A new way to issue NFTs: Understand INO gameplay in three minutes

This article was published on Babbit News, original title: "Is IDO OUT? Understand the New Play of NFT INO in 3 Minutes," author: Overnight Porridge

As the concept of NFT (Non-Fungible Token) becomes increasingly popular, the methods of issuing NFTs have also gained attention. Some community members have proposed naming the initial NFT issuance as INO (Initial NFT Offering).

So, what exactly is INO? In fact, INO is similar to various types of IXO, and its purpose is to distribute NFTs while also raising funds.

Recently, projects such as BakerySwap and NFTX have attempted or planned to adopt this concept.

We will use these two examples to introduce the concept of INO.

On March 10, the Binance Smart Chain (BSC) DEX project BakerySwap announced that it would introduce the INO mechanism, with the first issuer using this method being Chinese artist Cao Jun, whose landscape painting was auctioned for $452,349 in 2018.

As of now, information about this INO is still very limited, but it is speculated to belong to the common new issuance mechanism.

Another project that will introduce the INO concept is the NFT index fund project NFTX.

Recently, Scott Lewis, co-founder of DeFi Pulse, mentioned the idea of INO in his proposed NFTX V2 design concept.

The following is the translation of that concept:

Currently, this is just an idea, and it will be modified based on feedback.

Features:

• Time-locked exchange-only mode;

• INO (Initial NFT Offering) functionality;

Content creators can put a series of NFTs into a vault and then distribute ERC20 tokens according to their choice (airdrop, launch on Uniswap, token sale contract) and start a time period. During this time period, ERC20 holders can burn 1 ERC20 token and redeem 1 random NFT from the vault.

After the time-locked exchange-only mode is completed, users can normally start depositing and redeeming NFTs.

Fee Parameters

The DAO can set the withdrawal and deposit fee parameters for all NFTX D1 vaults, as well as the target withdrawal fee (the fee for redeeming specific projects from the vault). Fees are priced in vault ERC20 tokens.

A 1% deposit fee means that for each NFT deposited, the NFT holder will receive 0.99 ERC20 tokens.

A 1% withdrawal fee (which can be set higher or lower for each vault, defaulting to 0%) means that NFT holders must spend 1.01 ERC20 tokens for each NFT redeemed (it is expected that in most cases, the withdrawal fee will be set to 0).

A 10% target withdrawal fee means that NFT holders must spend 1.1 ERC20 tokens to redeem a specific NFT.

Fee Details

NFT Issuers

For issuers using the NFTX protocol for initial distribution, they can choose an address to receive 40% of the fees.

DAO Treasury

For vaults initiated by issuers, the DAO will charge a 40% fee. For vaults not initiated by issuers, the DAO will charge an 80% fee. (Alternatively, fees can be set to 0%, with 60% allocated to liquidity providers LP to earn NFTX).

Liquidity Providers (LP)

Liquidity providers (LP) who have staked NFTX/D1 LP tokens in the staking contract designated by the DAO will be eligible to claim the remaining 20% of the fees.

Summary

From the above two examples, it can be seen that the mechanism of INO is not unfamiliar; it merely replaces the ERC 20 type tokens we are familiar with with NFT art pieces. In the short term, this may just be a way to cater to market speculation demands.

As for whether these mechanisms can attract real users, we will need the market to provide us with the answer.