How Companies Are Changing the Problem of Liquidity in the NFT

• Loot NFT’s innovative new metaverse is targeting to democratize the NFT space.
• It will do so by implementing its own bid unit (BUNs), in limited supply and allowing single-only auctions.
• Loot NFT aims to solve liquidity problems via gamified methods to place bids on NFTs.

From March to April 2021, NFT sales generated an aggregated value of nearly $US 64 million. By October, sales hit $US 336.6 million. While NFTs have been all the rage recently, just like any novel technology, they also face several challenges. Unfortunately, some of these issues have led to many critics pointing to NFTs as a bubble waiting to burst.

The lack of liquidity is perhaps the biggest issue that worries most investors, so much so that some investors believe NFTs are a riskier investment than most altcoins. Moreover, as the history of NFTs has shown, very few collections and pieces make it through the test of time, and unfortunately, most lose their value within a few months. As a result, NFTs become illiquid – meaning they are not easily sold or exchanged for cash without a substantial loss in value – leaving owners in an unfavorable financial situation.

For example, when a holder wants to sell their ETH, they can easily do so on any centralized or decentralized exchange and at any given time. However, when it comes to NFTs, matching buyers and sellers can be a lot more challenging. Rather than trading on speculative markets, collectors typically prefer HODLing their NFTs. Moreover, they are sold bilaterally on markets, with just a few potential buyers for each transaction. For example, an in-game NFT card might only be in demand by a small group of buyers.

Due to this, the prospect of re-selling an NFT remains grim despite the Grey Market Value (GMV) of NFT transactions having increased dramatically since 2020. As a result, NFT holders must either accept the highest bid received in a set period (potentially leaving money on the table) or wait eternally for liquidity until a bidder meets the ask. However, it is not all grim, as several upcoming projects aim to solve the issue of NFT liquidity and the price discovery problems, thereby enabling creators to access deeper liquidity. For example, revolutionary projects like Loot NFT seek to solve the liquidity problem by introducing a gamified method to place bids on NFTs.

Loot NFT’s innovative new metaverse is aiming to democratize the NFT space, through not only providing a platform where users can trade their NFTs but also an entire blockchain ecosystem—from its own token to its e-commerce store, to its Loot Arena where users can battle it out to outbid each other.

Not only is this helping solve the liquidity issue in the NFT space, but it is also democratizing the industry by levelling the playing field in the way its auctions are run. In traditional auctions, the wealthy can outbid any bidder mainly because the currency used in…