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NFT Collection Partnerships
- Traders to instantly buy and sell NFTs in whole or fractional amounts
- Liquidity providers (LPs) to earn yield on their NFTs
- Different yield strategies in the form of full range liquidity (passive) and concentrated liquidity (active) positions
- Use idle NFTs in your vault to create a base layer of solid liquidity to help limit downside volatility, earn fees when users swap in the pool, and give users an easy way to join your growing community
- Being an early adopter of the next stage of innovation in the NFT market cycle. Other notable collections that have done this include Pudgy Penguins, Milady, Redacted Remilio Babies, Bit Bears, with more collections in the pipeline
- Good publicity and incentive alignment for the collection. We'd be happy to post Marketing content on Twitter and Discord to highlight your pool
Ideally 20-30 NFTs and an equivalent amount in value of ETH is provided to create a pool - this prevents large slippage when users make trades. The more initial liquidity that is provided, the better the slippage will be. During pool creation, an initial pool price can be set for the NFTs. Ideally this is set to the current market price of the NFT to avoid any arbitrage of value out of the pool.
- 1.Determine what sort of strategy you would like to deploy (passive/active)
- 3.Profit from the trades that occur in your pool in the form of fees
Milady Collection Real Yield:
- 1.The Milady team partnered with Caviar by deploying a shared pool of 6 Milady NFTs and 8.16 ETH for a total of 16.32 ETH in Feb 2023.
- 2.Since then over 300 Milady trades have routed through the pool, earning 1% in fees for each trade. At the same time, Miladys have become the flagship collection for NFT users who enjoy deep liquidity for the collections they support.
How much profit you make will be dependent on several factors such as your type of strategy, entry position, price action of the assets provided, and impermanent loss. On our leaderboard, you can see the most profitable LPs on Caviar with APYs currently ranging up to 200%.
There are several risks to be aware of when providing liquidity such as:
- Impermanent Loss (IL)
- LPs are at risk of experiencing IL if the price of the assets in the pool changes significantly. This can happen when the price of one token in the pool increases or decreases more than the other, which can lead to losses for the liquidity provider. You can learn more about IL in our detailed guide.
- Smart Contract risk
- Liquidity pools are implemented using smart contracts which can have bugs leading to losses.
There are several strategies you could deploy and our team would be happy to assist with strategy discussion as well as deployment for existing and new NFT collections. If you are interested in partnering with Caviar, please join our Discord and open up a ticket.