😌Overview

Despite the growth of NFTs trading volume and the huge numbers it presented over the past few years, the process it self is still dragged, with transactions based on order books and usually a big spread between the best offers and the floor price.

Using the well know DeFi AMM x*y=k constant product formula and idealized to bring the same solution on scalability, safety, liquidity and automation to the NFT market, the SnF AMM allows the same functionality. Amidst ERC-721 and ERC-20 pairs liquidity pools, SnF AMM provides new revenue streams for collections and liquidity providers, with fees split between them and the protocol, forming a new layer of base liquidity and pricing for floor NFTs, as well as distinct possibilities to boost entropy of NFT trading and stimulate arbitrage, bringing DeFi volume to NFT collections.

x*y=k

Liquidity provision

Each SnF pool manages and is made of both ERC-20 and ERC-721 tokens pairs. Anyone holding the given collections NFT can become a liquidity provider (LP) by depositing a corresponding value of each token into the pool, following the pool's assets ratio at the time, and receiving ERC-20 LP tokens in the process.

The token pairs on the pools act as automated market makers, allowing the swap of one token for another as long as the x*y=k curve remains the same, in which:

• k= A Constant where the trades must not change the product.

• x= 1st Pair's reserve balance

• y= 2nd Pair's reserve balance

With every trade, liquidity providers earn fees¹.

Liquidity Provider (LP) Token

Each pool has it's own LP ERC-20 token, which tracks LPs proportional shares of the pool total reserves and can be exchanged for the pool's assets at any time. The fees yielded goes into the pool, being shared among LPs and claimed when they redeem their assets. The remove and add liquidity processes have the same rules. When users redeem their assets from the pool, it's always an equivalent value of each token.

The token can also be used as an incentive to liquidity through farming/staking campaigns and third party advanced protocols, that can work on top of the collections LP tokens.

Swaps

Swaps are buy/sell orders made in a pair pool. Anyone can swap a token for the other, enjoying the opportunities and clean experience. After a swap, there's a different balance of assets in the pool, that using the x*y=k invariant formula to keep the constant, adjusts the price proportion to new standards, ready and set for a new swap.

Considering the standards on liquidity provision/removal, the only form to change the relative price of the tokens in the pool is through trading.

¹ The LP fees have an impact on relative prices.

² In a swap of a ERC-721 for a ERC-20 token, the fees comes from the output.