Quick take:
KuCoin has launched the first-ever NFT ETF by a centralised exchange. The leading crypto exchange platform on July 29 debuted the NFT ETF Trading Zone, a product developed to improve the liquidity of NFT assets. But more importantly, KuCoin believes the product will lower the investment threshold for blue-chip NFTs, thus expanding its addressable market to over 20 million users.
Blue-chip NFTs are among the rarest NFTs in leading NFT collections. Yuga Labs’ Bored Ape Yacht Club and Cryptopunks projects contain the most blue-chip NFTs, while Azuki, Meebits, Doodles, and Clone X also have a rich portfolio of expensive characters.
Because NFTs are sold as 1-for-1 items, it means that the number of NFT traders capable of acquiring blue-chip NFTs is limited. In addition, most of these NFTs are not offered as fractionalised NFTs, which allow users to buy portions of a given NFT.
This is what KuCoin’s NFT ETF Trading Zone is trying to change.
In general terms, exchange-traded funds (ETFs) are trading instruments created based on an underlying pool of assets. As a result, when an investor buys an ETF, there is no ownership attached to the purchase, although trading data for the ETF can be used by investors to make a decision about the liquidity of the underlying asset.
KuCoin is leveraging the same concept by enabling NFT traders to trade NFT ETFs of the leading blue-chip NFTs. The company was also the first to introduce a USDT-dominated ETF product for specific blue-chip NFTs.
The new Trading Zone aims to broaden access by allowing users to own proportionally shared ownership of native blue-chip NFTs, with the first token supported bing hiBAYC, an “ERC-20 token representing 1/1,000,000 ownership of the target BAYC in the BAYC Meta-Swap of the Fracton Protocol,” KuCoin said in a statement announcing the launch of the NFT ETF Trading Zone.
The company plans to launch more NFT ETFs in the future in partnership with the corporate department of the Fracton Protocol.
KuCoin also indicated that hiPUNKS, hiSAND33, hiKODA, and hiENS4 tokens will be joining hiBAYC as underlying assets at the beginning.
The NFT ETF Trading Zone marks a giant step in the leading crypto exchange platform’s efforts to establish a mature NFT market by lowering the investment threshold of high-potential and top NFTs in the crypto industry.
“Moreover, it also provides an exceptional trading experience with world-class liquidity, a better way to invest in top NFTs through direct purchases with USDT, instead of ETH, and without concerns about managing NFT infrastructure elements, such as OpenSea, wallets, and smart contracts,” the company wrote in the press release.
Commenting on the launch of his company’s newest product, Johnny Lyu, the CEO of KuCoin, stated:
“As a trading platform that is maintaining its rate of penetration in the NFT sector, KuCoin will continue to offer user-friendly products for investors, allowing them to easily participate in NFT investments. We are very excited to become the first centralized crypto exchange to support NFT ETFs that allow users to conveniently invest and trade top NFTs directly with USDT. In the future, KuCoin will keep exploring more NFT-related products for our users.”
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