NFTX Index and Non-Fungible Token Composability

Pat Doyle
2 min readFeb 24, 2021

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We have seen a lot of momentum coming out of the NFT markets. One of the most recent projects, Hashmask, which I wrote about in a previous post has been seeing a lot of traction. Hashmasks has seen over ~17,000 ETH (~$29,000,000) in trade volume on OpenSea. Below you can see the average sale price of a Hashmask on OpeaSea is around 2 ETH (~$3,400). However, it has ranged as high as 420 ETH for one mask and as low as .025 ETH.

Data Source: Hashmask — Traders

The maturity of the NFT market has brought very interesting developments. One that is very exciting is NFTX. NFTX is a Non-Fungible Token Index Fund on Ethereum. Its design is simple but very meaningful for the future valuation of the NFT space.

Here’s how it works for the Hashmask Index Fund:

  1. A user deposits their Hashmask into the fund.
  2. The user then receives a fungible token (ERC20) — Mask Token, which represents ownership of a Hashmask in the fund.
  3. Users can then trade this token which derives its value from the collective “average” price of all the NFT’s in the fund.
  4. Anyone owning a Mask Token can redeem their token for a hashmask in the index fund. The user is not guaranteed to receive the same one back.

You can see users collectively “Minting” mask tokens and “redeeming” them over time in the charts below.

Data Source: NFTX — Hashmash Index Dashboard

Below is the total number of Hashmasks in the index fund over time. There are currently 784 Hashmasks in this index.

Data Source: NFTX — Hashmash Index Dashboard

Well, why is this important? Making an NFT fungible through an index has allowed for easier price discovery for NFT investors and traders. Since each NFT has a set of unique characteristics it becomes difficult to find a price floor. When pooled together price discovery becomes much easier. Currently, 1 Mask Token is priced at $2,495 according to Coingecko.

Not only does this help with price discovery but when wrapping an NFT in an ERC20 token, the NFT space becomes much easier to interoperate with other DeFi protocols. This again continues to highlight composability and interoperability that Ethereum is able to unlock.

It will be very exciting to see how this space continues to grow and develop.

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Pat Doyle

Building actionable blockchain analytics. Co-Founder @ Genesis Volatility