While Crypto Kitties is one of the most popular NFTs, with nearly two million items held by nearly 100,000 addresses, the lack of liquidity for NFTs particularly impacts smaller projects. Most kitties would trade for only a few dollars. However, the biggest sale that week was recorded at $1,200, with only 61 sales (about 5.8% of all sales) over $100. The history of NFTs has shown that a very small portion of NFTs stay valuable over the long term, with most NFTs losing their value after a few months and becoming illiquid.įor example, looking at sales of Crypto Kitties over the last week of 2020, we see a total of 1,051 kitties sold on secondary markets for a total of $23,000. Addressing this problem allows for arbitrage opportunities, allows investors to gain price exposure to NFT projects without identifying and buying individual NFTs, and allows for fairer price setting and easier trading of NFTs by collectors and newcomers alike. By creating a secondary market of ERC20 derivatives of NFTs, NFT20 hopes to address the liquidity problem in the NFT space. Anyone can add their NFT to the appropriate pool and receive ERC20 token derivatives representing that NFT project that can be traded on dexes right away. NFT20 is a decentralized exchange and protocol for tokenizing NFT projects as ERC20 tokens to make them tradable on decentralized exchanges such as UniSwap or Sushiswap.

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