Yapeswap: ERC-1155/ERC-20 Compatible AMM pools

🔥 DAO Proposals
1

Description
We are building liquidity pools that will set prices on ERC-1155/ERC-20 pairs. The ERC-1155 tokens in this case will be fractions of one underlying NFT that have been broken down on Fraktal.io’s marketplace.

Fraktal.io has developed contracts that will allow NFT holders to break their ERC-721 or ERC-1155 NFT’s into up to 10,000 ERC-1155 tokens.

Our new feature will allow these users to then exchange these ERC-1155 tokens and ETH for LP tokens and stake them to a liquidity pool, creating a pool that trades fractional shares of the underlying NFT with ETH.

This product is a fairly big pivot from Yapeswap v1, which allocates idle liquidity in liquidity pools to single asset Yearn vaults to maximize capital efficiency on behalf of the LP.

Manifesto/Vision
As written in the Yapeswap Documentation:

"Our Mission is to build novel AMM features that provide liquidity providers with opportunities to earn yield on their assets in the most capitally efficient ways possible.

Our Vision is that our application will be governed by and for the members of the DAO and the users of the protocol, and that we can reach a point of runoff development, where the core team is no longer needed to make decisions and foster development.

To achieve our Mission and Vision, we will work to ship new features as often as possible while fostering the growth of the DAO and community and finding opportunities for collaboration with other strong web3 teams and communities."

Problem

  1. Holders of high value NFT’s do not have the opportunity to earn yield on these assets.
  2. As people are priced out of NFT collections, they lose their ability to gain any exposure to these assets.
  3. Because lending applications such as Aave have no way to verify the value of NFTs, holders are also unable to receive loans against their assets.

Solution

  1. Holders of said NFTs can now open liquidity pools that allow them to earn yield on their assets without giving up full ownership.
  2. Those who were previously priced out of expensive collections are now able to buy fractional shares and gain some exposure to these assets.
  3. By sourcing pricing information from our AMM, lending applications can allow NFT holders to stake their NFT’s as collateral - it should be noted that this will only work for NFT’s who belong to a collection whose price has been verified by the AMM.

Product
How it will work once live

  1. A user can fractionalize an NFT on app.fraktal.io
  2. The user takes their Fraktions to Yapeswap and creates a new pool or adds liquidity to an existing pool.
  3. If the NFT is not on the front end already, the user will type in NFT address and it will register, much how obscure tokens must be manually added to the interface when swapping ERC-20’s on Uniswap.
  4. The user takes the LP tokens and stakes them on geyser.io to receive FRAK + YAPE rewards, where these allocations have already been determined by their respective DAO’s.

Validation
Both the Raid Guild and the team at Fraktal.io beleive we have a strong idea for a new product which will give us an opportunity at another, more sustained and successful launch than our first launch in August. Our small but active community on Discord is also excited about the new product.

Progress
July - Core team formed
August - Yapeswap v1 Launch
September, October - Form relationships with protocols such as Fraktal.io, community building, in-house NFT project development.
November - Raid Guild hired to build pools, Yapeswap team is handling the UI updates, deployment of the new pools, and is relaunching the native token in order to provide adequate incentives for LP’s of the new NFT pools, to do away with our token trinity, and to migrate our DAO to DAOHaus.
December - Yapeswap v2 launch

Differentiation
The idea of fractional NFTs being traded in pools with ETH is not new. However, protocols such as Fractional.art have only launched pools where the NFT fractions are traded as ERC-20 tokens.

We think building ERC-1155 and developing the market for these types of pools can continue to lead to new interesting ways we can help our users earn yield on their assets. Below are a few reasons why we are excited about building with the ERC-1155 standard.

  • ERC1155 mixes fungibility and non-fungibility in one protocol. Every ‘Fraktal’ is a contract that commands an NFT and its Fraktions.
  • Internal attributes in the Fraktal contracts like majority, sold, fraktionsIndex and some others allows multiple variations on governance and capabilities to handle a digital asset.
  • Potential to fraktionalize a Fraktal multiple times to govern different aspects of it (id: 1 = value holders, id: 2 = management, id: 3 = …)

We feel our team and formation story is a point of differentiation for us as well. Our team started as exclusively part time anons, and none of the current team members had any web3 employment experience to speak of when we first banded together. Yapeswap is as much an expiriment in DAOing and community building as it is an experiment in building novel AMM features.

