Curio Cards NFTX Vault

#1

Hi everyone, I’ve created a NFTX vault for Curio Cards!

An NFTX vault is a smart contract that holds NFTs from a single collection and tracks the balance of NFT-backed tokens, called vault tokens. In this case, we now have a Curio Cards NFTX vault which holds Curio Cards, with an accompanying ERC-20 vault token called CURIO. The number of CURIO cards in existence is always equal to the number of cards in the vault. Anyone can mint CURIO by depositing a card, and anyone can redeem a random card from the vault for the cost of 1 CURIO. Since all cards in the vault are valued the same, the CURIO token will track the Curio Cards floor price, or the cheapest card(s) in the collection.

Benefits:

  1. Fractionalized vault tokens - the CURIO token tracks the Curio Cards “floor”, and lets investors get exposure to the Curio Cards floor price without needing to buy a full card
  2. Floor liquidity - having good floor liquidity means that collectors can sell large amounts of cards quickly without crashing the floor price. Liquidity is important because it makes an asset a better store of value if owners are able to sell it quickly in a pinch without taking a loss.
  3. Yield generation - every time someone uses NFTX to buy or sell an NFT there is a 5% fee which goes to liquidity providers. So, by having an active vault, liquidity providers are able to use Curio Cards to mint CURIO and then deposit with ETH to earn income - thus making Curio Cards a productive asset.

See the NFTX FAQ for more info:

Summary:

  • NFTX vault fractionalizes Curio Cards NFT into ERC20 vault token CURIO. 1 CURIO = 1 floor curio card
  • Liquidity on SushiSwap lets users buy and sell floor curio cards through the vault without having to rely on OpenSea offers and listings
  • DO NOT deposit non-floor cards into the vault. You may not get the same card back when you withdraw/redeem.
  • You can provide liquidity and receive fees from vault trading volume. The tradeoff is that your gains will be reduced if Curio Cards has a significant increase in price (impermanent loss).
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#2

Trade Curio Cards using NFTX:

How do I buy a specific card from the vault?

Do this if you want to choose which card to buy from the vault.

  1. Go to the Buy page: Buy - NFTX App
  2. Choose the cards you want to buy, and click “Buy Now”. The right sidebar will show the total price.

Under the hood, this will purchase CURIO tokens from SushiSwap and redeem them for specific cards. The vault will charge a 5% fee for this purchase, which goes to the liquidity providers.

How do I buy a random card from the vault?

Do this if you don’t care which card you get from the vault.

  1. Purchase the CURIO token from Sushiswap: SUSHI. 1 CURIO = 1 card.
  2. Go to the Redeem page: Redeem from Vault - NFTX App
  3. Select the quantity of random cards on the right sidebar. It will cost 1 CURIO token for each random card.

There is no fee for doing a random redeem, so if you don’t care about which card you’re buying, you can use this option to save some fees.

How do I sell cards to the vault?

  1. Go to the Sell page: Sell - NFTX App
  2. Select the cards you want to sell, then click “Sell Now”

Under the hood, this will mint CURIO tokens by sending cards to the vault and sell the CURIO for ETH on SushiSwap. The vault will charge a 5% fee for minting, which goes to the liquidity providers.

How do I trade the CURIO token directly?

If you want exposure to Curio Cards floor price without buying a full card, you can always buy and sell CURIO as a ERC-20 token on SushiSwap. This lets you trade fractional Curio Cards, which is useful for investors which may not be able to afford full cards.

1 Like
#3

Provide liquidity to earn yield:

The NFTX vault charges a 5% fee for minting and redeeming CURIO tokens which gets paid out to liquidity providers which stake their CURIO-ETH SLP tokens. This provides a yield opportunity for Curio Card holders that want to earn income from their cards.

How do I provide and stake liquidity?

  1. Go to the Stake page: Mint & Stake Liquidity and Inventory - NFTX App
  2. Select the cards you want to deposit.
  3. You will need to provide an equal value as the deposited cards in ETH.
  4. Click on “Approve” to allow the smart contract to spend your Curio Cards (if you haven’t used the vault before)
  5. Click on “Mint & Stake”. This transaction will mint CURIO from cards, add them with ETH to the SushiSwap LP, and stake your LP tokens all in one go.

In return for not charging the typical 5% fee for minting CURIO from your cards, the LP position will be locked for 48 hours before it is able to be unstaked / withdrawn. For more info, see the NFTX docs on staking liquidity: Staking - NFTX.

How much yield should I expect?

The income for staked LPers is based on the volume of the vault. Any fees generated from vault mint and redeems are distributed proportionally to anyone staking their LP tokens on NFTX. The yield for other NFTX vaults as of the time of this post range anywhere from 45% (Pudgy Penguins) to 270% APR (Hashmasks), depending on volume of the vault. Yields will generally be higher when there is higher volatility in the Curio Cards price. An estimated APR will show up on the CURIO vault info page after we see some volume in the vault.

What are the risks?

  • Your gains will be reduced if curio cards has a significant increase in price
    • As with most liquidity providing yield opportunities, there is the risk of impermanent loss (IL). This means that if the price of CURIO changes drastically, your LP position will be worth less than if you held the cards and ETH separately. The effect of IL is roughly quadratic, so it is relatively small for smaller price changes but gets larger for larger price swings (+100% or more). For a more in-depth explanation of impermanent loss, see this article.
  • Only deposit floor cards
    • There is no guarantee that you will get the same card back that you deposit into the vault. The NFTX vault treats all cards equally, so you can redeem some card back from the vault, but not necessarily the same one. Because of this, only deposit floor cards into the vault! If you deposit a more expensive card, you will likely not be able to redeem it back later in the future, since someone else will likely redeem it first.
  • Not your keys, not your cards
    • As with all smart contracts, there is the risk of a smart vulnerability being exploited, leading to loss of funds. NFTX vaults have undergone several audits and reviews, but no audits are perfect. NFTX had a security incident back in June leading to loss of 6 ETH, but the attack vector was limited to a custom implementation for CryptoPunks and was fixed quickly within 3 hours, with all lost funds covered by the NFTX DAO.
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#4

(reserved for future post)