Zora launches onchain NFT secondary markets with Uniswap
The first NFT collectible on the new token standard “Limitless” raised about 55 ETH on nearly half a million mints
Alongkorn Sanguansook/Shutterstock modified by Blockworks
The dynamics of memecoin trading are coming to NFT markets.
Zora announced the launch of onchain secondary markets with Uniswap for its NFT collectibles last week.
This is enabled by a new “ERC-20z” token standard, an extension from the ERC-1155 standard that effectively wraps and unwraps an NFT so it becomes tradable like a standard ERC-20 token.
Zora’s new token standard addresses a typical pain point of NFT mints, namely the lack of liquidity to make NFTs tradable on a secondary marketplace after the mint closes.
Read more: Web3 Watch: A second Trump token fiasco
To bootstrap initial liquidity, the new token standard funnels a portion of mint fees into the subsequent Uniswap pool after the mint concludes. Users who missed the initial three-day timeframe to mint can still subsequently purchase the NFT on Uniswap.
As Zora co-founder Jacob Horne puts it: “When the mint ends, the market begins.”
Importantly, this also empowers collectors to receive secondary market royalties onchain, in contrast to the way royalties have been enforced offchain on traditional NFT marketplaces like OpenSea.
The first NFT collectible on the new token standard “Limitless” (ZRTK) was launched by the Zora team. It saw a staggering 493,343 number of mints, raising 54.76 in ETH, according to Andrew Hong on Dune.
Daily transactions on the NFT-focused chain spiked to 197,519 on Wednesday, a 181% increase from two days prior, based on Growthepie data.
“Why do users want to buy tokens? They do so for patronage and profit. The new protocol update aims at the latter,” Seed Club founder Jess Sloss told Blockworks. “It introduces a mechanism to bring more buyside demand into the NFT ecosystem.”
Zora is not the first player in the NFT space to experiment with new token standards. Back in February, Bozo Finance and Ghost Labs developed a token and NFT “hybrid DeFi” concept on Solana.
On Ethereum, the Pandora project launched what it called the “ERC-404 standard” — a misnomer as it had no connection to the ERC process — that sought to merge the ERC-20 and ERC-721 standards.
At its peak, one PANDORA token traded for over $32,000, but now changes hands for about $1,800.
Read more: Pandora ERC-404 collection tops $90M in sales, token falls 55%
These experimental token standards enabled native fractionalization of NFT assets into fungible tokens without relying on a trusted third-party protocol to lock up the original NFT.
The fractionalized token could then be deposited into a liquidity pool, with smart contracts tethering the price of the fractionalized piece in accordance with the underlying original NFT.
All attempted to solve the liquidity problem of NFT trading, just as Zora’s latest standard does.
“It’s all part of a broader user-generated-asset trend that we’ve seen with pump.fun,” Sloss said.
Macauley Peterson contributed reporting.
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