Gate NFT AMM - Increased NFT liquidity, and More Diverse Trading Options

2023-03-16, 04:09

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![](https://gimg2.gateimg.com/image/article/1678939898img_v2_28027ec0-3b58-440f-be60-a3eeede7d98h.jpg)
Gate.io, a global cryptocurrency exchange, has introduced a new feature called [NFT AMM](https://www.gate.io/nft/?ch=GM_blog_nft_20230316&utm_campaign=TR_vqham4NF&utm_content=&utm_medium=ptr&utm_source=CH_sApqy83F&utm_term= "NFT AMM"), based on the Automated Market Makers (AMM) protocol, to provide more liquidity and trading opportunities for users interested in non-fungible tokens (NFTs). NFT AMM is a protocol designed to price NFTs through mathematical formulas and is different from traditional trading platforms that use the order book method. The NFT AMM feature is expected to provide greater liquidity for NFT trading by allowing users to become market liquidity providers and earn additional income.

In the mainstream NFT trading market, peer-to-peer trading is the most common method, and buyers can either make an offer on the NFT they are interested in or purchase it directly based on the seller's listed price. However, this method has some limitations as sellers cannot always make a sale quickly, and they may have to lower the price resulting in a loss if they need to sell their assets quickly. To address these issues, NFT AMM was introduced, which focuses on liquidity and allows users to become liquidity providers. By participating in the market liquidity, users can earn additional income.

AMM is an automated market maker protocol commonly used by decentralized trading platforms to price assets through mathematical formulas. Unlike traditional trading platforms that use the order book method, asset pricing is done through pricing algorithms. The AMM pricing formula varies depending on the protocol. <a href="/uk/price/uniswap-uni" target="_blank" class="blog_inner_link">Uniswap</a> uses the constant product market maker model, which is represented by the formula x * y = k, where x represents the amount of one token in the liquidity pool, y represents the amount of the other token, and k is a fixed constant indicating that the total amount of liquidity in the pool must remain constant.
![](https://gimg2.gateimg.com/image/article/1678940655366hdhdh.png)

The NFT AMM feature is expected to provide greater liquidity for NFT trading by allowing users to become market liquidity providers and earn additional income. Liquidity providers (LPs) play a crucial role in the functioning of liquidity pools. Essentially, LPs inject funds into the pool, which serves as a large pool of funds for traders to conduct transactions with. As compensation for providing liquidity to the protocol, LPs earn a commission from the transactions that take place within the pool. In the NFT AMM model, the percentage of fees earned is set by the liquidity pool creator.
![](https://gimg2.gateimg.com/image/article/1678940644sds22.png)
Overall, the introduction of the NFT AMM feature is expected to provide greater liquidity and more trading opportunities for users interested in NFTs. The AMM protocol has the potential to transform the way NFT trading is conducted, and it will be interesting to see how the market responds to this new feature. As the NFT market continues to evolve, it is likely that more innovative solutions will be developed to address the unique challenges faced by NFT traders.

Author: Global marketing Mason
This article represents only the views of the researcher and does not constitute any investment suggestions.
Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.

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