What is sudoswap?
sudoswap, the first NFT automated market maker for cryptocurrency, was launched in May 2022. Similar to Uniswap, the Ethereum-based technology facilitates trustless asset trading through user-funded liquidity pools. Users of sudoswap can trade between NFTs and ETH instead of between two fungible tokens. At first look, it may be difficult to discern how sudoswap differs from traditional NFT trading platforms like OpenSea, the largest NFT market in the world with trade volumes significantly exceeding those of its rivals.
Sudoswap's pools are entirely decentralized and supported by its users, unlike OpenSea. This does not imply that trading is cost-free, nevertheless, the trading pool's designer establishes a swap fee of a few percent that is deducted from each successful NFT purchase or sale.
The people who provide the NFT and ETH liquidity get paid when assets are traded through the platform's pools. Additionally, this means that sudoswap avoids any current royalties imposed on collections by their creators. Additionally, consumers have more motivation to use a certain pool to trade through it if the swap fees are lower. This encourages pool developers to compete with one another to offer the lowest fees, which benefits end users by lowering pricing.
Sudoswap is advantageous to users as it enables NFT owners to instantaneously sell their assets without the need to find a buyer, increasing market liquidity and efficiency.
However, the way sudoswap controls the value of the NFTs sold through its pools is likely its most novel feature. Depending on how many NFTs are purchased or sold, the platform automatically adjusts the bid and ask for each collection using bonding curves. For instance, the buy price somewhat drops when a user sells an NFT into a pool, boosting the supply. Depending on the delta value chosen by the pool's developer, the price per NFT will decrease as more are sold until market forces determine what it is worth. On the other side, purchasing an NFT from a pool raises the price progressively, keeping the asset's price in step with demand.
Sudoswap has unique features that are not available on some other NFT platforms. It enables users to leave the counterparty field empty, making it possible for anyone to fill the order. This is especially beneficial if you are exchanging your NFTs for fungible tokens. Interestingly, users can choose an expiration date and time. Any requested exchange that is not completed before the date and time automatically expires and is voided. Instead of having to send an on-chain transaction to cancel a swap, you now have the choice to let it expire. This reduces the potential loss if the counterparty decides not to complete a swap.
It is not feasible to create swaps via multisig wallets or smart contract wallets like Argent, which is a significant Sudoswap functionality limitation.