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NFT Infrastructure and Liquidity Solutions Based on Fractal Bitcoin (Providing abundant NFT liquidity through advanced cross-chain asset protocols and bond curves)

Currently, the NFT market faces a continued downturn. In August 2024, global NFT sales totaled $374 million, a 76% decrease from the peak of $1.6 billion in March. Although sales volume has dropped, the average value per NFT transaction has risen, with the average sale price in August increasing by 27%, indicating a shift toward more cautious investments (Live Bitcoin News).

In the Bitcoin ecosystem, Bitcoin NFTs based on Ordinals are rapidly rising. The Ordinals protocol, launched in 2023, introduced a new concept of inscriptions, paving the way for NFT transactions on Bitcoin. By January 2024, the total number of Ordinals inscriptions had exceeded 56 million. With major markets supporting Ordinals and BRC20, Bitcoin NFT trading volume has significantly increased, with sales reaching $167 million in the past 30 days, making it the second-largest NFT blockchain after Ethereum. However, the current Bitcoin NFT ecosystem is still in its early exploratory stage, with existing solutions mainly utilizing protocols like RGB and Ordinals for creating and trading NFTs on the Bitcoin network. These solutions face challenges such as performance bottlenecks, limited scalability, and restricted smart contract capabilities, hindering the widespread application of NFTs on the Bitcoin network.

The lack of liquidity in NFTs is mainly due to high trading barriers, inflexibility, low capital efficiency, and inefficient pricing mechanisms, leading to excessive market volatility, high uncertainty, and exaggerated price movements. Mainstream NFT markets often suffer from opaque trading models, artificial liquidity, and privilege, causing irrational market booms or panics. Commonly used order book trading systems further reduce NFT liquidity and worsen pricing. As a result, NFT Automated Market Makers (AMMs) have the potential to break the current dominance of order book trading systems. Although there have been innovations like SudoSwap aiming to create an AMM-friendly ecosystem for NFTs, they still suffer from relatively high slippage, and few innovations have successfully established sufficient NFT liquidity with or without incentives.

Therefore, borrowing NFTs from lending has become one of the most effective and popular ways to cash out without selling. However, liquidation and bad debt risks have become a double-edged sword for lenders and borrowers. In addition, using fragmentation tools to financialize NFTs is another popular cash-out method, improving liquidity, tradability, pricing, and risk diversification by converting a single or group of NFTs into fragments. However, fragmented NFTs are rarely seen in the market due to the lack of motivation for holders to provide liquidity by fragmenting their NFTs and the lack of buying incentives for potential buyers.