Liquidify V3

Liquidify V3 is a decentralized protocol for tokenizing NFTs into tradable ERC20 tokens, allowing for fractional ownership, improved liquidity, and trading opportunities.

Overview

Liquidify V3 allows NFT owners to wrap their NFTs (ERC721 or ERC1155) into ERC20 tokens, creating a liquid market for otherwise relatively illiquid assets. This enables:

• Fractional Ownership - Split NFT value across multiple owners
• Improved Liquidity - Trade fractional NFT values without selling the entire asset
• Market Access - Lower entry barriers for valuable NFT collections
• Price Discovery - Establish fair market values through trading activity

Key Components

The protocol consists of several key components:

LiquidifyV3Factory

The central contract that deploys and manages Liquidify pairs. The factory:

• Creates new Liquid ERC721 and ERC1155 token contracts
• Manages protocol-wide parameters and fees
• Maintains registry of created contracts

LiquidERC721

Handles the wrapping and unwrapping of ERC721 NFTs:

• Locks NFTs in the contract and mints ERC20 tokens
• Allows token redemption for the underlying NFTs
• Supports tiered token issuance based on NFT rarity
• Handles protocol and creator fees

LiquidERC1155

Similar to LiquidERC721 but for ERC1155 tokens:

• Supports multi-token standards
• Manages quantities of fungible tokens
• Integrates with the same fee and Uniswap structures

LiquidifyStandard

Base contract that implements:

• ERC20 token standards
• Fee distribution mechanics
• Uniswap pair integration

Key Features

• Tiered Tokenization: Configure different token amounts for NFTs based on rarity or traits
• Creator Fees: NFT creators receive a percentage of trades (up to 5%)
• Protocol Fees: Small fees support protocol development and maintenance
• Uniswap Integration: Automatic liquidity pool creation
• Storage Fees: Small fees for wrapping/unwrapping to prevent spam

Technical Integration

Liquidify V3 integrates with:

• Uniswap V2 for automated liquidity
• OpenZeppelin contracts for secure implementation
• ERC721 and ERC1155 NFT standards
• ERC20 token standard

Usage Examples

Creating an ERC721 Liquidify Pair

// Deploy a Liquidify pair for an ERC721 collection
address liquidPair = liquidifyFactory.createLiquidERC721(
    "Wrapped CryptoPunks",  // token name
    "WPUNK",               // token symbol
    0xb47e3cd837dDF8e4c57F05d70Ab865de6e193BBB, // NFT contract address
    100,                   // tokens per NFT (100 tokens per punk)
    300                    // creator fee (3%)
);

Wrapping NFTs

// Approve the Liquidify contract to transfer your NFT
IERC721(nftContract).approve(liquidPairAddress, tokenId);

// Wrap your NFT (receive tokens)
uint256[] memory tokenIds = new uint256[](1);
tokenIds[0] = 1234; // Your NFT ID
LiquidERC721(liquidPairAddress).wrapERC721{value: storageFee}(tokenIds);

Unwrapping NFTs

// Approve tokens to be burned
IERC20(liquidPairAddress).approve(liquidPairAddress, tokensPerNft);

// Unwrap to receive an NFT
LiquidERC721(liquidPairAddress).unwrapERC721{value: storageFee}(tokensPerNft);

Fee Structure

• Creator Sell Fee: 0-5% (set at deployment)
• Protocol Fee: 0.25% on sales
• Storage Fee: Small ETH fee for wrap/unwrap operations

Security Considerations

The protocol implements multiple security features:

• Reentrancy guards
• Owner controls with renouncement options
• Fee limitations
• Safe transfer mechanisms

License

This project is licensed under the MIT License - see the License file for details.

OP Retro Funding

This project is a part of the OP Retro funding program with project ID: 0xb0c8fe8e359a91bc2fa4b7498e2c7f6a50f730ee1dc821bee016a4b7feb7639e