Hashmasks, the latest craze in the NFT market, aren’t just about looking cool. Now, collectors can use their Hashmasks to provide liquidity on exchanges like Sushiswap.
NFTX is a new protocol that allows users to create and invest in 1:1 NFT-backed index funds. This allows NFT holders to use their digital assets as collateral for AMM liquidity providing, yield farming and borrowing/lending. Hashmasks is leveraging the protocol to create the NFTX Hashmasks Index Fund.
Liquidity for Hashmasks
Unlike on other NFT marketplaces, like OpenSea, the index fund will allow NFT owners to make a percentage fee on every trade that’s made on the index’s tokens, NFTX explains in their blog post.
NFTX’s Hashmasks basic pool accepts any Hashmask, regardless of rarity or traits, meaning that owners of low-value masks will likely be able to profit more from participating in the fund than they would by selling their own mask. Supplying one Hashmask as collateral will always give you one $MASK index fund token.
The fund is banking on being filled up with the least valuable Hashmasks (which they refer to as “floor Hashmasks”), and is set up to specifically track the ETH-floor prices of Hashmasks.
But there’s one important caveat: When users want to pull their collateral back out, $MASK tokens can only be redeemed for a random Hashmask from the collateral pool. Since there’s no guarantee that you can get your original Hashmask back, you’re better off hanging on to your Hashmask if you’re attached.