How Airdrop Pass Works

Airdrop Pass (AP) and its counterpart, Discount Pass (DP) helps transform existing NFTs and other illiquid digital objects into flexible, capital efficient assets by splitting their value into two distinct, tradable tokens that offer NFT owners and traders enhanced liquidity and yield opportunities. Dive into how it works for holders of supported NFT collections or general traders looking for exposure to new airdrops or established NFT communities.

Minting Airdrop & Discount Pass Tokens for NFT Holders~
  • The first and most critical step is to create the supply.

  1. Click on the “Mint” button at any point to mint AP/DP. You must be a holder of the collection. For each NFT, you will receive:
    • 1 AP Token - ERC-20 that can be traded in fractional units and can be sold immediately upon minting.
    • 1 DP Token - ERC-721 that represents a holder’s claim to the underlying 721 and can only be redeemed upon the expiration of the vault.
  2. Select the NFT to deposit, but make sure you 100% want to proceed because you will not be able to redeem your NFT until the expiration of the vault.
  3. Then click on Mint to receive the AP and DP tokens in your wallet.
Buying and Selling AP Tokens for Traders

If you do not have any NFTs in these collections, but you want to add exposure (or leveraged exposure) to any of these collections, you may want to consider buying or swapping AP tokens.

  1. Click on the NFT collection, then select “Swap” on the Airdrop Pass card.

  1. You will swap ETH for the AP token, which should resemble any other swap modal you see. Please be careful of slippage caused by low liquidity in the trading LP. Once you confirm the details, hit “Buy” and you will receive the AP tokens shortly.

  1. To sell, select the “Sell” tab and follow the same steps. Note that slippage can occur, resulting in impermanent loss.
Why Buy AP Tokens?

When you buy AP tokens of a particular collection, you are allocating capital to an asset that will have potential yield. Because AP is a small percentage of the total underlying value of the NFT, you can leverage your exposure.

This means that instead of buying 1 NFT to gain airdrop yield equivalent of 1 NFT, you can theoretically buy 10 AP tokens, which means you can leverage up to 10x of yield rewards and receive 10 NFTs worth of yield rewards, while not needing to buy or own 10 NFTs.

Even if you have 1 AP, you are able to claim 1 NFT’s worth of airdrop rewards, which brings us to the next section.

Buying and Selling DP Tokens for Traders

If you’re a user that just wants to buy a discounted NFT without the airdrop yields, then buying the DP token will be a better fit for you. As DP is a single token that cannot be fractionalized, and is the holder’s right to claim that NFT when the DP vault expires, we revise the original formula:

  • DP = Existing Value of the NFT (Floor Price) - AP

To see this formula in action, head to your chosen NFT collection first, then click on Buy on the Discount Pass card. It will then open up to this window, where you are buying a discounted NFT pass token subtracted by the airdrop pass value. You can later redeem this discounted NFT once the DP token vault expires.

To reiterate, you are purchasing a discounted NFT pass because you are giving up the airdrop pass value on this NFT, and while you will not be entitled to any airdrop yields, you will eventually own this NFT, once the DP vault expires and you’re able to redeem.

Note that the risk here is value of the NFT decreases, so you are effectively making a bet on the NFT collection in the future.

Why Buy DP Tokens?

Users may want to consider buying DP tokens because they always wanted to own an NFT of that existing collection without needing the airdrop yields; or because they are making a bet that the future value of the NFT will increase.

For example, presently, you can buy a discounted NFT pass, redeem the NFT for 9 ETH, and optimistically in the future, the NFT’s floor price may increase to 10ETH in the future, which you can thereby sell, and earn a profit of 1 ETH.

Claim or Redeem AP or DP Tokens

To claim or redeem AP tokens, please note the expiration date on the Airdrop Pass and the Discount Pass. This corresponds to the date when the airdrop pass and discount pass vaults expire, and when you can claim and redeem your Airdrop Yield or Discounted NFT.

Providing Liquidity

If you want to earn trading fees while holding both AP and DP tokens, consider providing liquidity. During the beta, users must supply both AP tokens and the corresponding ERC-20. In the future, we may introduce single-sided liquidity provision.

Disclaimer: The object market is a highly risky and speculative market, thus assets like AP and DP contain even more risk and speculation. Please make sure you understand the product and risks associated with it before purchasing.