Team
As stated above, Yapeswap v1 was shipped by a team of anons who banded together in the name of capital efficiency. The team members who remain dedicated are listed below. Most of the team are relatively new to building in web3 and come from a web2 background (or another field entirely).

Torg (Full-time) - Operations, BizDev, Community Management
0xSumna (Full-time) - Developer (smart contracts/full-stack)
Gav - Developer (smart contracts/full-stack)
FrankCostanza - UI/UX Design
CJ8 Operations - Operations, BizDev, UI/UX design, recruiting
StewieZoolights - Front End developer
Crypnotiq - Fraktal.io lead, has helped shape the vision for Yapeswap v2

Grant Request $
$10,000 DAI

Funds
The Yapeswap DAO has voted to to hire the Raid Guild for $16,000 DAI, and the funds have already been processed. Work is scheduled to start on 11/15. We are requesting $10,000 in DAI to partially cover these costs.

Help
We invite anyone who is interested in the project to join our discord server and take a look at our DAO Forum, any feedback that we receive will be taken into consideration. We are always looking for new team members who have something to add to our ecosystem.

Additional Resources

2

Hey guys, after our discussion today we had some thoughts that we’d love to share with you.

The general consensus is “We don’t really get it” :sweat_smile:but we are stoked on you guys as builders and excited that you’ve already been engaging with our ecosystem.

Soooo, we’re down to grant you $5000 for starters & we’ll ask for you to apply for another $5000 from The MC Arboretum: A DAO for funding projects on Arbitrum :deciduous_tree:

Let’s move forward with that process and get the proposal going, in the meantime please share your key insights about Yapeswap that would help our members have an AHAH moment for the ultimate utility of the project :bulb:

~ Cheers

1 Like
3

Hey Yaylor and MC peeps, we’re really excited to hear all of that :smiley: Here are my key insights that I hope will spark some AHAH moments for MC members:

Before the time of Uniswap and AMM’s, the liquidity for fungible tokens/ was found on DEX’s, and before that it was found on CEX’s. The jump from CEX’s to DEX’s was an improvement in that it eliminated centralized risk, but the AMM was a necessary and logical next step to eliminate the need to put in bids/asks and wait for them to be filled on a DEX, because the AMM can hold the liquidity and update the price of a given trading pair as exchanges are made between the two assets. The jump from DEX to AMM sparked the onset of the DeFi era because users could finally buy and sell with guaranteed liquidity available (I know you’re all familiar with CEX/DEX/AMM, I am going somewhere with this, I promise :sweat_smile:).

We see OpenSea as a DEX equivalent for NFT’s. The assets sold on OS are not held on the exchange, but in the individual owner’s wallets, eliminating centralized risk. However, the NFT’s themselves on the ‘floors’ of collections sit on the market waiting for a buyer, as there is no instantaneous liquidity.

We think that introducing an AMM for NFTs can unlock unrealized utility for NFT’s and provide new opportunities in the same way that the jump from DEX’s to AMMs did in DeFi. Fraktal’s marketplace allowing users to create, list and buy fractional ERC-1155 tokens is already a step in the right direction as owners can create liquidity for themselves on a given asset without selling it entirely. Since users are buying and selling fractions for ETH, why not allow them the opportunity to LP their tokens and earn rewards on the fees that would normally go to the protocol? Using the same or a slightly modified version of Fraktal’s current buyout procedure, the original owner will still have an opportunity to buyout and re-unite an entire asset that has been ‘LPed’ if they are inclined to do so. As NFT liquidity pools are opened and prices in a given LP settle, our AMM can then be used to provide accurate on-chain pricing for whole NFT collections and allow them to be used as collateral in DeFi protocols.

Im hoping I’ll get some responses on that last paragraph there, especially if you do not think an NFT LP pool as we’ve described is buildable due to the logistics/complexity of it all (what boundary do you think we will not be able to get past? The buyout contracts are all there, and the Uniswap fork to support ERC-1155/ERC-20 pairs shouldn’t be an issue, will we have problems combining those elements?) or if you think the idea will not be as useful as we think it will be in the market (Why do you think the product will not see adoption?)

We will put in a proposal with the MC Arboretum DAO :smiley: