Proposal for Nouns x Abacus
Abacus is a protocol that doubles as a decentralized market maker and underwriter for any NFTs with active Spot pools. An Abacus Spot Pool (“Pool”) is a vehicle providing dependable appraisal services to the owner(s) of NFT(s) via a distributed coordination game. Appraisers are incentivized to provide this service in exchange for ABC tokens, their share of any sale premium, and, in certain instances, additional incentives in the form of bribes.
Example: Alice has a Cryptopunk and would like to have it appraised in order to get a loan from a lending protocol that leverages Abacus, so she creates a pool for her Punk. Bob and Charlie see a newly created pool and check the floor price of Cryptopunks to see that the floor is sitting at 50 ETH. Bob and Charlie each add 21 ETH for a total of 42 ETH in the pool (since they think if the punk goes to auction it’ll likely sell for above 42 ETH)! Now, since that liquidity is locked in the Spot pool, Alice can leverage the pool as collateral to borrow against. The lender is happy, because they’re no longer lending against the volatility of the NFT, lending is made easy! Alice is happy because she can now take out a high LTV loan for a low cost against her NFT (since associated volatility has dropped dramatically)! Bob and Charlie are happy because they’re earning ABC, thereby increasing their ownership of the Abacus network (see whitepaper for benefits of ABC OR wait for token design deep dive to come out)!
How can Nouns use Abacus?
Using its treasury, Nouns can deploy liquidity into Abacus Spot pools. This liquidity will serve two purposes for Nouns; market making for the Nouns collection and underwriting Nouns loans. Spot pools act as a market maker because an owner can close the NFT in exchange for the liquidity in the pool at any point in time (i.e. it offers a constant minimum bid for an outstanding Noun). Additionally, they act as an underwriter by allowing lenders to offer favorable lending terms due to the guaranteed liquidation price offered by the Spot pool. Therefore, overall collection liquidity would increase as well as unlocking lending liquidity at low rates for existing Nouners! All the while, Nouns DAO would receive ABC for providing this liquidity which can be allocated to boost Noun pool emissions and collect a portion of overall Abacus revenues (paid in ETH). Boosted emissions would incentivize outside capital (non-Noun treasury based) to enter Noun pools resulting in even deeper liquidity for Noun holders on the market making and underwriting side. If Nouns DAO doesn’t want to concern itself with the individual actions required to execute this, there are services available that will allow Nouns to choose an appraisal strategy (i.e. could be based on things like risk appetite or target base price) and passively provide Treasury to accomplish the aforementioned.