PRISM — Liquid NFT Markets

0xDb6c
January 10th, 2022

TL;DR

Prism is the Uniswap for NFTs.

  • Buy and sell NFTs instantly.
  • Always on sale.
  • Algorithmic price discovery.

Experience it for yourself 👇


The way we monetize media NFTs does not scale.

At Glass, we’ve taken an experimental approach to monetizing media. We’ve offered our early creators two ways to monetize their work, 1/1 auctions and limited editions, the two most common ways to monetize NFTs today.

Neither of these will work in the long run. Here’s why.

1/1 Auctions

Auctions rely on a handful of collectors competing with each other, driving up the price of a work in a short amount of time. Auctions have high highs, but are unsustainable for the vast majority of creators.

On established NFT platforms, the majority of auctions never hit their reserve price. Creators come in with an expected valuation for their work, and most leave disappointed when it doesn’t reach their expectations.

When the auction does succeed, the creator is happy to get thousands of dollars in a short amount of time. The collector, however, is exposed to high risk since the event of a secondary sale is low.

Limited Editions

Limited editions use scarcity and community to drive a collection to sell out. However, similar to auctions, it’s hard for the creator to choose a good price for their work.

And even if they do sell out, the secondary market is relatively small compared with speculative PFP projects.

The key take away is that liquidity matters, at any point, willing buyers may disappear and liquidity with it.


The problem with both of these models is the lack of financial upside for collectors. In the vast majority of cases, collectors are simply donating to a creator, instead of investing in a piece of content.

If we want millions of new collectors in web3, that will drive value to creators, we need an NFT model that has lower risk and higher security for collectors.

Today, we are excited to announce PRISM.

PRISM makes collecting media NFT safer and less risky for collectors. The price of an NFT increases predictably as more people collect it, and collectors can sell their NFTs whenever they want.

How It Works

PRISM works a lot like open editions, except the price changes dynamically.

Every time an NFT is bought, the price goes up. Every time its sold, price goes down.
Every time an NFT is bought, the price goes up. Every time its sold, price goes down.

As NFTs are purchased, the price per NFT increases by a fixed amount. At any point, a collector can sell their NFT back, decreasing the price by that fixed amount.

Let’s break it down with an example.

  1. The first NFT sold for a new video starts at 0.1 ETH.
  2. After the first one sells, the price increases by 0.01 ETH.
  3. The next NFT sells for 0.11 ETH.
  4. The price increases again, to 0.12 ETH. And so on, for the next edition.
  5. Now, the collector of the first NFT can sell the NFT back to make a small profit.

Selling Back

You can sell instantly back to the smart contract. No OpenSea fees, no waiting for offers. One click, sell.

This mechanism is known as a bonding curve - specifically, a linear bonding curve, because the price increase is always the same. The beauty of this model is that liquidity is guaranteed by the smart contract, and it’s fair for both early collectors and late collectors. Collectors can be guaranteed profits fairly quickly and easily.

How Do Creators Make Money?

The creator makes 10% on every NFT purchase. Since the price is always changing, the creator’s income compounds as more and more people hold the NFT.

When you sell an NFT back, 10% goes to the creator.
When you sell an NFT back, 10% goes to the creator.

Let’s take a look again at the example from before, with a starting price of 0.1 ETH and a price increase of 0.01 ETH per NFT sold.

  1. If 30 NFTs are bought (assuming no one sells along the way), the creator makes 0.475 ETH.
  2. If 60 NFTs are bought, the creator makes 1.84 ETH.
  3. If 100 NFTs are bought, the creator makes 5.06 ETH.

You can play with the numbers yourself below 👇 just slide the n number of NFTs, to see how much you would make as a creator.

What’s amazing is that there is no “end,” like there is with auctions and editions. Auctions “end” after the countdown expires. Limited editions “end” after they sell out.

With PRISM, a piece of content can be valued continuously, across time, forever.

Have you ever seen a video from 7 years ago show up on your YouTube feed, that only recently got millions of views? Memes are timeless, sometimes taking months and even years to reach their full potential.

Monetization should work the same way culture does.

Conclusion

NFTs are new, so the space for how to monetize them is relatively unexplored. What has worked with earlier projects does not necessarily scale to others.

To tap into the true potential of NFTs — to change the way creative content is monetized — we must explore better models.

Collectors ultimately support creators. Reducing risk expands the demand for media NFTs, allowing for more collectors to be onboarded to Web3, and allowing for more artists to be supported.

PRISM is our first step in evolving NFT media economics to make the NFT space more sustainable for both collectors and creators.


Protocol

If you are a developer or NFT platform interested in using PRISM, apply for early access here:

After undergoing audits, the contract code will be published under a AGPL 3.0 license.

Arweave TX
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Ethereum Address
0xDb6c1a8aF1883262aaD221A25816468ef693D4A2
Content Digest
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