According to Blockworks, the dynamics of memecoin trading are entering NFT markets with Zora's recent launch of onchain secondary markets in collaboration with Uniswap. This development is facilitated by a new “ERC-20z” token standard, an extension of the ERC-1155 standard, which allows NFTs to be traded like standard ERC-20 tokens by wrapping and unwrapping them. This new token standard addresses the common issue of liquidity in NFT mints, making NFTs tradable on secondary marketplaces after the minting period ends.
To bootstrap initial liquidity, a portion of mint fees is directed into the subsequent Uniswap pool after the mint concludes. This allows users who missed the initial minting period to purchase the NFT on Uniswap. Zora co-founder Jacob Horne stated, “When the mint ends, the market begins.” This also enables collectors to receive secondary market royalties onchain, unlike traditional NFT marketplaces like OpenSea, where royalties are enforced offchain.
The first NFT collectible using the new token standard, “Limitless” (ZRTK), was launched by the Zora team and saw 493,343 mints, raising 54.76 ETH. Daily transactions on the NFT-focused chain spiked to 197,519, a 181% increase from two days prior, according to Growthepie data. Jess Sloss, founder of Seed Club, noted that the new protocol update aims to bring more buyside demand into the NFT ecosystem by introducing a mechanism for patronage and profit.
Zora is not the first to experiment with new token standards in the NFT space. In February, Bozo Finance and Ghost Labs developed a hybrid DeFi concept on Solana, and the Pandora project on Ethereum launched the “ERC-404 standard,” which aimed to merge ERC-20 and ERC-721 standards. These experimental token standards enabled the fractionalization of NFT assets into fungible tokens without relying on a third-party protocol to lock up the original NFT. The fractionalized tokens could then be deposited into a liquidity pool, with smart contracts adjusting the price based on the underlying original NFT. All these efforts, including Zora’s latest standard, aim to solve the liquidity problem in NFT trading.