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- Five CryptoPunks NFT index fund have been migrated from Balancer to SushiSwap using the NFTX DAO platform.
- The CryptoPunks collection is selling for outrageous amounts of money.
Ethereum-based non-fungible tokens (NFTs) have been gaining traction as an investment over the past few months. In particular, the CryptoPunks collection has seen a surge in popularity that has propelled their prices into the stratosphere. Their arrival on the decentralized SushiSwap protocol is an indicator that CryptoPunks could continue to rise.
Created by Larva Labs, the CryptoPunks collection consists of 10,000 “uniquely generated” characters. Among the thousands of CryptoPunks, none is the same as the other and all can have a unique owner who is registered on the Ethereum blockchain. At the time of their release, the NFTs that constitute this collection were free, but they were quickly pulled out of the market.
According to a blog post, NFTX, the platform for making ERC-20 tokens that are backed by NFTs, has created indexes based on these collections. The platform migrated indexes from Balancer to SushiSwap using the NFTX DAO platform. The platform creates ERC-20 tokens backed on NFTs, in this case, those in the CryptoPunks collection. The post states the following:
With NFTX, it is possible to create and trade funds based on your favorite NFTs such as CryptoPunks, Axies, CryptoKitties, and Avastars, right from a decentralized exchange.
Migration to SushiSwap, how does it work?
NFTX DAO created 5 CryptoPunks funds where users can provide liquidity, as the platform’s release states. In addition, they have enabled a combined fund with multiple tokens that will be used as collateral. The 5 funds created by the platform are PUNK, PUNK-BASIC, PUNK-FEMALE, PUNK-ATTR-4, PUNK-ATTR-5, PUNK-ZOMBIE.
Each of these funds or indexes, as they are also called by NFTX, has a backing with a 1:1 parity with the NFT on which they are based – with the exception of the combined PUNK fund which has a portfolio balance of 20% with respect to the other 5 funds offered.
To provide liquidity in the funds, users must take their NFTs from CryptoPunks as collateral. Then, they must “wrap” their NFTs using the Wrapped PUNKS website. With their token created, they can return to the platform and connect their wallet (Metamask, etc.) to the platform and proceed to choose a fund in which to provide liquidity. The platform makes the following warning to users:
Be aware that supplying your NFT as collateral mixes them with all other similar NFTs in that fund, making it a possibility that you will not be able to redeem the exact NFT when you redeem your fund token later. This is caused by the randomness associated with redeeming an NFT out of a fund.
The platform also allows users to redeem their tokens at any time by going to its main website, NFTX.org. For more details, users can watch the tutorial that will allow them to “wrap” their NFTs to become liquidity providers in NFTX DAO funds:
At the meantime, CryptoPunks collection is selling for outrageous amounts of money. As the “CryptoPunks Bot” reported yesterday, one NFT, called “Punk 1651” sold for 78 ETH, equivalent to $136,850.
— CryptoPunks Bot (@cryptopunksbot) February 16, 2021