NeoSwap
NeoSwap
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NeoSwap
Introduction
NeoSwap is a multi-item, multi-party NFT swap platform that enables smart contract barter to achieve the simplest trades for goods and services in the world.[1] Due to NeoSwap’s use of smart contract technology combined with its proprietary artificial intelligence algorithms, NeoSwap has unlocked NFT liquidity in ways never before imagined possible.
The NeoSwap platform finds the optimal multi-way trade between many parties where items (goods or services represented as NFTs) are swapped amongst the parties. For now, NeoSwap is focused on NFT swaps. The unique combination of NFT (both products and services) and cryptocurrency (“barter dollars”) has invented an entirely new way to barter powered by AI, termed “Neo-barter.”[2]
Why is NeoSwap revolutionary?
To better understand the implications of NeoSwap, the evolution of commerce must be better understood.
Initially, barter was the primary way to transact amongst individuals. This was traditionally performed in the town square or local souk. The method, however, is inherently unscalable as transactions are strictly limited to the goods and services provided to the exchange. Further, other complications concerning perishable goods limited the transferability to small geographic regions.
For these reasons, societies began relying upon mediums of exchange that could be used by all. This led to the spread of currencies like gold and fiat. Fast forward to 2022, NeoSwap allows for a new type of economy, a neo-barter powered by AI. NeoSwap’s revolutionary innovation makes barter scalable and efficient, even for complex multi-party transactions. As a result, NeoSwap’s neo-barter unlocks tremendous liquidity across the world economy.
Step-by-Step User Flow
Proof of Research conducted a step-by-step analysis on how to successfully navigate a NeoSwap party. Parties typically consist of five to twenty users and are either open to the public or open to a niche group.
There are five key user flows found in every NeoSwap party. First, users choose which NFTs they are willing to swap or sell.
Users then price their chosen NFTs with a minimum reserve price. The reserve price is a user protection that mandates a minimum price for which a user is willing to part with their NFT. At times the reserve price may be higher or lower than the NFT project’s floor price. Reserve pricing is entirely dependent upon the value to the user.
Next, users select the NFTs they wish to swap or buy in the party’s pool of contributed NFTs.
Fourth, users then bid on each of the NFTs in the pool they wish to acquire. The NeoSwap bidding process is unique in that it employs over-bidding protections. Users are encouraged to bid on as many NFTs in the pool at the most competitive prices possible. Unlike a silent auction, NeoSwap users are not forced to buy every item they win via bidding. NeoSwap mandates a “pre-set” maximum spend amount for the entire bidding process. Said another way, users cannot spend more than the maximum amount of crypto they initially “pre-set” to spend.
Finally, NeoSwap algorithms determine the optimal solution based on each user's input and write a smart contract to finalize the trade. A visual representation of the five steps is shown below.
NeoSwap User Flow
Step 1: List NFTs to swap or sell
Step 2: Price NFTs (users set reserve prices they are willing to part with their NFTs)
Step 3: Select NFTs to swap or buy
Step 4: Bid (users set a token budget that they contractually cannot overspend—solves the silent auction dilemma)
Step 5: Receive Trade and sign the smart contract
The below gif represents a full NeoSwap transaction. This includes the movement of NFTs and crypto amongst the parties to the swap.
On-Chain Roadmap
NeoSwap initially started on the Stacks blockchain; however, the vision has always been multichain with plans for future expansion to the Solana and Ethereum blockchains. Stacks has a relatively small NFT marketplace and was the ideal spot to test NeoSwap’s minimum viable product. After tremendous success on Stacks, NeoSwap is in the process of expanding to the Solana blockchain.
Solana has lightning fast transaction speeds and is known for its active NFT markets. After Solana, NeoSwap will expand to the Ethereum ecosystem, by far the most developed blockchain economy. Expansion may be in the form of the Ethereum mainnet or an L2 solution. Additionally, NeoSwap may eventually create its own protocol on Stacks once Hyperchain scaling solutions mature.
