- Sudoswap is an AMM
- Controversy around Sudoswap's royalty-free txns
- Don't care, I want to make $$$
- How to buy/sell on Sudoswap
- Create an NFT-ETH liquidity pool on Sudoswap
Since launching July 8, Sudoswap has done almost $26 million in volume with more than 111,000 NFTs traded. It also passed the 15,000-user mark in August.
It pales in comparison to OpenSea’s 416,000 active traders last month, but the rise of the automated market maker, or AMM, has been a boon for NFT traders and collectors because of its low marketplace fees and — much to the chagrin of NFT founders and artists — its royalty-free transfers.
Despite their concerns, it appears that Sudoswap is here to stay, especially after the market aggregator Gem.xyz integrated the AMM into its site on Aug. 25.
How Does Sudoswap Work?
Users familiar with decentralized exchanges will recognize SudoSwap’s mechanics. SudoSwap lets users buy and sell NFTs from unique liquidity pools, which they also can create.
SudoSwap’s contract creates new pools through contracts that are owned by the pool’s creator. All of SudoSwap’s activity is on-chain, unlike NFT marketplaces like OpenSea and LooksRare, which use a list of orders.
When a user lists an NFT on OpenSea, the marketplace requires a signature for the order, then keeps that order off-chain in a database until they either cancel or someone submits a transaction to buy their NFT.
On SudoSwap, if a user wants to sell an NFT for an amount of ETH, the NFT gets placed into a pool smart contract, where it waits until the user either cancels and withdraws the NFT from the pool contract or someone buys the NFT and removes it from the pool, sending the ETH to the seller. The protocol takes a 0.5 percent fee but there are no creator royalties because the NFTs are transferred.
Sudoswap charges lower marketplace fees (0.5 percent) than OpenSea (2.5 percent) or LooksRare (2 percent), so users can sell NFTs and pocket more of the sale price. Sudoswap users are charged a gas fee for each purchase and sale, though the Sudoswap contract is efficient.
There are also arbitrage opportunities on Sudoswap.
Arbitrage is trading off of different prices on different exchanges and users will notice inefficiencies in prices, especially during times of high volume trading on an NFT.
For example, the sell price on the Shellz Orb collection as of Aug. 26 on Sudoswap was 0.057 ETH while the floor price on OpenSea was 0.05 ETH.
A user could buy the Shellz Orb NFT on OpenSea and quickly sell it for 0.057 ETH — a profit of 0.0056715 ETH.
How Do I Buy and Sell on Sudoswap?
There are two ways to buy NFTs on Sudoswap: make a purchase on the collection page and by making a collection offer.
To purchase an NFT off of Sudoswap, navigate to the collection page of the NFT, choose the NFTs you want, then click the "> sudo swap" button and confirm the transaction in a wallet.
To make a collection offer, go to a collection and click "Make Collection Offer" and fill out the form saying how many NFTs you want to buy, how much ETH to spend and if more than one is chosen, how much the subsequent purchases will decrease by.
Users on Gem will also notice the Sudoswap symbol in some collections.
Selling NFTs on Sudoswap
To sell, choose the sell tab on the collection page then click the "> sudo swap" button and confirm the transaction in a wallet.
How Do I Create a Pool?
Users experienced in DeFi may want to provide liquidity for an NFT-token pair and take advantage of setting their own trading fees.
To do so, users will need to set up a liquidity pool (only NFT-ETH pairs are currently available on Sudoswap) and choose between a linear (flat amount) and exponential (percentage) bonding curve.
With bonding curves, every NFT bought from the pool increases by the pool creator’s set amount (delta) and every NFT sold to the pool decreases the price.
If a user creates a pool with a starting price of 0.5 ETH and a delta of 0.05 ETH, then the price of an NFT will go up to 0.55 ETH after one NFT is purchased. If two NFTs are sold to the pool after that, the price will decrease to 0.45 ETH.
Will Sudoswap Survive?
Sudoswap may not become the next OpenSea, but royalty-free trading may be the way of the future. At least Beeple thinks so.
i think the creator royalty argument is actually a lot simpler than people make it out to be.— beeple (@beeple) August 13, 2022
There is ZERO way to FORCE royalties technologically so creators will have to build a collector base that WANT to honor these royalties…. It’s really that simple. 🤷