About the editor: Spencer Noon is Co-founder & General Partner at Variant Fund.

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Network coverage:
Coverage on Sudoswap, OpenSea, and NFT market analysis.

Sudoswap is a brand new primitive for DeFi, unlocking liquidity for NFTs similar to Uniswap for fungible tokens. The AMM protocol for NFTs allows users to create pools to buy, sell, or market make NFTs. In addition to having pools for blue chip collections like Nouns, Azukis, and Pudgy Penguins, Sudo has unlocked liquidity for a longer tail of newer, more experimental collections.

Similar to Uniswap when it burst onto the scene with its v1 in 2018, Sudoswap is already starting to attract 3rd party developers building at the intersection of DeFi and NFTs. For example, Reservoir recently enabled instant selling of Sudoswap NFTs via its platform. And despite being live for just 3 months, Sudoswap is already on track to be a leading NFT marketplace, with ~$54m in cumulative volume and ~30k users to-date, impressive figures that make the “Uniswap for NFTs” comparison even tougher to ignore.

• While volumes on several other NFT marketplaces are inflated by significant wash trading, the data suggest Sudoswap volumes are largely and increasingly organic. When filtered for back-and-forth trades with the same wallet, Sudoswap’s volumes continue to look strong relative to the broader NFT market turndown, where volumes on other marketplaces such as OpenSea has also lagged. Only 2.5% of daily Sudoswap volume consists of wash trading, compared to 90%+ and 80%+ on LooksRare and X2Y2 respectively. This is especially notable considering the project recently announced it would be launching a SUDO token.

Sudoswap enables an important new primitive in the NFT market: automated liquidity provision, which has proven to be extremely profitable for users. On Sudoswap, users can create trade pools to earn fees for providing bi-directional liquidity (swapping ETH for NFTs or NFTs for ETH). To create a trade pool, users (also known as LPs) deposit ETH and NFTs and configure a bonding curve that specifies the prices at which the pool will transact. In addition to linear and exponential bonding curves, Sudoswap recently added concentrated liquidity curves as an option.

In just 3 months, the fees earned by Sudoswap liquidity providers have totaled over $1.4M, a staggering figure that shows LPing is extremely profitable for users. For perspective, this figure is roughly 1/4th of the fees earned by LPs on Curve, one of Ethereum’s largest DEXs, which saw $16.3B in volume over the same period! Sudoswap pools also open up interesting possibilities for collections: they can conduct initial distributions along a bonding curve, create pools of collection-owned liquidity, and more easily incentivize third-party liquidity providers.

• YTD NFT volume has been 10.9m ETH (~$30.5b USD), with a weekly volume peak of 514k ETH in late January. There’s been a significant NFT market slowdown in recent months, with August volume down 76% (87% in USD) from all time highs. Prior to 2022, OpenSea dominated NFT markets (Q4 2021 market share >90%). Over the year, OpenSea has shed market share to competitors, down to 65% in August (LooksRare - 2.63%, Gem - 6.42%, X2Y2 - 15.75%, other - 9.76%).

• The slowdown made way for new marketplaces - Sudoswap, Blur, ENS.Vision and others. Another burgeoning segment is community marketplaces; while this niche is still young, there are major efforts underway (see @Snag_Solutions, @usefirstmatexyz, ENS.vision, forgotten.market).

• ENS.Vision, a community marketplace for ENS domains, has become the dominant secondary marketplace for ENS domains (1 month sales share = 48.25%) and has even built a strong native order book with 28.28% of recent sales coming from ENS.vision native liquidity. Explore all this data and more here.

• What defines an NFT collector? While almost anyone can consider themselves a collector, this analysis focuses on addresses "collecting" the top 100 NFT projects by lifetime volume. Collectors (or addresses) are defined as as: 1) holding three of more NFTs of the same project, 2) holding three or more NFTS of three or more different collections, and 3) holding the NFTS for 60 days+ (this eliminates flippers).