Natasha Dean
Editor
Editor
Sudoswap has seen a surge in popularity this month. Crypto Briefing investigates how to make the most of the new trading platform and why it has sparked so much interest.
What Exactly Is Sudoswap?
Sudoswap makes NFT trading even simpler. Sudoswap, which launched in May 2022, is crypto’s first NFT automated market maker. The Ethereum-based platform works similarly to Uniswap, allowing users to exchange assets with confidence via user-funded liquidity pools. Sudoswap users, on the other hand, may trade between NFTs and ETH rather than two fungible tokens.
At first look, it may be difficult to identify what benefits sudoswap has over traditional NFT trading platforms like OpenSea, the world’s largest NFT marketplace with trade volumes that significantly outnumber all of its competitors. Sudoswap’s pools, unlike OpenSea, are totally decentralized and sponsored entirely by their users. However, this does not imply that trading is free; the trading pool’s designer establishes a swap cost of a few percent of each successful NFT buy or sell.
Fees earned when assets are exchanged through the platform’s pools are returned to those who provide NFT and ETH liquidity. This also implies that sudoswap avoids current license payments imposed by the producers of collections. Furthermore, the lower the swap costs for a particular pool, the more incentive users have to trade through it. This encourages pool creators to compete for the lowest fees, resulting in lower pricing for end users.
Sudoswap also allows NFT owners to sell their assets instantaneously without having to wait for a buyer, enhancing liquidity and efficiency in the NFT market. The most unique aspect of sudoswap, however, is how it regulates the value of the NFTs exchanged through its pools. The platform use bonding curves to automatically raise and reduce the bid and ask on each collection based on the number of NFTs purchased or sold. For example, if a user sells an NFT into a pool, boosting supply, the buy price falls significantly.
The more NFTs sold, depending on the delta value chosen by the pool’s founder, the lower the price per NFT falls until market forces determine its fair worth. Buying an NFT from a pool, on the other hand, progressively raises the cost of subsequent purchases, keeping the asset’s price in accordance with demand.
The number of users interacting with sudoswap has increased dramatically in recent weeks. In July, the protocol had an average of 36 users each day, according to Dune statistics provided by 0xRob. After one month, sudoswap has almost 2,000 daily users and a total trading volume of more than $18 million.
Starting Over
Using sudoswap to trade NFTs is no more complicated than engaging with other automated trading platforms. As with any blockchain protocol interaction, check sure you’re on the right site and link your Web3 wallet using the on-screen prompts.
Navigate to the collections page once connected to see which NFT collections users have created liquidity pools for. Pools for popular, well-established, and frequently traded collections are the largest and most active—don’t expect to find pools for smaller or more obscure projects.
After you’ve found a collection to trade, click on it and then go to the “pools” tab. This will display the user-created pools from the collection that offer NFTs, the amount of liquidity for each one, the type of bonding curve used, and the Delta value (how much sales and purchases affect the price of NFTs in the pool). For this demonstration, we’ll use the Webaverse Genesis Pass collection.
The majority of collections have a single main pool where the majority of their liquidity is concentrated. However, it’s worth investigating whether other pools with lower swap fees are available—especially if you’re looking to buy NFTs from higher-value collections like Bored Ape Yacht Club or 0xmons. We’ll look at the main pool for Webaverse Genesis Passes, which has a liquidity of 226 NFTs and 16.522 ETH.
The current price the pool sells an NFT for, the Delta (the amount NFT sales and purchases move the ask price), and the overall swap fee charged by the pool’s creator are all displayed here. Scrolling down, we can also see a graph that depicts the bonding curve of the pool. By adjusting the sliders on the buy and sell sides, you can simulate how buying or selling multiple NFTs from the pool will affect the price and how much it will cost.
Because pools raise the price of NFTs as they sell them, it’s often better to buy multiple NFTs from multiple pools. The built-in “Sweep Mode” of sudoswap can be used to find the best combination of purchases. For example, if we wanted to buy 10 Webaverse Genesis Passes, we would choose the cheapest option for the first purchase. This would, however, raise the price of other NFTs in the corresponding pool, making it cheaper to buy from other pools before returning to the first.
When selling multiple NFTs, the same principles apply as when buying them. If we needed to sell several NFTs from a collection quickly, we could probably get a better overall price if we sold single NFTs to different pools rather than all of them to the same one.
It’s also worth noting that when purchasing NFTs from sudoswap pools, users can choose the exact NFT they receive. While this isn’t as important in collections like Webaverse Genesis Pass, where each NFT is the same, it does have an effect on collections with varying rarity. This is because it allows buyers to purchase NFTs with rare traits at a price close to the collection’s floor price.
Meanwhile, NFT holders wishing to sell rarer items may discover that they may obtain a greater price for their grails on other marketplaces such as OpenSea.
While sudoswap is still in its early stages, it has the potential to transform NFT trading. Members of the NFT community have already begun testing several applications for the protocol, ranging from lottery systems to GameFi markets. Simultaneously, speculators are seeking to cash in on the buzz with initiatives like Sudo Loot and Sudo Inu.
While it is unknown whether sudoswap will host larger collections in the future, this may not matter. It has already advanced NFT trading and appears to have a promising future.
With an eye for detail and understanding of this exciting industry. My experience has given me an understanding of crypto trends and how to effectively break them down. I have a soft spot for NFTs and the Metaverse.
