Disclaimer: The text below is an advisory article that was not written by Cryptonews.com journalists.
Since 2021 first half year, the total market cap of NFT sector started to explosively grow, and all kinds of NFT projects spring up. According to the data of NFTGO, the total market cap of the NFT sector is only USD 70 million in Jan 2021. While in Feb 2022, its market cap soared to the historical peak and broke through USD 35 billion, which means NFT took place the role of Defi and became the most popular investment vehicle in 2021.
Currently, the NFT sector has evolved into various sectors, including PFP, arts, collectibles, games, real estate, photography, music, sport, etc. However, the market cap of PFP accounts for more than 60% of the total NFT sector, which means the fund is mainly invested in PFP assets.
Yuga labs became the empire of NFT sectors after it acquired the CryptoPunks: Yuga Labs tried to prompt the Otherside metaverse and vest new storytelling to PFP assets in the ecology. Recently, Noah Davis, the man responsible for NFT auctions at Christie’s will join Yuga Labs as the Brand Lead for CryptoPunks. This news provided a shot in the arm for PFP sector. Noah Davis said that he is feeling bullish about the future of CryptoPunks.
It’s hard for normal investors to directly purchase top NFT projects since they are too expensive. Blue-chip PFP projects such as CryptoPunks, Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), Moonbirds are undoubtfully the sky limit of the NFT sector. For example, the floor price of CryptoPunk is 65 ETH, while the floor price of BAYC is 84 ETH. NFT market needs an entrance to allow normal investors to participate.
Since 2022, especially at the end of Q1 and Q2, the growth of the number of holders is slowing down, while the numbers of traders, buyers and sellers encounter the cliff. It means that people’s desire to trade is cooling down. Particularly in the Terra ecosystem, UST suffered from death spiral, and the price of Luna is close to zero, stETH depegged, all these events make the funds extracted from the market, the buying power of NFT market is gradually decreasing. NFT market needs a new development path rather than going after the trend of the market.
Not only the liquidity of some long-tailed NFT assets is closing to zero, but the floor price of some PFP assets is also hitting a record low. Many holders have an unrealized loss because these assets are hard to get liquidated in a suitable price range. According to Chainanalysis, although there is still 65% profit room if you sell an NFT in the secondary market, but only 29% of trade is profitable in the respect of investing. Therefore, PFP is becoming a typical troubling NFT asset. The NFT market needs a method to protect the interest of NFT holders.
In traditional finance, derivatives is the best way to hedge the risk and throw out a minnow to catch a whale. However, only a few platforms have promoted derivatives for NFT assets, especially derivatives for PFP (a series includes many NFTs but the price is hard to uniform). But the good respect is that NFT data analysis platform REDHARE is providing a comprehensive index for all series of NFT assets, which can represent the price trend for the whole series of NFT.
Based on this, JPEX launched Bored Ape Yacht Club (BAYC) index, CryptoPunks index, Mutant Ape Yacht Club (MAYC) index, and recently launched Crypto Punk & REDHARE NFT INDEX. These whole series of contracts can provide 40 times leverage, which allows normal investors to participate in investing in top NFT projects with limited funds, and provides investment vehicles for top-tier NFT holders to hedge against the risk. The launch of JPEX NFT contract series become a hot topic for the NFT sector.
JPEX launched the industry’s first contracting product targeted at PFP NFT assets.
PFP profile holders are now facing several major problems. Taking Crypto Punk for instance, as one of the most expensive PFP profile series, the price floor of this asset breaks records everyday with the further falling of the market. This means that users holding this series of NFT assets are under the risk of loss. Viewing from another aspect, this kind of asset lacks liquidity. Usually, you need to list at a price far lower than the price floor to clinch a deal. For example, if the price floor is 65ETH, you need to list at 60-63ETH to clinch a deal. In addition, in the short term, NFT sector capital outflow is accelerated, PFP asset value decline is a definite trend. The fact that holders look for an effective and stable hedging instrument, is the demand from the market.
Therefore the index contracting products of Crypto Punk and REDHARE NFT are of great significance to these NFT holders (who are usually long-term holders). As a Crypto Punk asset holder, when a certain market trend comes, we can make short selling to the Crypto Punk index contract through JPEX, thus making gains through risk hedging to spot assets. Certainly, under the premise of accurately judging the trend, the 40 times’ leverage JPEX offers is enough to enable investors to make a lot of money. So even if the value of Crypto Punk falls, the potential risks can be completely hedged through contracts and leverage. Top NFT prices, like Crypto Punk, don’t have sharp rise or decline in value frequently. As you can see in the chart above, the price floor is relatively stable, so the contract product itself is safe (rarely have extreme conditions) and has a good chance of earning a profit (even several times of the value of Crypto Punk itself) .
