TLDR:
- Since July 2022, Sudoswap has processed 23.8k ETH in volume (approximately $39.7 million) involving 38.1k unique wallets. A total of 96.9k NFT transactions have been facilitated on Sudoswap.
- Nansen data shows that there are currently 1,687 Sudoswap pools, although not all of them must necessarily have had a sale.
- The increase in the total value locked in Sudoswap’s liquidity pool to $2.9 million in such a short span hints at its early popularity among NFT market participants.
- In the first week of its public release on July 9, Sudoswap’s volume represented 0.03% of the total market. After a month, this proportion increased approximately 121 times at the end of August. In a similar period, OpenSea saw its market volume dominance drop from 71.2% to 66.9%.
- Although Sudoswap’s initial growth in August was undoubtedly exponential, market trends data on Sudoswap indicate that this trend might be losing steam in the short run. However, this slowdown in transactions and users is in line with the broad NFT market trends.
On Sudoswap, users can create open swaps where any market participant can view and interact with a specific wallet address and become an exclusive participant in an NFT trade. The protocol uses an open-source 0x protocol to create and settle swaps between any combination of ERC20, ERC721, ERC1155 tokens, or even a combination of all three where NFT trades can be settled ETH or WETH. Despite the recent hype and attention Sudoswap garnered on Crypto Twitter, its concept of peer-to-peer NFT trading is not new. Before Sudoswap, we witnessed the launch of other similar platforms, such as NFTTrader and Swap.Kiwi.
What's the Sudoswap edge?
To put it simply, each NFT listing on Sudoswap is its own pool, where the seller is responsible for providing liquidity to those pools. This means that users can set the NFT values and other parameters for their pools, including selling the NFTs on a bonding curve where it gradually increases as NFT pieces are transacted.
An apparent edge that Sudoswp offers is the optimization of gas costs since users only need to pay for asset approvals and swaps. This feature differentiates Sudoswap from OpenSea and other NFT marketplaces, where users must pay gas to create orders.
Sudoswap allows assets to remain in users' wallets until both parties confirm a trade, facilitating a trustless transaction. To uphold the integrity of being trustless, Sudoswap uses trade codes instead of users posting hyperlinks. This security feature implies scammers are deterred from luring unsuspecting users with fraudulent hyperlinks. For a specific trade to be sent to another party, the trade initiator will need to give a trade code to another party, who will input the code to complete the trade.
Since users can seamlessly buy NFTs across different pools, faster and more efficient price discovery of NFTs are encouraged. Arguably, this reduces the threat of traders and speculators being stuck with an illiquid NFT.
New challenges introduced by Sudoswap?
Sudoswap does not pay any royalties to the creators of the NFTs trade. Such a practice differs from the current market leader OpenSea which pays, on average, 5% to NFT creators on the secondary sale of their NFTs (of which OpenSea charges 2.5% as a fee for its platform). Instead, Sudoswap charges a 0.5% fee on trades, sending this revenue to its treasury, not the creators. Such a practice might severely impact the revenue streams of NFT creators. Some critics, such as Punk #6529, have argued that “not paying royalties" is not a sustainable competitive advantage for Sudoswap.”
The platform’s low fees mean it has become relatively attractive for NFT traders, especially those who trade in high frequencies. However, Sudoswap had also found itself attracting potential wash trades (a similar trend noted on LooksRare when they initially opted not to charge fees on specific NFT collections). Since Sudoswap’s launch, Nansen’s wash trading filter flagged approximately 3400 ETH worth of transactions on Sudoswap that are possible wash trades.
Sudoswap’s marketplace trends
Since Sudoswap’s official launch in July 2022, its marketplace trends suggest that NFT market participants welcome how Sudoswap disrupts the ways NFTs are transacted. Since July 2022, Sudoswap has processed 23.8k ETH in volume (approximately $39.7 million), involving 38.1k unique wallets. A total of 96.9k NFT transactions have been facilitated on Sudoswap. Additionally, the increase in the total value locked in Sudoswap’s liquidity pool to $2.9 million in such a short span hints at its early popularity among NFT market participants. Nansen data shows that there are currently 1687 Sudoswap pools, although not all of them must necessarily have had a sale.
In the first week of its public release on July 9, Sudoswap’s volume represented 0.001% of the total market. After a month, this proportion increased approximately 3200 times at the end of August. In a similar period, when we look at the volume excluding minting, X2Y2’s transaction volume share dropped from 47.3% to 46.4%, OpenSea’s market volume dropped from 36.0% to 33.9%, while LooksRare’s volume remained similar.
Although Sudoswap’s initial growth in August was undoubtedly exponential, market trends data on Sudoswap indicate that this trend might be losing steam in the short run. However, this slowdown in transactions and users is in line with the broad NFT market trends.
In the recent week, we have witnessed a slight plateau in Sudoswap’s volume; with a slight drop in the number of users transacting on the platform. This may be due to the drop in first-time buyers transacting on Sudoswap.
A possible explanation for this drop in first-time users could be the recent announcement of the SUDO token. Before the release of SUDO, new users are incentivized to use the platform in the hope of receiving possible airdrops of the tokens. However, given SUDO’s announcement, speculative first-time users may no longer have the immediate incentive to switch to Sudoswap. It was announced that 41.9% of the initial 60 million SUDO supply goes to XMON holders.
Insights from Nansen dashboards show that 0xmons multi-sig treasury owns approximately 75% of XMON - a proportion which will not be eligible for the lock-drop. The top 10 individual XMON holders collectively own 371.8 XMON, making up 3.7% of the XMON supply. We can speculate that these holders are likely to be the largest SUDO recipients, subject to the amount of XMON they are locking up for the SUDO airdrop.
Concluding comments
Sudoswap introduces a new way to conceptualize NFT trades and transactions. Since its launch in July 2022, Sudoswap has experienced rapid growth. While the current transaction-related metrics indicate a slowdown in its growth, this trend is in line with the general NFT market performance. It is, however, still early to gauge the extent of Sudoswap’s impact on the NFT ecosystem.
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