How to Use Liquidity Pools: Swapping One NFT for Another
I've always heard the term liquidity pool as part of the roadmap for a lot of NFT projects, but I never really looked much into it. One night, I decided to look at one, and I cannot believe I waited so long. I have a lot of, to put nicely, less desirable NFTs from generative projects and the liquidity pools for those allowed me to swap some of my NFTs for another. It seemed too good to be true, but it is. Here are some sample swaps I've made:
So what are liquidity pools?
Let's break down the terms:
Liquidity = converting your asset to a token that may allow you to do more things (in this case, from a non-fungible asset to a token that can be turned to ETH).
Pool = a collection of assets.
Imagine having a necklace that you are having a hard time finding a buyer for or that you just didn't want to go through the trouble of selling. You go to a pawn shop instead and they offer you cash that may be a little less than what you'd get if you sold it on your own. But, cash is cash, and now you have it. That's one function of liquidity pools. Another function is swapping, which we will focus on this blog.
How to Swap One NFT for Another
1) Navigate to NFT20.io
2) Connect your wallet
3) Go to Assets and choose an NFT project you'd like to swap. In this case, we'd try Top Dog Beach Club.
4) Toggle the 'Swap NFT to NFT' button.
5) Click on the 'Top Dog Beach Club NFTs' in the 'From' section of the box.
6) Choose the NFT from your wallet that you'd like to swap by clicking the circle next to it and then clicking 'Select'.
7) Click on the 'Top Dog Beach Club NFTs' in the 'To' section of the box.
8) Choose the NFT from the pool that you'd like to swap with by clicking the circle next to it and then clicking 'Select'.
9) If it is your first time swapping NFTs for a particular project, you would first need to 'Approve' the swap. Do this by clicking on 'Approve'.
10) A Metamask transaction for ' Set Approval for All' would pop up. It costs some gas to do this.
11) You should also see this box at the bottom right corner of your screen informing you of where you are in the process. Wait for the transaction to complete.
12) Once the transaction is complete, you should now see just a 'Swap' button. Click that.
13) A new Metamask window for 'Contract Interaction' would pop up. This costs a little more gas.
14) Press confirm, wait for the transaction to finish, and you're done! The shiny new NFT will be in your wallet shortly.
Swapping NFTs can serve a lot of purposes -- whether that be for personal enjoyment or to get more aesthetically pleasing ones for better resale value. Be sure to check out if your NFT project has a liquidity pool set up, and if they do, take advantage of that. New NFTs will be in the pool as the projects put more NFTs in, or as people swap some in and out. Keep on checking them over time as there definitely are some gems to be had (got some below!). Happy swapping!