NFT holders can also have unexpected gains, such as airdrops. Previously, YUGA LABS airdropped 150 million, which is equivalent to 15% $APE of the total to BAYC/MAYC holders when minting governance coin of $APE, with all initially unlocked. If you hold a BAYC monkey, you will receive 10,094 airdrop tokens, while holding MAYC will receive 2,042 $APE. According to the initial claim price (March 17) of USD 7.3 per $APE token, the BAYC holder will make a profit of over USD 70,000. MAYC holders stand to make more than USD 14,000. The $APE token peaked at USD 26.19, so holding a BAYC monkey for a drop can make a profit of more than USD 260,000 and holding a MAYC can make a profit of more than USD 50,000.
Therefore, after these PFPs evolved into a new narrative direction (especially it recovers from a prolong slump), holders will get a bunch of airdrop opportunities. In this process, JPEX NFT contract will further help holders to make more profits.
REDHARE NFT INDEX Contract
Except for individual NFT contract indices for a single NFT project, REDHARE NFT INDEX(RHNI) mentioned above is Asia’s First NFT Index launched by Red Hare. By tracking the most iconic NFT projects(CryptoPunks, BoredApeYachtClub(BAYC), MutantApeYachtClub(MAYC), Moonbirds, Sandbox), and combining on-chain trading data, RHNI provides users with Macro market performance. Simply, just like Nasdaq is one of the most important indexes for tracking the performance of the US stock market, RHNI is an important index to reflect global NFT conditions.
REDHARE NFT INDEX launched by JPEX, is the only hedging tool available to current NFT holders. REDHARE NFT INDEX represents the trend for the whole NFT sector. When the price of NFTs going down, investors can further short sell the REDHARE NFT INDEX(up to 40 times’ leverage), to make up for the loss of holding various NFT assets.
Of course, by buying REDHARE NFT INDEX, investors with various NFTs can also make profits both from the increase of NFT price and contract. For professional NFT collectors and investors, the REDHARE NFT INDEX contract can help them further avoid potential risks. In the cryptocurrency market, whale wallets will usually hedge via derivatives, while the series of NFT contracts launched by JPEX initiate a new epoch in hedging against the NFT assets, which is of vital importance to the industry.
NFT contract series is also suitable for small-sized investors
PFP assets are usually invested by medium to large-sized investors, the unit price of these kinds of assets is usually high and it’s hard for normal investors to participate in and get potential profits. At the same time, derivatives based on NFT assets are still the market gap. Currently, long-tailed users still account for the majority, and products serving long-tailed users usually have more room for growth.
Therefore, another meaning of the NFT contract series is that: it allows investors to seize the potential opportunities of NFT assets without considering the scale of funds. Compared with traditional contract products, NFT INDEX contract launched by JPEX has lower risks and higher potential returns, all of these just satisfy the demand of long-tailed users, to make up the market gap. JPEX’s NFT contract series products have fairly huge room for development.
Currently, JPEX already launched for NFT Index products: CryptoPunks Index, Bored Ape Yacht Club (BAYC) Index, Mutant Ape Yacht Club (MAYC) Index and REDHARE NFT INDEX. JPEX will continually launch individual NFT indices for each top NFT project for more NFT investors to hedge against the risk and provide more investment targets.
As an Australian exchange, JPEX is maintained by development teams from Japan, Australia, and the United States. JPEX, as a well-established trading platform, always focuses efforts on the security of the platform and users’ assets and related mechanisms, and positively looks for global compliance to become the benchmark ecology in the aspect of assets security. It’s worth mentioning that since JPEX launched in 2020, there has been no security issue happened, which reflects the high-security level of JPEX.
JPEX always puts efforts in promoting innovative products, the current financing product allows users to gain income from more than 30 pairs of cryptocurrencies, and interest will be calculated daily. Especially when the funds are extracted from the DeFi sector (currently the TVL of DeFi is only USD 20 billion), the whole sector is risky and the income is weak, JPEX is very attractive.
On the basis of improving its products, JPEX is continuously expanding its ecology to more financially developed areas. According to the 1st development plan published in the 2nd quarter of 2022, JPEX further illustrated its business focus. JPEX works conscientiously and with commitment in the respect of platform compliance. Currently, JPEX has obtained financial licenses from various countries: Lithuania FCIS, US MSB, Canada MSB, US NFA and Australia ASIC. It announced that JPEX will expand globally in 2022 and 2023, and the target market will include Malaysia, Taiwan and Dubai. JPEX’s business also includes cryptocurrency technology development, optimizing trading platform experience and NFT technology and service, etc. JPEX is always committed to providing more investment opportunities and excellent trading services to users in different areas.
Meanwhile, JPEX is setting foot in the traditional area, except establishing strategic partnerships with renowned listed companies, JPEX is also setting foot in the sports area: JPEX has prompted the NFT jointly with Western Sydney Wanderers Football Club, established a strategic relationship with the Macarthur FC and other high-quality sports partners to prompt the cryptocurrency widely known by the public. JPEX is becoming another renowned crypto ecology setting foot in sports areas besides Coinbase, FTX and OKX.