🧑‍🔧The mechanism

Explaining the concept

Looking at it from the perspective of a liquidity provider, you possess a certain amount of NFTs and ETH. If you anticipate that the value of NFTs will either remain stable or rise in the future, you can deposit your NFTs and ETH into the AMM and earn a fee on any trades that take place. The AMM will automatically oversee your position, and you will have the flexibility to withdraw your NFTs and ETH at any time.

Traders have the option to purchase the NFTs that are in the pool include the ones you have deposited into there. Trader have also the option to sell any NFTs for this collection they may have, and receive ETH from the pool in exchange. The AMM will modify the price in the pool with each trade, and you will earn fees on the transactions that occur. The crucial point to note is that every NFT in the pool is treated as if it is fungible, implying that any NFTs that you deposit must be of comparable worth to the lowest-priced NFT that is being traded against it. While this might be acceptable if you are dealing in low-value NFTs, it is not feasible if you are dealing in rare NFTs.