Pooled NFT v2
Pooled NFT has been a change of pace for our community. It’s the first product where we’ve practiced rapid prototyping and worked to keep our feedback loops as short as possible. We’ve been live on Mainnet for just a few months, and we’re already talking about v2.
Withdrawing the last NFT in a pool
In this blog post, we discuss an edge case for pools with a single NFT left inside them. This literal edge case poses a coordination problem for any fractional holders who want to access the value of that final NFT in the pool. Let’s look at a real-life example of this happening on chain.
The following Porsche NFT pool currently sits with just one NFT in the pool. Because of the way math and rounding works within Uniswap, you can see there remains dust in the Uniswap market that likely will never be able to be recovered.
Also, notice how an MEV bot holds 0.000000000000000001 Porsche Pool tokens. At some point, this opportunistic MEV bot sandwiched a trade and technically earned a profit. That fractional piece of the pool is worth less than a penny, yet without a way to contact the MEV bot, we have no way to withdraw the final NFT from the pool, you can trade it out for another one, but there will forever be one Porsche NFT in this Pool. We need an elegant solution to manage this edge case!
Introducing Pooled NFT v2
The primary objective of our v2 Smart Contracts is to provide an elegant solution for managing the last NFT that may get stuck in the pools.
To achieve this, we are implementing new permissions, which can only be invoked if a single NFT is left in the pool. The mechanism will allow us to set a Multi-sig wallet as an Admin of pools to help arbitrate this rare scenario. If our team is ever called on to arbitrate this situation, you can expect that we will liquidate the NFT and disperse the proceeds to the pool token holders pro-rata to their pool token holdings.
Key Features of Pooled NFTs v2:
- Multi-sig Managed Last NFT Removal: If a single NFT remains in the pool, the pool will no longer be permissionless, allowing the Multi-sig to take the NFT out of the pool.
- Pool Token Balance Reset: every pool token holder’s balance will be reset to 0 when the final NFT is removed from the pool. This enables reusability.
Future Considerations
As our experiment with Pooled NFTs progresses, we may explore implementing more complex logic that would autonomously initiate an auction and distribute the proceeds when there is a single NFT left in the pool.
However, since we are still gauging the adoption of Pooled NFTs, we are opting for a simpler and less-complex solution for the time being. This next iteration comes with a trade-off, as it gives our team control over the last NFT removal. Users of the protocol will implicitly trust the team to sell the NFT and distribute the funds accordingly. These permissions are only available when the balance of the pool is a single NFT. So those wishing never to trust anyone and use Pooled NFT v2 need to deposit 2 NFTs, and they get the same guarantees we shipped with v1.
Conclusion:
By introducing Pooled NFTs v2 with an elegant solution for stuck NFTs, we aim to enhance the user experience and solidify our position as a pioneer in the NFT space. We are excited to roll out these updates as we continue working towards collateralizing NFTs and tokenizing real-world assets. Our next blog post provides a status update to the community, so stay tuned!
Join us on Discord and Twitter to stay updated on the latest developments as we continue to polish Pooled NFT.
