List of AMMs designed for trading with fractionalized NFTs


Unlike traditional order book NFT markets like OpenSea in which users buy and sell individual NFTs from each other, an NFT AMM allows users to instantly buy or sell NFTs without a counterparty, with the trade price determined algorithmically. This drastically improves liquidity and price discovery in the NFT market, just as the first wave of AMMs did for ERC-20 tokens. This unlocks new possibilities for using NFTs as collateral, or in futures or options markets.
The first few NFT AMM platforms like NFTX or Sudoswap were groundbreaking in their own right, but the AMMs they offer are functionally constrained, being subject to the same limitations as Uniswap AMMs or offering a small selection of bonding curves. Moreover, they suffer the same composability issues plaguing the DeFi space. For example, if an NFT is priced in DAI, users first have to convert their ETH before making a purchase. This requires an additional transaction, usually in another app.
The Government Toucan AMM, Shell’s first NFT AMM, is our first look at the future of NFT swaps. It’s exciting for a few reasons. First, it uses Proteus, the most flexible AMM engine on the market. Although the TOUCOIN+ETH pool implements a simple constant product curve with Proteus, future NFT pools could take advantage of more sophisticated Proteus bonding curves customized to any asset. Another big leap is its excellent UX, due to Shell’s composability: The NFT swaps work like any other token swap and can be batched with any other DeFi action. That means you can swap a Toucan for any token you’d like, or buy a Toucan with any token in your wallet. If you want to get really fancy, you can even use LP tokens to buy Toucans!
Shell is the only DeFi protocol that can natively interface with both fungible and non-fungible tokens. This is a critical step in bringing DeFi and NFTs closer together, and building out robust financial tools for NFT creators, collectors, and traders. We can already see this happening with Proteus: Because fractionalized NFTs can harness Proteus, it’s now vastly simpler to build finely-tuned concentrated liquidity pools for NFTs.
Most importantly, Shell’s NFT swaps showcase the power of composability. As we continue to innovate and add more functionality and new primitives to the core protocol, NFTs will be automatically included in the next wave of DeFi.