What problem does NeoSwap solve?
The world economy primarily consists of illiquid items. Illiquid items range from hand-me-down clothes to antique furniture to intangibles (IP, goodwill, etc) to services provided to NFTs. The overwhelming majority of these items are of subjective value and, as a result, difficult to establish a market clearing price.
Trades of these items are typically peer-to-peer or in marketplaces where one buyer is matched with one seller. Barter markets, as they exist today, are highly inefficient and in need of massive disruption.
NeoSwap has tremendous ambition to solve the NFT illiquidity problem. NeoSwap’s platform creates liquidity for both illiquid and subjectively valued items by finding multi-way trades that involve multiple parties. Complex in-person swaps conducted without NeoSwap algorithms are impossible to achieve.[3] However, the invention of the NFT powered by NeoSwap’s AI invented a new way to conduct these swaps.
As the crypto economy onboards real world items there will be an explosion in volume of illiquid assets and obligations represented as NFTs. Blockchains will soon see NFTs representing art, gaming items, brands, culture, the metaverse, and off-chain assets. Similar to most profile picture collections, the majority of these NFTs will struggle to find buyers in traditional peer-to-peer marketplaces. This is where NeoSwap will step up as liquidity solution.
What markets will NeoSwap enter?
According to NeoSwap’s Litepaper, “65% of listed NFTs never sell!”[4] In 2021, there was an estimated NFT market capitalization of approximately $40 billion. Back of the napkin math reveals an illiquid NFT market capitalization of more than $25 billion.
As blockchain economies scale over time, NFT economies will become a greater and greater percentage of the overall economy. Punk 6529 expects NFTs to be the financialization transport layer for intangibles (first) then off-chain assets (second). Punk believes the addressable market to be “society and culture” (first) and “the entire economy” (second). A fully mature digital economy includes the “entire economy” which has a total addressable market in the tens of trillions of dollars.
Team
The founding team is comprised of technical heavyweights. Dr. John Ennis, CEO & co-founder, is a successful entrepreneur with a PhD in mathematics and a post doc in computational neuroscience. John also co-founded Aigora, a company empowering sensory and computer science teams to implement artificial intelligence.[6] Many of the core contributors to NeoSwap have also been members of the Aigora team. Hamza Diaz, CXO & co-founder, is a full stack developer and data scientist with a background in computer science and communications. Hamza is director of technology at Aigora.[7] Jakub Kwiecien, CTO & co-founder, holds a masters in theoretical physics. He is the head of AI at Aigora and has experience in machine learning, algorithmic development and data science.[8]
In a Reg D offering, NeoSwap closed a $1.25 million pre-seed round at a post-money valuation of $15 million earlier this week. The capital provides NeoSwap with 16 months of runway. NeoSwap expects to open its seed round sometime in Q4 2022 for interested investors.
Conclusion // Alfa Leak
NeoSwap is one of the most interesting startups in the Stacks ecosystem. It is tackling one of the largest addressable markets on the planet and appears to be the first mover with its novel neo-barter process. The team is led by technical heavyweights with previous startup experience. As the NFT economy matures NeoSwap should be well positioned to take a sizeable market share of the NFT liquidity market. In an optimistic scenario it is likely NeoSwap becomes one of Stacks’ first unicorns.
Alfa Leak: The PoR team has it on good authority that the more NeoSwap parties you attend the larger your future airdrop/dividend!
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[1] https://app.sigle.io/neoswap_.id.stx/rq8RXPizuljrDOxN5jHjr
[2] https://www.ncbarter.com/How-BBE-Works/Barter-Basics#:~:text=reduce%20cash%20expenditures.-,What%20is%20a%20barter%20dollar%3F,available%20within%20the%20trade%20network.
[3] https://app.sigle.io/neoswap_.id.stx/rq8RXPizuljrDOxN5jHjr
[4] Ibid.
[6] https://www.linkedin.com/in/johnmichaelennis/