The dynamics of memecoin trading are coming to the NFT markets.
Zora last week announced the launch of onchain secondary markets with Uniswap for its NFT collectibles.
This is made possible by a new “ERC-20z” token standard, an extension of the ERC-1155 standard that effectively wraps and unpacks an NFT, making it tradable as a standard ERC-20 token.
Zora’s new token standard addresses a typical pain point of NFT coins, namely the lack of liquidity to make NFTs tradable on a secondary market after the coin has closed.
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To build initial liquidity, the new token standard will funnel a portion of the coin fees into the subsequent Uniswap pool after the coin closes. Users who missed the initial three-day mining period can still purchase the NFT later on Uniswap.
As Jacob Horne, co-founder of Zora, puts it: “When the coin ends, the market begins.”
Importantly, this also allows collectors to receive secondary market royalties onchain, unlike the way off-chain royalties are enforced on traditional NFT marketplaces like OpenSea.
The first NFT collectible on the new token standard “Limitless” (ZRTK) was launched by the Zora team. According to Andrew Hong on Dune, there were a staggering 493,343 mints, yielding 54.76 in ETH.
The number of daily transactions on the NFT-focused chain rose to 197,519 on Wednesday, up 181% from two days earlier, based on Growthepie data.
“Why do users want to buy tokens? They do this for patronage and profit. The new protocol update is focused on the latter,” Seed Club founder Jess Sloss told Blockworks. “It introduces a mechanism to bring more buy-side demand into the NFT ecosystem.”
Zora isn’t the first player in the NFT space to experiment with new token standards. 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 was unrelated to the ERC process – which aimed to merge the ERC-20 and ERC-721 standards add.
At its peak, one PANDORA token traded for over $32,000, but is now changing hands for around $1,800.
Read more: Pandora ERC-404 Collection Surpasses $90 Million in Sales, Token Drops 55%
These experimental token standards enabled native fractionation of NFT assets into fungible tokens without relying on a trusted third-party protocol to lock the original NFT.
The fractionated token could then be deposited into a liquidity pool, with smart contracts fixing the price of the fractionated piece in accordance with the underlying original NFT.
They all tried to solve the liquidity problem of NFT trading, just like Zora’s latest standard does.
“It’s all part of a broader trend of user-generated assets that we’ve seen at pump.fun,” Sloss said.
Macauley Peterson contributed reporting.
