Too Long Don’t Read Version
- Uniswap V3 brings NFT to mainstream financial applications. 2.
- Every version upgrade of Uniswap has led to an upgrade of the entire DeFi. 3.
- Uniswap V3 is a key step for NFT financial applications. 4.
- NFT descriptive power, suitable for expressing complex and variable financial contracts. 5.
- ERC721 is only a starting point for Financial NFT, it can never be the mainstream. 6.
- Mainstream Financial NFT must have two specialties, one is descriptive and the other is detachable.
If digital money is programmable money, then Financial NFT is automated money, smart money, a universal tool to help parties create contracts and facilitate collaboration.
- Financial NFT puts the power to create various financial instruments in the hands of users.
- Freedom brings innovation.
- There will be a number of Financial NFT projects featuring DeFi.
Uniswap V3 brings NFT to mainstream financial applications
On May 5, Uniswap V3 went live. Among the many new features, the official pride is the ability to support liquidity providers (LPs) to specify a price range for market making (hereinafter referred to as “range making”) (Figure 1-3). This ability not only greatly improves LPs’ capital utilization, but also reduces erratic losses, which is indeed a major innovation in the AMM space. The potential of NFT in financial applications will be seen in this way.
Figure 1. Designated market in the $250-$12,000 price range
Figure 2. Designated market in the price range of $0.960-$1.040
Figure 3. V2 vs V3
Every Uniswap upgrade has led to an upgrade of DeFi as a whole
In November 2018, Uniswap V1 brought to life Vitalik’s vision of a self-marketing exchange, moving DeFi away from the dogmatism of rigidly copying the CeFi model and into a separate path. In May 2020, V2 allowed for the free addition of trading pairs, which directly inspired the DeFi boom that continues to this day. What is the industry significance of this V3 release? I think it is to stimulate innovation in the application of Financial NFT. Once NFT is widely used in financial applications, it will open up a huge new map.
Uniswap V3 is a key step forward for NFT financial applications
The general public may not associate V3 with the hottest NFT of the moment – after all, NFT seems to be equated with crypto art in all the news. The LP Token of V3 uses NFT to replace the original ERC20, which is a key step of Uniswap and a key step of Financial NFT (Financial NFT). In V2, this contract was represented by ERC20, and the only difference between different LPs was the number of shares, and the terms of the contract were the same; in V3, this contract was represented by ERC721, so that different LPs could set different market terms.
NFT is very descriptive and suitable for expressing complex and variable financial contracts
Many people like to argue that this thing does not have to use NFT, he used ERC20 can still do it, I will give a not entirely appropriate example to see how this argument is not reliable. For example, singers A and B have to buy tickets for a concert in Beijing, and concert tickets are actually a paper contract between the organizer and the audience. The trouble with the ticket contract is that it is complex and changeable; the concert ticket for singer A is different from the concert ticket for singer B, the ticket for tonight is different from the one for tomorrow night, the ticket for the front row is different from the one for the back row, and the seats in the same row from different angles are also different, so there are many variations. If ERC20 had to be used for tickets, a separate company would have to be set up to produce tickets for each seat for each concert. For example, one company is called “A Singer May 5, 2021 Beijing Concert Row 1 Seat 7 Ticket Company”, another is called “A Singer May 5, 2021 Beijing Concert Row 2 Seat 1 Ticket Company”, and the third is called “A Singer May 5, 2021 Beijing Concert Row 1 Ticket Company”. “, and the third one is called “B Singer May 6, 2021 Shanghai Concert 3rd Row Seat 5 Ticketing Company”. In short, under the ERC20 model, if there is a slight difference in the conditions of the tickets, a company has to be set up to print the tickets, which is of course ridiculous. The NFT model is much more reasonable, you just need to open a ticketing company to print different tickets for different concerts, different seating levels, and different special conditions. All the differences are reflected in the tickets, rather than for a little difference in half the effort to open a large number of short-lived companies, the cost is naturally greatly reduced.
