in collateralized asset pools. After liquidation, users can still buy back their assets at 1.2 times the liquidation price within 24 hours. So back to the above example, the F-BAYC Token worth (16.17 ETH, 16.94 ETH) will still be temporarily locked in the platform for 24 hours, as long as within 24 hours, user A pays (16.171.2=19.404 ETH – 16.941.2 =20.328 ETH) to retrieve this part of the F-BAYC Token.
Furion has its own set of oracle rules. It constructs the price curve of NFT by collecting historical transactions of all NFT markets. If it is within a certain price range, then the lower limit of the price range will be taken as the reference price of the F-X Token.
In addition, Furion also introduced the veToken model; users can pledge FUR to obtain veFUR to enjoy governance, platform fee income, and improve loan utilization.
At present, the Furion main network is expected to be launched in the first quarter of 2023. The project is still in a very early stage; while the entire NFT market is in a cold winter, the market is shrinking and sluggish, and the capacity of the NFT-FI market is actually smaller.
For blue-chip NFTs, the upper limit of the quantity is foreseeable, and it is unknown whether there are so many lending markets and competitors are also constantly developing. In addition, in the large-scale liquidation event of BendDAO, it is not difficult to find that the liquidity of blue-chip NFT in the bear market is still much worse than expected.
Although Furion classifies mirror tokens based on liquidity, price, etc., the mortgage asset pool composed of blue-chip asset mirror tokens may not be immune to the bear market.
Once the asset pool is isolated, once it encounters vicious liquidity depletion, it may be difficult to avoid the bad debts caused by serial wear and tear. In addition, if there is no higher loan interest rate, how to break through BendDAO’s first-mover advantage and attract blue-chip users to pledge loans after the project is launched is not a small problem.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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