One token, ten NFT collections. That's the promise of Cryptex Finance's new JPEGz product.
The index token is powered by Coinbase Cloud data and Chainlink oracles, and it will be launched on the layer-2 Ethereum scaling solution Arbitrum One, offering investors an easy way to gain exposure to the NFT market.
JPEGz tracks the market capitalization of various popular NFT collections, including Azuki Official, Bored Ape Yacht Club, and CryptoPunks, among others.
Cryptex Finance co-founder Joe Sticco told Decrypt that the ten initial “blue-chip” collections were chosen using Coinbase Cloud based on their on-chain liquidity, the transparency of their liquidity, as well as parameters that exclude wash trading from their floor prices.
Integrating Chainlink’s NFT Floor Price feeds, which provide a minimum value for each NFT in the index, enables JPEGz token holders to gain exposure to the NFT collection’s combined market caps without purchasing the NFTs directly.
JPEGz also lets NFT holders, platforms, and exchanges hedge the positions more efficiently.
As Sticco explained, those with an NFT position could mint JPEGz with MakerDAO's stablecoin DAI or ETH and immediately sell the index token on an exchange like Uniswap.
If the total market cap of the collections declines, the JPEGz tokens could be bought back and then burned for DAI or ETH, “netting the difference as a hedge against their NFT positions.”
While Cryptex Finance offers JPEGz as an index-tracking token facilitated by an over-collateralized vault for liquidity, Sticco says the company will never directly custody any NFTs.
Instead “users may be able to post their own NFTs as vault collateral to mint JPEGz soon,” he said.