Understand the three-dimensional trade-offs of fairness, transaction efficiency, and volatility from the perspective of becoming a banker

Original author:Encrypted Skanda(Twitter: @thecryptoskanda)

Want the bull market to come again? To be straightforward, we dont need dazzling buzz words. What we need is a new issuance mechanism, trading mechanism, and market-making mechanism to bring stupid money.

So where to find potential new issuance mechanisms? Illiquid asset markets.

From the lessons of Shuzang, BRC 20, Friend, NFT, casino model and @blur_io, lets find the recipe for new issuance mechanism and market.

1/ The Crypto audience is the most knowledgeable and gambler in the world. Their good bets are different from classic casino gamblers because they - do not need fixed odds - believe in information difference advantage rather than long-term trained skills (out of thousands) or the law of large numbers, so they dont like to do dojos in snail shells, Repeatedly study how to beat the 0.5% house edge of the blackjack dealer; instead look for the hidden alpha in the new bid and get out before the market knows it.

2/ They need targets that are not widely known, so traditional markets and mainstream currencies do not meet the requirements, and the price for seeking newness is a low-liquidity, high-risk target market:

• High transaction efficiency (whether transactions can be completed quickly)

• High volatility (small trading volume contributes to large fluctuations, rapid rise)

• The advantage of non-trading mechanism is minimized (you can bet and lose but not be rugged)

Such a target is in line with their needs for early discovery, precise exit, and ability to exit.

3/ Similarly, the dealer will choose between three dimensions, but the purpose is to maximize the comprehensive profit ROI, no matter in what way:

• Fairness (whether there is a non-transactional advantage)

• Transaction efficiency (whether the two parties can quickly complete the transaction)

• Volatility (whether it can be traded at low cost)

Unless you are a philanthropist, these three dimensions are an impossible triangle from the bankers perspective. The bookmaker will consider how to balance player orientation and maximize ROI when designing.

4/ Whether it is the electronic disk of the post card in the early days, or the AMM mechanism of Shuizang and meme coins, the NFT pending order transaction, even the BRC 20/ETHS fair inscription pending order, and the Friend curve, they are essentially the same thing. Different ratios, but to attract users, you need to have:

• Wealth effect (with flagship project exponential ROI)

• Sufficient standard (latecomers have more items to rush)

• Somatosensory customer losses are controllable

Does it look like the GGR kill rate model?

5/ Lets compare non-free mint PFP NFT, BRC-20 and Shuizang from Zhuangs perspective.

BRC-20 is the least economical: the banker has no advantage, and the transaction efficiency of the pending order mode is low. The advantage is that it does not require too much money to pull orders when the initial emotional side is there, but the premise is that the banker hits the full amount of inscriptions.

NFT≈BRC-20, the project party has a greater advantage, and can be reserved for smashing and rug.

Shuzang is a complete black box, with almost no open market available, and it is basically a game between Zhuang and leisure.

6/ If it is substituted into the GGR killing rate model, we find that the killing rate of Shuzang is the most controllable, followed by NFT, and BRC-20 is completely uncontrollable.

What would you do if you were Zhuang? This is why the height of iBox is so far difficult to match in the NFT market.

Similarly, the BRC 20 project has no successors and its life cycle is much shorter than that of NFT, which is not surprising regardless of cultural attributes. Fairness can bring temporary popularity and wealth effects, but in the end it is the operators needs that determine everything.

7/ Then compare Friendtech, Shuizang and NFT?

We will find that FT is more cruel, because the users opponent is always only the platform, and the automatic market-making algorithm is used for transactions. The algorithm is positively related to the number of net purchases, and the only cost is 5% for KOL.

For the same pull, FT actually needs to pay 5% of the current price, while NFT needs to pay 100% of the floor price of the market circulation in full.

8/ Even in the price drop range, if support is needed, then FT is still equivalent to continuous LBP issuance, while NFT can only continue to hard sell with sales revenue + royalties.

Imagine a referendum plan that FriendTech has not announced. Is it possible to only reward buying and punish selling?

Speaking of this, I have to mention what is wrong with another plate @blur_io made by Paradigm, which is obviously also a trading mining code washing model.

9/ The problem is that Blurs subsidies are going to the wrong people. Blur allows its users to go to the gambling table and make bid walls. Who does it provide liquidity to? To the holder of the blue chip NFT. The holder is thrown to the user, resulting in a loss. Who took this customer loss? Its a holder.

Blur gets nothing. Instead, airdrops will be sent to users based on the trading volume. This is like a gambler who gets 1.2% for himself, but loses 80% in order to earn money. And the casino didnt make a dime.

10/ What is the correct way to do it? Blur only allows its own NFT targets to participate in transaction mining, and bid wall as counterparty, customer losses become Blur’s GGR, use part of the pull, and at the same time use transaction mining to subsidize user buying behavior, and finally control the kill rate at Within a certain range.

In the next step, continue to absorb excellent NFT teams, join transaction mining under the premise of using Blur as a market maker, become Curve of NFT, and even rule NFT.

11/ In fact, after seeing this, I believe the answer is already obvious:

• Find a target with (actual) low fairness, high volatility, and as high transaction efficiency as possible

• Establish a trading platform with a trading mining subsidy mechanism

• Subsidize the purchase behavior through the transaction mining mechanism, and subsidize the target of full control

• Ensure that the total customer loss is slightly higher than the total subsidy (including the cost of pulling the deal)

• Package the mining mechanism and market-making terms to expand project selection

Make a live bid.

12/ Of course, I only substituted the dealer’s perspective, Paradigm’s POV. However, in fact, most of us are still separated from Paradigm by 10,000 @Delphi_Digitals (the ability to mobilize all the influencers on the Internet cannot be learned).

It is difficult to say how the market will respond, and whether the right time, place and people are in place. But Ordinal is ahead, and Bot is coming from behind. Why Not?

There will definitely be the next (group) hero on the chain, IT COULD BE YOU