The MarketVault is where NFTs sold to the protocol or held as collateral are kept. NFTs that have been sold to the MarketVault can be purchased by
Collectors using the redemption, Buy-It-Now, or Bids mechanics. The MarketVault also directs the minting and burning of the
NFT Index Token, which allows the token to track its backed value via arbitrage.
The core difficulty in creating a lending protocol for NFTs is the problem of liquidations. NFTs make a poor collateral type in traditional lending protocols because the principals of loans are dominated in fungible tokens, and it is difficult to quickly convert an NFT into a fungible token. The MarketVault underlies a new type of asset capable of receiving a variety of NFTs and producing a fungible token, in essence fungifying the NFT. This provides the guaranteed, instant counterparty necessary to efficiently carry out liquidations.
Interacting with the MarketVault is permissionless; it is not just a guaranteed counterparty for the protocol, but for every market participant. Since it is able to receive multiple types of NFT and produce a single fungible token, each new collection whitelisted to the MarketVault builds upon the liquidity of the previous collections, allowing it to accrete upon itself. Rather than a variety of fragmented vaults with shallow liquidity, the MarketVault provides a unified, global source of liquidity for NFT trading.
The MarketVault contains NFTs in two conceptual sections: Unreserved and Reserved.
Unreserved NFTs enter the vault when a
Seller directly deposits their NFT into the MarketVault in exchange for
NFT Index Token or when loans collateralized by NFTs default or become liquidated. NFTs in the Unreserved section of the MarketVault can only exit via the