📃AMM for NFTs

Bringing liquidity to floor NFTs.

Sweep n' Flip has an on-chain, gas-efficient automated market maker (AMM) that pools NFT liquidity and enables trading of an entire NFT collection.

Our AMM offers a more efficient way to trade NFTs by providing liquidity for NFT collections and allowing NFT traders to access a wider range of NFTs at more competitive prices.

How does it work?

In contrast to conventional NFT marketplaces, which adopt an order book framework, Sweep n' Flip utilizes the AMM paradigm. This means that, rather than trading with another user directly, a dealer acquires or sells NFTs from a liquidity pool.

The AMM paradigm involves two groups of participants: traders and liquidity providers. A liquidity provider contributes NFTs and ERC20 tokens to a pool in exchange for a portion of the fees generated by the pool. Numerous liquidity providers may contribute to the same pool. However, this method is not efficient for trading rare NFTs, which are commonly known as "non-floor assets."

Liquidity overview

The x*y=k invariant formula used in the AMM guarantees the presence of idle liquidity, adjusts the price impact of trades based on the deposited liquidity. An increase in liquidity leads to a decrease in price impact and vice versa.

In every AMM, the liquidity is represented by LP tokens, which are ERC20 tokens that grant the holders the right to withdraw NFTs and ETH from the AMM depending on the amount they own. When liquidity providers contribute liquidity, smart contracts create these LP tokens and distribute them. LP tokens being ERC20 tokens can be utilized in other parts of the DeFi ecosystem. For example, they can be staked in a yield farm or used to vote on governance proposals for each pool.