Uniswap - 3. Unisocks NFT

    In May 2019, Uniswap released a limited edition pair of socks. Each pair of socks is linked to a non-fungible token (SOCKS). The NFT can be traded while the physical socks are held in a vault. At any point the NFT owners can burn their token to take delivery of their pair of socks. - Produce a chart tracking the price of SOCKS over time. - Calculate the return on investment of SOCKS over a period of your choosing. Bonus points: Highlight other NFT projects that enable the trading and delivery of a physical product. Hint: there is one such NFT project on Thorchain. Another one will soon launch on Terra.

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    Introduction

    Unisocks is an experimental NFT project launched by the Uniswap team and first brought to the limelight during the Fluidity Summit in New York City on May 9, 2019. Unlike other NFTs in the decentralized finance (DeFi) space, $SOCKS follows a “bonding curve” model governing its price, which enables the early adopters to earn more in profit than the late majorities. This is because when there are more tokens bought and brought to the supply, its value increases accordingly.

    Up to date, 198 of the initial 500 minted socks have been redeem. That means the token has been burnt and the lucky (or degen) owner has received a pair of unique socks he can brag about. How much will the last pair of SOCKS be worth?

    Methodology

    For the SOCKS price over time, the ethereum.token_hourly_prices was queried for the min, avg and max price per day with the constrain token_address = '0x23b608675a2b2fb1890d3abbd85c5775c51691d5' to get the SOCKS price chart shown in results.

    For the SOCKS ROI, I created 3 CTE to obtain the price at which an early buyer (November 9th 2020) and a late buyer (May 9th 2021, one year after the project's presentation) bought as well as the sell price on March 3rd 2022. ROI for both scenarios will be calculated.

    Results

    SOCKS price over time

    Chart below shows the SOCKS price since September 19th 2020, 4 months after the project launch. The daily max, average and min price are displayed.

    There are two well distinguishable exponential bull runs, the first which peaks on March 4th 2021 at 160k USD and the second on August 9th 2021 at 198k USD. Since the second peak, a retracement has been happening with current levels at around 75k.

    Conclusions

    Unisocks is a very interesting project since it adds a physical collection item to the NFT token and the bonding curve mechanism for price discovery. As with all NFT, the argument if they are just a pair of overvalued socks will be always used against it, but I think that as long as somebody gives the collectible value, it will be traded at these crazy prizes. At least it is backed by a physical world collectible as oposed to other NFT projects in the crypto space, that for some were just a bunch of oversold pixels...

    Sources

    Coinmarket Cap

    Unisocks stats

    Money Laundry: The Rise of the Crypto Sock Market

    Vanir Threads

    Runebase Podcast

    Other physical collectibles projects

    Vanir Threads - Thor FORCE 1

    The THOR Force 1 is a custom sneaker in the style of the world's first cross-chain decentralized liquidity protocol, THORChain. This sneaker is redeemable one time for the physical version which includes a custom box and accessories. Each sneaker is redeemable for the physical version one time only - made by hand by Vanir Threads. Redeemed NFTs hold their utility in being an access pass to future drops and collaborations by Vanir Threads. Step into Asgard while supporting the community's values of decentralization, immutability, and freedom.

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    SOCKS ROI

    The table below shows the calculate ROI for two scenarios:

    • Early buyer of 1 SOCKS on November 9th 2020 selling on March 9th 2022 (16-month holding)

    • Late buyer of 1 SOCKS on May 9th 2021 selling on March 9th 2022 (10-month holding)

    The early bird enjoys a ROI of 2644% while the laggard has lost 14% of his investment. These are fictive ROI examples, they show how different an outcome NFT investment can have.

    Market timing is extremely difficult and it is arguable that someboy who bought early would not sell if his investment already did a 300x-400x gains, so only really hardcore hodlers will be hodling enough to see the example ROI.

    A very interesting analysis was made by Pat Doyle on the article linked below, he found out was was the top and low ROI for SOCKS traders:

    • TOP ROI 366,6%
    • LOW ROI -28%

    I wasn't able to find wallets buying and selling SOCKS with a similar approach, that is why I chose random dates.

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