How does the Midaswap protocol compare to other NFT trading protocols

Single-Side Liquidity vs Double-Side liquidity

In the standard Uniswap V2 style NFT AMM design, LPs who want to add liquidity need to add bilateral assets at the same time. Sudoswap also uses this design. LPs need to provide both NFT and FT assets. For example, in the Azuki-ETH trading pair, LP needs to provide both Azuki and ETH to become an LP and earn trading fees. This design undoubtedly raises the entry threshold for LP. In the field of NFT, PFP collections has few number of nfts due to scarcity. If bilateral liquidity is required to become LP, the number of NFTs will limit the number of LPs. In application NFT projects, due to the particularly large number of NFT assets, LPs who want to provide large amounts of NFTs as liquidity have to deposit large amounts of FT (ETH/USDC), which also limits the number of LPs. To sum up, single-side liquidity is more suitable for LPs to add liquidity in the NFT field than double-side liquidity.

In the field of NFT, PFP collections have a few numbers of nfts due to scarcity. If bilateral liquidity is required to become LP, the number of NFTs will limit the number of LPs. In application NFT projects, due to the particularly large number of NFT assets, LPs who want to provide large amounts of NFTs as liquidity have to deposit large amounts of FT (ETH/USDC), which also limits the number of LPs. ​

To sum up, single-side liquidity is more suitable for LPs to add liquidity in the NFT field than double-side liquidity.

Bonding Curve vs Liquidity Book

Since each NFT has its own independent Token ID, one NFT cannot be "owned" by two LPs at the same time, which requires independent liquidation of NFT assets among LPs in the NFT AMM.

In order to liquidate NFT assets independently, Sudoswap adopts Bonding Curve to solve this problem. In Sudoswap, different LPs can build pools with different Bonding Curves for different trading strategies. At the same time, since one pool has only one LP, the independent liquidation of NFT assets among LPs is completed through the isolation of the pool. However, the isolation of Pool also makes NFT liquidity isolated on chain, which causes the lack of on-chain composability.

We can think of Midaswap as an NFT version of Uniswap v3. The Liquidity of different LPs can be aggregated into the same Pool through the Liquidity Book algorithm. LPs are able to build different trading strategies by providing customizable liquidity positions. The Token ID of LP Token (ERC721) can be used to complete the liquidation of NFT assets among LPs, so Midaswap has both high liquidity utilization efficiency as Uniswap V3 and high composability.

Composability

Universal Router

Midaswap will integrate the Universal Router, which is a new generation of universal routing protocols released by Uniswap v3. Through Universal Router, existing FT asset routes can be added to NFTs on the path, so users can purchase NFTs on the Midaswap platform with any ERC20 asset as payment currency, which definitely improves the users' experience.

Lending

Midaswap's LPs will receive ERC721 LP Token after adding liquidity. Since the algorithm of Liquidity Book is a simplified version of UniswapV3's tick algorithm. Therefore, Midaswap utilizes a calculation method for determining the net value of LP tokens that is similar to that of UniswapV3., which means that the calculation is compassable in other NFTfi protocols. For example, Paraspace can support Uniswap v3 LP Token as collateral for lending, so Paraspace naturally also supports Midaswap Lp Token as collateral for lending. In this way, Midaswap realizes the composability between lending protocol and Dex in the nftfi field.

Liquidity Mining

Since the liquidation among LPs in Midaswap is independent, the trading fee is also independently allocated to the LP providing liquidity, instead of being distributed to LPs according to their liquidity shares in Uniswap v3. Therefore, when an LP participates in Liquidity Mining, the more times the liquidity provided by the LP is traded, the more fees will be generated and the more rewards will be earned by the LP. The reward distribution is calculated based on the fee generated by LPs' liquidity during the time of staking. Therefore, Midaswap Liquidity Mining is essentially swap farming.