Introduction
Over the years, NFTs have demonstrably shown that they have become part of our lives in the blockchain ecosystem. And just like tokens, they won’t be going away. Blockchains have provided a way for art creators to express their works digitally and earn from it when they are being traded. Sujiko Protocol is a derivatives trading system developed by SolWorks for people to take long or short directional positions on Non-Fungible Tokens.
Problems with NFT Trading
One of the catalysts that increased the adoption of NFTs were the yields and profits that traders have earned from “flipping” NFTs on-chain. But to have flipped an NFT in profit means you bought it low and sold it high (and not everyone does that frequently! ????). This brings us to two majorly known problems:
- To profit from trading NFTs, a buyer must buy into an NFT collection at a cost price lower than the selling price to guarantee a gain. Anything else apart from this is a loss since selling at purchase price means losing money through network and royalties fees.
- A trader cannot trade an NFT collection they can’t afford to buy initially. This means you can’t trade a Solana Monke Business (SMB) if you don’t have over $5,000 to acquire one.
Brief Reasons for a Decentralized NFT Perpetual Protocol
Innovative solutions like Sujiko protocol are built to tackle some existing problems. Below are some of the reasons why
- A perpetual market can create an avenue for traders to engage a short exposure to an NFT in a collection without them buying it at all.
- With platforms like Sujiko, a trader can easily use leverage trading to enter market positions that are greater than their balance
- Anyone who buys an NFT can use Sujiko to take an opposing position in the market to hedge their portfolio. This is also known as risk management.
- Sujiko is a decentralized application that has no single point of failure or restrictions that occurs on centralized trading platforms. This help to facilitate a peer to peer system of trading that doesn’t require trusting centralized services to work properly.
- By building on Solana, Sujiko utilizes the fastest blockchain network that is secure. Its 400ms latency makes it plausible to power a product like Sujiko.
Mechanisms used in the Development of Sujiko Protocol
Sujiko Protocol implements a blend of the three major types of market-making models. Perp Protocol’s vAMM, Drift’s dAMM and the traditional constant-to-product AMM. The hybridization of these market-making models gives rise to three distinct features for Sujiko Protocol. These are:
- Core vAMM: This is the virtual AMM that provides liquidity from Liquidity Providers. It also acts as a counterparty for trading transactions in the system.
- Decentralized Limit Orderbook (DLOB): This is a virtual order book that is facilitated by off-chain workers who record the orders and the on-chain settlement.
- JIT Auctions: This is a special type of Dutch Auction whereby the market orders are matched with the orderbook. If the orders available do not match accurately, it is moved into the Dutch Auction model that starts with the oracle price and ends with vAMM quoted price.
These mechanisms, when released one after the order for Sujiko, will enable an increase in the availability of liquidity for traders. This also means leverage trading will be more robust since the market will become bigger.
Sujiko Protocol implements Switchboard and Pyth as its oracle providers. When the application goes live, the fees charged will range from 0.1% – 1.5%. This range is dependent on the spot liquidity and other forms of volatility on the NFT collection.
Sujiko Warriors NFT
Sujiko Warriors NFT is a collection of 8,888 art collection that will be utilized in the SolWorks projects such as Sujiko Protocol.
Sujiko Warriors provide utilities for holders. Some of these utilities are:
- Gated Access: Only holders of Sujiko Warriors will be able to access the NFT perpetuals trading platform.
- Revenue Sharing: Holders of Warriors are entitled to a percentage of the fees that will be earned by the protocol from trading activities.
- Art upgrades and Airdrops. Who doesn’t love airdrops?
- Sujiko Warriors holders are prioritized to access all products developed by SolWorks.
- Insurance Fund: A substantial amount from the earnings of the Warriors NFT collection will be allocated as part of the Insurance Fund for Sujiko Protocol. This is the reserve that is used to make sure that traders at loss in the perpetual markets won’t lose beyond their balance.
Solworks
SolWorks is a team of people building tools and decentralized applications on the Solana blockchain. Some of these applications are:
- SolApps: This is a directory that chronicles the best applications built on the Solana blockchain.
- SolToolKits: This is a NodeJs library built to help developers spin up their projects faster.
- Sujiko: The protocol explained in this article for NFT perpetual trading
SolWorks still has some other projects in the works like Generator, Col8, Footpath and SolDisperse.
The Team
The Solworks Team is made up of seven people in three departments. Founded by Zhe, he handles the fullstack engineering role. With about 10 years of experience in the software engineering industry, he single-handedly built the applications himself.
Ro and Scribbler work in the Graphic and Art department of Solworks. In the Community team, HotDad, Dogs and CryptoFeds are community moderators helping users and enthusiasts get onboard with Solworks’ solutions in a fun and engaging way. The community manager is SayurKol.
Conclusion
NFTs have become a major part of the blockchain community and will be remaining as more people adopt it and use cases are concurrently unlocked. NFT trading has become a multibillion dollar niche in the blockchain ecosystem and Sujiko provides people with long or short exposure to them so as to hedge their portfolio or speculate on assets they do not own or cannot afford. This is a game-changer for traders globally and it is also an innovative dapp built on Solana.
Follow their official social media handles to stay updated for their official launch:
Website: https://sujiko.dev/
Sujiko Twitter: https://twitter.com/sujikoprotocol/
Solworks Twitter: https://twitter.com/solworks_/