Sudoswap is leveling up ♨️

The newest NFT AMM is near!
Jul 5, 20223 min read

Dear Bankless Nation,

“AMM” stands for automated market maker.

Generally speaking, it’s another way of saying decentralized exchange, i.e. a DEX. The automation of this style of exchange stems from its “liquidity pool” model, which entails crowdsourcing pools of assets into smart contracts that people can trade through permissionlessly.

You probably recognize this approach from DeFi projects like Uniswap or Sushi, but the AMM design has also been gaining traction in the NFT ecosystem since the launch of NFTX in January 2021.

Take note, though, because there’s a new NFT AMM arriving that’s called sudoAMM, and it has many NFT aficionados excited.

The system will evolve the sudoswap NFT trading protocol into a fully-fledged on-chain marketplace in style, so let’s highlight some of the big ideas around sudoswap’s big progress for today’s Metaversal.


Sudoswap evolving into an NFT marketplace

Sudoswap explained

Last year was a boom year for NFT infrastructure innovations, and one of my favorite projects from that infra surge was sudoswap, an over-the-counter (OTC) swap app for NFT and token trades built on top of the 0x Protocol.

sudoswap was launched in April 2021 by 0xmons, a pseudonymous developer who’s renowned in veteran NFT circles for releasing the eponymously-named 0xmons pixel monsters collection, zkNFT, and beyond.

In the summer of 2021, 0xmons began envisioning an NFT AMM that would rely on liquidity pools and bonding curves (as opposed to just liquidity pools) to facilitate NFT trading. This work led to a general whitepaper and a blog post outlining the basic design of what would officially become the “sudoAMM.”

The sudoAMM model 101 - image via sudoswap

In October 2021, the sudoswap team launched the v2 of its swap NFT system, which improved wallet readability, added swap history to profiles, and more. All the while, the sudoswap team kept developing the sudoAMM behind the scenes.

In January 2022, the sudoswap team phased out all links from the app’s website in an effort to deemphasize the OTC service ahead of the sudoAMM rollout. (Note: when sudoswap migrates to the sudoAMM, the project’s initial but deemphasized OTC service will remain indefinitely accessible at  otc.sudoswap.xyz.)

Then in March 2022, the 0xmons team officially announced its plans for the sudoAMM and revealed that community members were stress testing the system ahead of a “full public launch.”

How will the new sudoswap work?

When finally opened up, sudoAMM will underpin the new sudoswap NFT marketplace.

Traditional AMMs allow for liquidity provision that supports prices from zero to infinity, i.e. all along an asset’s possible price range. However, sudoAMM is a concentrated liquidity AMM for trading whole NFTs, meaning it lets people customize the price ranges they provide liquidity to.

Instead of fractionalizing NFTs into divisible ERC20 tokens like NFTX does, sudoAMM will instead use bonding curves to facilitate the trading of whole NFTs. Accordingly, a given pool’s price quotes will be determined by which bonding curve style the pool creator chose. We’ve never seen this sort of marketplace approach in the NFT ecosystem before!

Image via sudoswap

sudoAMM will support buy-only pools, sell-only pools, and pools where users can buy and sell. Out of the gate, then, the new and improved sudoswap will let traders trade ETH for NFTs and vice versa, while liquidity providers can 1) deposit ETH to pools to earn NFTs, 2) deposit NFTs to pools to earn ETH, or 3) deposit both ETH and NFTs to pools to earn trading fees across both the buy and sell sides.

What to expect from sudoswap 2.0

  • Low-slippage NFT trades
  • Low-cost NFT trades
  • A lively and decentralized on-chain NFT marketplace
  • Improved flexibility for traders and liquidity providers alike, e.g. the ability to create “dynamic buy/sell wallets”
  • $SUDO, which is not launched yet but will serve as the governance token of sudoswap after it is

Zooming out

Roughly speaking, the new sudoswap will function like Uniswap V3 for the NFT ecosystem, i.e. providing avenues for supplying concentrated NFT liquidity. Yet sudoswap will also be able to do things natively that Uniswap V3 can’t, like support dollar cost averaging (DCA) strategies through single-sided liquidity pool action. All things considered, then, sudoswap is an NFT project you want to have on your radar for 2022 and beyond. A release date isn’t set for the sudoAMM yet, but I think it’s fair to expect its launch sometime later this summer, so keep your eyes peeled!

Action steps

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

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