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Allow the right to sell the airdropped NFTs! What is Liquid Delegate for liquidity delegation?

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Allow the right to sell the airdropped NFTs! What is Liquid Delegate for liquidity delegation?

"Delegation is the proxy right in the world of cryptocurrency, where you can store valuable tokens in a cold wallet, link it to a hot wallet, and perform token-required actions such as claiming airdrops, gaming, or joining Discord communities. This way, you won't risk the actual tokens." Renowned developer foobar introduced his product delegate.cash in the article "Liquidity Delegation".

What is Liquid Delegate for Liquidity Delegation?

Liquidity Delegation, or LD, offers a trustless way for users to trade "airdrop claims." NFT holders can delegate their NFTs without the risk of liquidation or renting, ensuring they can be returned. This product was launched before April and is currently utilized on 11 EVM-compatible chains, such as Yuga Labs' Sewerpass, ArtBlocks' Friendship Bracelets, Forgotten Runes, and Invisible Friends. Platforms like Tokenproof for proof of ownership and creator-focused platform Manifold also have relevant applications.

How does it work?

When an NFT holder creates an LD, they set a delegation period. For example, delegating a CloneX #999 for a month will store the NFT in a custodial contract and provide an LD NFT.

LD functions include:

  • Trading on the NFT market
  • Delegating authority to the holder
  • Granting lightning loan privileges for custodied NFTs to the holder
  • Allowing the holder to burn LD to return the custodied NFT to the original NFT owner

The concept of liquidity delegation aims to provide a new form of liquidity market for NFTs, which were previously traded privately with low assurance.

How can it be applied?

Airdrop Claim Outsourcing

Many NFT holders or DAOs may not have time to wait in crypto communities for airdrop notifications but still want to profit from them without missing out. LD enables the sale of airdrop rights, shifting this responsibility to buyers.

Passes, Event Tickets, and Leases

delegate.cash supports Vulcan and CollabLand usage, allowing LDs to be rented out for a week for community or exclusive events. This eliminates the need for private NFT transfers and reduces the risk of loss.

Locking Proofs

NFT projects want their buyers to remain loyal. Through LDs, NFT teams can purchase LDs from holders to incentivize long-term holding, creating mechanisms similar to veToken.

How does the product generate revenue?

  • LD creation fees
  • Integration support for the third-party market using ERC-2981 royalty standards
  • delegate.cash's proprietary trading market also adopts ERC-2981

Conclusion: Secure Leasing Approach

The ability to keep NFTs safe while leveraging their utility for borrowing or selling to others appears to be the highlight of this product. LD aims to cater to various behaviors of NFT holders and provide liquidity.

However, since holders delegate their NFTs to the protocol, there is a risk of loss if issues arise, which users need to consider.