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V2/V3 Comparison

Summary of V3, relative to V2.

Main Points

  • Separate deployments NFTX V2 will continue to run separately from NFTX V3. All vaults/vTokens on NFTX V3 use fresh deployment addresses. Parts of this document refer to V2 in the past tense, but this is merely to aid comprehension. V2 will continue running in the future as it is now.
  • NFTX AMM — NFTX V3 uses its own AMM (a fork of Uniswap V3) instead of using Sushiswap. All pools on the NFTX AMM have pairs of the form vToken/WETH and have trading fees of 0.3% or 1%. All AMM fees go to LPs, but to receive vault fees (from mints, redeems, and NFT swaps), LPs must use the default 0.3% fee tier.
  • Liquidity-based vault fees for LPs — In V2, vault fees were distributed to all LPs at the same rate because all liquidity occupied an infinite range. In V3, vault fees are distributed to LPs at unique rates based on how much liquidity they provide around the current price—just like how AMM fees get distributed.
Now that NFTX V3 has its own AMM, the term "swap" can refer to both NFT-to-NFT vault swaps and vToken-WETH AMM swaps. When talking about mints, redeems, vaults, or vault fees, "swap" will usually refer to NFT-to-NFT swaps, but when discussing the AMM, the protocol as a whole, or the web UI, "swap" will usually refer to vToken-WETH swaps.

Vaults

  • No more randomness NFTX V3 vaults offer minting, target-redeeming, and target-swapping, but not random-redeeming or random-swapping. In V3, a "redeem" implies a target-redeem, and "swap" implies a target-swap.

Vault Fees

  • Vault fees in ETH — In V2, vault fees were paid and received in vToken. In V3, vault fees are paid and received in ETH and calculated using vToken TWAPs.
  • Default 3/3/3 vault fees — Like V2, V3 allows custom vault fee settings for mints, redeems, and swaps. In V2, the UI suggested default fee settings of 5/2/3/2/5 for mints, random-redeems, target-redeems, random-swaps, and target-swaps. In V3, the UI suggests default fee settings of 3/3/3 (mint/redeem/swap), represented as a flat 3%.
With V2, inventory stakers collected vault fees via xToken appreciation, and liquidity stakers collected yield by claiming vToken. In V3, both inventory stakers and LPs (in 0.3% pools) receive vault fees by claiming ETH.

Inventory & Liquidity

  • ERC721 positions — NFTX V2 represented inventory and liquidity positions using ERC20 xTokens and xSLPs. Now, in V3, inventory and liquidity positions are represented using ERC721 NFTs. We refer to inventory staking positions in V3 as xNFTs, and instead of xSLPs, NFTX V3 uses UniV3-style liquidity positions from the NFTX AMM.
  • Less restrictive timelocks — NFTX V2 implemented timelocks as ERC20 transfer locks on stakers' wallets. NFTX V3 enforces timelocks on the NFT positions rather than their owners' addresses. This change means that accounts can move inventory and liquidity positions around while they are locked. Inventory staking timelocks are also 3 days in V3 instead of 7 days.
  • No more liquidity "staking" — In V2, liquidity provision occurred on Sushiswap, and then SLP tokens were "liquidity staked" on NFTX. In V3, liquidity staking happens implicitly when an LP provides liquidity for a vToken's 0.3% fee pool.
  • Target NFT off-ramping — In V2, only inventory stakers could receive NFTs (instead of vToken) when unstaking/off-ramping. In V3, inventory stakers and LPs can choose to receive NFTs when off-ramping. Another change is that, unlike V2, which used random redeeming when stakers off-ramp, in V3, inventory stakers and LPs can select which NFTs they wish to receive when off-ramping.
  • One-hour timelocks for positions made with vToken — Like V2, V3 allows users to onramp into an inventory or liquidity position using vToken or NFTs. In V3, inventory and liquidity positions are subject to only a 1-hour timelock (instead of 2-3 days) if the staker/LP accepts only being able to off-ramp back to vToken (not NFTs).
  • Early withdrawal mechanism — In V2, stakers had to wait until a timelock had ended before unstaking their position. In V3, it is possible to withdraw a position before its timelock ends by paying an early withdrawal fee. The early withdrawal fee is paid in vToken, begins at 10%, and goes down linearly to zero over the timelock's duration.

New Features

  • Premium fees — In V3, NFTs have an added "premium fee" if they have been transferred into the vault recently. The premium fee begins at 500% (of 1 vToken) and goes down to 0% over 10 hours. The premium fee is charged in ETH and determined by the vToken's TWAP. The fee distributor sends 90% of the proceeds to the address that sold the NFT into the vault (or that deposited the NFT as part of inventory staking or LPing). The remaining 10% is distributed as regular vault fees.
If an inventory staker or LP who is off-ramping in V3 wishes to receive an NFT that has a premium fee, they are required to pay the premium fee in ETH as part of the off-ramping process.