AMM for Non-fungible Tokens

Automated Market Maker For NFTs

Catfish Market has introduced Automated Market Makers (AMMs) for major NFT collections — by offering individual bids for each NFT and auto-listing purchased NFTs for resale at a markup, it brings comprehensive liquidity to the collection.

Catfish AMM Operating Mechanism

When you sell your NFTs (especially non-floor NFTs) on other marketplaces, you can usually only sell to collection bids (below floor price) or trait bids — it’s like jumping from the 5th floor with a safety net waiting on the 1st or 2nd. But Catfish sets up the net for you on the 3rd floor or higher, and as liquidity in the Catfish AMM grows, that net keeps rising — eventually reaching the 5th floor, ready to catch you.

How does the AMM catch your fall?

LPs and Ceiling Price

Anyone can act as an LP (liquidity provider) by depositing any amount of ETH into the AMM as reserve funds for potentially buying NFTs.

Aside from depositing ETH, the only thing an LP needs to do is set a “Ceiling Price” for the collection—the bid for the top-ranked NFT on the battle leaderboard—which will be used as the cost basis for any NFTs he may buy.

The Ceiling Price is set in multiples of the collection’s floor price, such as 3x or 5x the floor.

Valid Bids

When an NFT is sold to the AMM by a collector, it may be collectively bought by multiple LPs.

Since each LP buys NFTs based on their own submitted Ceiling Price multiplier—and these bids can vary significantly—to reduce internal arbitrage among LPs, the AMM will only use "valid bids" to purchase next NFTs:

Bids are ranked from highest to lowest, and only those included in the cumulative ETH total up to 10x the floor price are considered valid. Funds associated with bids below that cutoff will not be used for the next NFT purchase.

Price each NFT

Here’s how this “safety net” works:

Auto-list Price Reduction Curve