Floor Perpetuals: NFT Collateral, Funding, and Liquidation Design
Summary
The paper proposes perpetual futures tied to an NFT collection’s floor price. NFT holders could lock collection assets as collateral, sell floor perps to raise liquidity, and retain any value their specific NFTs gain relative to the collection floor. Other traders could take leveraged long or short exposure. An illustrative example shows how a holder’s perp short can offset a decline in the floor while leaving relative appreciation in their NFTs intact.
The mechanism adapts standard perps with NFT collateral, funding paid in additional perp units when a short lacks cash, and liquidation based on the index price to reduce forced NFT sales. It also proposes raising long collateral requirements when the system lacks enough funds to meet withdrawals. The design depends on a reliable, liquid floor-price index; thin spot markets create risks of inaccurate valuation, manipulation, and liquidation. The paper is a proposed framework, not evidence of a deployed market or tested performance.
Key ideas
- NFT holders could mint and sell floor perps against NFTs while retaining ownership of the collateral.
- Floor perps would let traders take leveraged exposure to a collection’s floor price.
- NFT-backed shorts may pay funding in additional perp units when they lack cash.
- Using the index price for liquidation is intended to reduce forced NFT sales caused by mark-price spikes.
- Reliable floor pricing and adequate system liquidity are central design challenges.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.