Analyzing the JPEG’d Protocol model will help you understand how to capture value for JPEG tokens as well as the future and vision of the project.
JPEG’d is a protocol built on Ethereum that allows NFT holders to open Collateral Debt Positions (CDPs) to borrow money (PUSD) through the use of NFTs as collateral. challenge.
The two main active tokens on the project are JPEG (native token) and PUSD stablecoin:
If Maker Dao only allows high-quality, reputable assets as collateral, Unit Protocol enters a whole new market of NFTs, allowing investors to mint Tokens from collections while the NFT set is in possession.
The working mechanism of JPEG’d is similar to Maker DAO.
To be able to start interacting with JPEG’d, you will first need to access the My Vault section of the protocol and select the NFTs you want to offer as collateral to be able to borrow PUSD.
You can choose from many different types of NFTs, as long as those NFTs are supported by the protocol.
After providing NFTs offers, you will be able to borrow PUSD
At launch, only CryptoPunks NFTs will be able to mint PUSd on the protocol. shortly after launch, EtherRocks, and then Bored Ape Yacht NFTs will be added to the protocol. Thereafter, JPEG token holders can submit proposals to governance to add new collections.
This is the main feature of the JPEG’d protocol. The maximum amount of PUSD minted is 32% of the value of the collateral.
For example: The value of the NFTs provided to the protocol is $150, then it will only be minted up to $48
PUSD mint/redeem mechanism:
Mint:
Redeem
To ensure that the PUSD is stable at a pegged $1, when the collateral Vault drops to a certain percentage, the assets in the Vault will be liquidated to repay the debt.
To avoid the collateral being liquidated and auctioned. Users can purchase insurance for their CDP contracts to can repurchase their NFTs from the DAO after repaying their outstanding debt and a 25% insurance fee. The 25% insurance fee is based on the user’s outstanding debt which is principal plus any accumulated interest. Insurance is a 5% non-refundable fee assessed when the initial debt is drawn, and any new debt thereafter.
For example, a user elects to purchase insurance and opens a CDP for 10,000 PUSd. The 5% insurance fee along with the 0.5% deposit fee is assessed and he receives 9,450 PUSd. eventually, the debt on this position grows to be 15,000 PUSd and the user is liquidated due to adverse market conditions. The user must repay the 15,000 PUSd outstanding debt plus a 3,750 liquidation fee (25%) back to the DAO. After the DAO receives these funds the NFT will be returned back to the user. If the funds are not sent to the DAO within 48 hours of liquidation the insurance coverage lapses and the NFT is now owned by the DAO.
Currently, Unit Protocol captures value in 2 main ways:
According to the project’s Whitepaper, JPEG’d is locked to participate in the auction for only 7 days, after which the user can withdraw and do other things. So in the short term, this model can help reduce the supply of JPEGs temporarily, but in the long run, it won’t work.
The project said the fees from the lending as well as the proceeds from the auction will be transferred to the Treasury of the project. However, this money will be used to pay for future liquidated debts. Whether the project uses this Treasury to capture for the Holder or not has not been mentioned.
Overall, the project still doesn’t have many captures for JPEG’d holders.
JPEG’d Protocol is one of the first Lending stablecoin projects using NFTs as collateral in the market. This is a very different step.
The above is an overview analysis of the JPEG Protocol Model. What do you guys think about this project? Please leave your comments in the comment section below so we can exchange and discuss.
Find more information about JPEG’d
Website: https://jpegd.io/
Whitepaper: https://docs.jpegd.io/
Twitter: https://twitter.com/JPEGd_69
Telegram: https://t.me/jpegd
If you have any questions, comments, suggestions, or ideas about the project, please email ventures@coincu.com.
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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