ERC721 is just a starting point for Financial NFT, never the mainstream
ERC721 is the current mainstream token standard for NFT and is widely supported, so this time Uniswap also directly adopted ERC721 as the standard for implementing V3 LP Token. However, the specialty of ERC721 is to describe unique items, and technically, two ERC721 NFTs have nothing in common with each other, so their prices are not cross-referenced. It is very good for financial calculations, very good for liquidity, but very bad for describing complex contract conditions. ERC721, on the other hand, places too much emphasis on individuality, thinking that any two things in the world are very different and have no analogy, disregarding the fact that there are “similarities” and “varieties” in the world. It is extremely descriptive, extremely uncomputable, and naturally very illiquid. Both are too extreme and too idealistic. The mainstream financial instrument pass-through of the future will be neither ERC20 nor ERC721.
The mainstream Financial NFT must have two characteristics, one is descriptive and the other is detachable
Descriptive, in order to express advanced financial contracts, and low enough cost. The vNFT standard we propose in Solv is designed with the needs of Financial NFT in mind, combining the computability of ERC20 and the descriptive power of ERC721. It combines the computability of ERC20 with the descriptive power of ERC721.
Figure 4. vNFT combines the benefits of ERC20 and ERC721
If digital money is programmable money, then Financial NFT is automated money, smart money, a universal tool to help parties build contracts and facilitate collaboration
In contemporary society, people collaborate with each other mainly through the establishment of contracts. Money is really just a tool to facilitate collaboration. A major impediment to collaboration is the cost of transactions, and a large part of that cost is spent on creating, negotiating, signing, and monitoring the execution of contracts, and a large part of that is due to the fact that money is now too “dumb”. In fact, the greatest value of digital currency is that it can be programmed, and the program can be rigidly and uncompromisingly enforced. Financial NFT is a step up from digital money, being smart money with built-in operational logic and automatic operation. financial NFT encapsulates many common money transaction patterns and flow rules, making it easy for the average person to use. With the powerful Financial NFT, it will be easier for people to enter into transactions that lead to a greater range and more efficient collaboration with each other.
Financial NFT puts the power to create all kinds of financial instruments in the hands of users
Previously, if you wanted to trade a contract, you had to wait for the big guys to design the product, make it, approve it, and put it on the market. Now, with Financial NFT, any ordinary user can create a variety of financial instruments. Once this power is returned to the user, it will mean financial liberation. DeFi is a redistribution of power, it’s not a technological innovation, an engineering miracle, or black magic, it’s a restructuring of production relations, it’s something that we used to look up to people for, but now we can do it ourselves. So what did DeFi do? It freed the power of creating financial instruments from CeFi and gave it back to ordinary users.
Freedom brings innovation
When Financial NFT emerged, a variety of users created a wide range of digital financial tools in a short period of time to optimize resource allocation, manage risk, or speculate on bets. Users who are given the freedom to create will be tempted by the practice to innovate endlessly.
A number of DeFi-specific Financial NFT projects will emerge
DeFi projects that attempt to directly copy traditional finance have been lukewarm, such as bond and option DeFi projects, attracting a group of traditional finance experts who are confident to bring proven products and experience from traditional finance to DeFi, but the resulting products often do not attract DeFi players. On the contrary, many projects conceived entirely from DeFi are often surprisingly successful. The LP NFT in Uniswap V3, which has no precedent in traditional finance, was conceived and created in practice, and has a much better chance of success.
We developed the Solv protocol with the hope of working to become a platform for every ordinary user to create and trade Financial NFT. vNFT, proposed by Solv, is a generic Financial NFT description protocol and is being submitted to the Ether Council, striving to become the industry standard in this field. Solv will provide powerful visualization tools to help users design and create a wide variety of Financial NFTs on their own, customize their appearance, rules and functionality, and facilitate their free flow.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/one-small-step-for-uniswap-one-giant-leap-for-defi-x-nft/
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