NFT's + DeFi = JPEG'd
Disclaimer: This is not financial advice. Only sharing my thoughts about crypto projects. This is made for educational purpose. You can always lose your money in crypto. Be careful.
My first crypto analysis will be about: JPEG’d. First I will start explaining what JPEG’d is trying to achieve. Future plans. The people involved. Tokenomics. Bla bla bla.
The second part will be focused on making bulletpoints of bull-cases and FUD-cases. I will simply try to explain my thoughts in an objective way based on the information that we have about JPEG.
What is JPEG’d?
Jpeg’d is trying to be the DeFi cornerstone for NFT’s. Basically a hub where you can utilize your fav NFT to make more income or specifically: get a loan. Getting a loan for owning a JPEG, you say? What a time to be alive…
It’s quite easy to grasp what they are doing if you are familiar with Makerdao: you deposit collateral (ETH for example), open a CDP (Collateralised Debt Position) and mint DAI using your collateral. You can now use your DAI for other things while still being the owner of your collateral (ETH).
Jpeg’d is doing the same thing but the difference is that you can use your NFT as collateral. Instead of minting DAI, you mint PUsd, a stablecoin of JPEG’d.
Cryptopunks will be the first NFT to be used as collateral for loans on JPEG’d
This is a big and unique use case as the NFT market is huge but still untapped in terms of utility. Being able to use your piece of art to get a loan, is revolutionary and easy to grasp if you are already familiar with DeFi. It makes your NFT more useful than just for showing off or buying/selling/holding. It makes your NFT actually a useful asset.
As stated in their first medium article, their vision is to expand beyond just JPEG’s:
‘‘Our vision for the future sees the NFT space expanding to music royalties and albums.’’
Smart move, music industry and NFT’s has a lot of potential and room to grow.
Liquidation Free Vaults
Stated from their medium articles, one of the core features of JPEG’d will be the ability to deposit into vaults with 0% chance of liquidation. The debt generated from depositing NFT’s will fluctuate based on valuation. The NFT’s can be withdrawn within 24-48 hours. Obviously, this means that these vaults with generate less return than vaults with a possibility of liquidation. It’s a trade off but a safe way to still get returns.
Sneak peak of the UX of JPEG’d , including the vaults.
The so called ‘Chad Council’
JPEG’d is founded by big names in the DeFi ecosystem. They saw an opportunity within the NFT space and had the idea to combine NFT’s with DeFi. To be quite frank, the NFT space is quite ‘‘simplistic and underdeveloped’’ and seeing the DeFi bigbrains step up the NFT ecosystem, is a good thing. Who are these bigbrains you say? I got you covered (keep in mind it’s a mix of contributors and advisors):
Defi God, Tetranode and Tztokchad
Santiago R. Santos
Carson Cook (involved with Tokemak)
Projects: Dopex, The LAO
Jannie Degen Spartan
There are more advisors but these are the biggest names I could find. Their tokens are vested 2 years from date of TGE (6 month cliff).
Decentralized Perpetual Futures
This is where I believe, the hand of Tztokchad is coming in. Obviously, being the founder of Dopex (a decentralized option platform on arbitrum), it’s quite a nobrainer that he might be the one to design this part of JPEG’d.
The idea is that you will have the power to speculate on floor prices of NFT collections and going long/short on NFT’s. An option market but for NFT collections. How? Chainlink nodes will be used to acquire data for the valuations. As a Chainlink guru, you can understand that I’m very happy with that as I believe it’s the best oracle solution. Also, they plan to be on Arbitrum: low gas fees, reliable and coincidently the same L2 as Dopex…..
Token Generation Event
The JPEG token is the governance token of the JPEG’d protocol. Stated on their website, it’s described as a ‘valueless’ token. The irony, is that if you remember DeFi summer, Andre Cronje was saying literally the same thing about YFI. We all know what happened after that…..
Aside from the psyops, the token will be used to provide liquidity and resources to the DAO. It will also oversee, administer, and change parameters to the protocol. The donation event just got finished and they managed to raise roughly 72 million usd. A huge amount which will be discussed later on.
The total supply is 69,420,000,000 JPEG. The distribution:
Zoomer’s Bull and FUD cases
All in all, this was just a brief overview of the most important information I could find on JPEG’d. Let’s start with the fact I’m invested in JPEG’d. The reason why, is that the bull cases are worth more than the FUD cases. Let’s get into it:
First of all, the valuation of JPEG’d is considerably high. Having raised 72 mil without a launching product can be considered as FUD. Also the fact that there was no Liquidity Mining program after 2 days of token claim period, made the token tank in price as there was liquidity added but no incentive to buy the token. Having a liquidity program ready after token claim, could have prevented a lot of sell pressure as most investors have an attention span of a goldfish.
I consider this as a minor mistake though. Being in crypto for 4 years, I’ve seen many mistakes with blue chips projects (Aave aka ethlend and Fantom suddenly pops in my mind) and something like this doesn’t affect the fundamentals of the project.
Moonboys expected the moon but didn’t realize that if you let everybody donate, who are you going to dump on?
Now that the price is below LBP and the weakhands/moonboys already sold at a loss, I’m expecting a U-turn. Why? Let me get into the bullcases:
You have to understand first of all, who’s behind it. DefiGod , Tetranode and Tztokchad already made it. A money grab would be foolish, they know with the influencer power they have, they can setup an empire within a huge market (Crypto/NFT/DeFi). The position of wealth they have built, is based on conviction and fundamentals: I believe this will be their own baby and the same philosophy will be used. Not even to mention their image is bigger than the cashgrab opportunity.
With TzTokchad, they have a bigbrain that can help with combining NFT’s with derivs. Tetra has a long term vision and starcraft type of brains, you can’t fade that.
JPEG’d also can scale ‘en masse’ with it’s architecture. Anything at opensea can theoretically be added. It’s a lot easier to scale. Not to mention that JPEG’d is going to be the only NFT derivative protocol that is worth a damn right now. 72 mil to spend is a huge amount that can be considered FUD but because of the reasoning above (the team behind it), I think it’s rather Putin’s nuclear rocket to nuke JPEG to interstellar rather than a cashgrab.
After all, I’ve never been an NFT guy as I simply can’t do an analysis of a JPEG before buying (which I can with DeFi projects) but this is a different story. There is a clear utility for NFT’s being made, a market that is untapped and could explode once NFT holders understand how DeFi works.
Ironically, this could be the bridge for normies to get into DeFi. Let’s see where this goes, I’m a fan.
Great article! I like the format for analysing a project. Looking forward to seeing what else is in store.
Launching at a 230 mil fdv is high for a company without a product, but considering that the raise was to fund the treasury it would make sense that they would want as much money to underwrite loans as possible. It wouldn't surprise me if the team knew the launch was going to go the way it did. The larger the treasury the better the JPEGd protocol can run.
Personally, I think the combination of futures exchange and NFT loans makes this a huge product. The team behind it will all but guarantee its monopoly since they also own a large amount of the NFTs that will be used as collateral.