Photo by Monoar CGI Artist on Pixabay

NFTs have caught the attention of creators and their audiences, by enabling new forms of ownership, and novel revenue streams for creators.

NFTs

Non-Fungible Tokens (NFTs) are digital assets identified by a blockchain address. An NFT corresponds to some digital art or gaming asset and is minted with a smart contract.

Ownership of an NFT is determined by the blockchain address of a user and is registered on the blockchain via a smart contract.

By the very definition of an NFT, two NFTs are not interchangeable as each is unique, and has a unique address. However, in practice, NFTs are produced as part of collections. Many NFTs come with a limited number of copies, similar to limited edition prints.

The NFT Liquidity Problem

Like traditional art, for gaining any economic value, one should be able to buy and sell NFTs efficiently.

A major problem with NFTs marketplaces is a lack of liquidity. This forces sellers of NFTs to face difficult decisions, as it is hard to predict how bids will progress into the future.

We propose to consider call auctions for increasing liquidity in NFT marketplaces.

Call Auctions

In a call auction, market participants place orders to buy or sell at a certain bid or offered (ask) prices…