Collection Hedge
A New Way to Protect NFT Collections
Collection Hedge is a feature within Hedge Loop that allows entire NFT collections, rather than individual assets, to be hedged. This provides NFT collection owners and creators with a powerful way to protect the overall value of their collections and even earn passive income from their holdings. By hedging a percentage of their collection, they can safeguard their investment from market volatility, while maintaining liquidity and long-term growth potential.
How Collection Hedge Works
Hedging a Percentage of an NFT Collection
Hedge a Portion of the Collection: Instead of hedging individual NFTs, collection owners can hedge a percentage of their entire collection. This allows them to protect the value of the entire portfolio without the need to manage each NFT individually.
Customizable Hedge Percentage: Owners can decide the percentage of their collection’s value to hedge. For example, if a collection is worth 1,000 SOL, the owner can choose to hedge 10%, which equals 100 SOL, providing a safety net for a portion of the collection’s value.
New Collections Hedging with Minting Fees
Hedge from Minting Fees: NFT creators launching new collections can automatically hedge a percentage of the minting fees received during the initial sale of their NFTs. This allows them to secure a portion of the income earned through minting, protecting it from market downturns.
Automatic Hedging: As minting fees are collected, a portion of these fees can be directly allocated to a hedge, ensuring that the creators have secured a stable value for future development or as a financial buffer.
Benefits of Collection Hedge
Protect the Overall Value of the Collection
Mitigate Market Volatility: Just like individual NFTs, entire collections can be affected by market fluctuations. By hedging a percentage of the collection, owners can protect its value from downturns in the market, ensuring that a portion of their investment is safeguarded.
Balance Risk and Reward: Hedging a portion of a collection allows owners to balance the risk of market volatility with the potential reward of price appreciation, ensuring they maintain liquidity while reducing loss exposure.
Diversified Protection
Across Multiple NFTs: By hedging a percentage of a collection, owners can protect multiple NFTs at once. This ensures that the collection’s overall value is preserved, even if individual NFTs experience significant price drops.
Flexible Hedge Management: Collection owners can adjust the percentage of their hedge over time, increasing or decreasing the amount of SOL they deposit based on current market conditions.
Secure Minting Revenue for New Collections
Protect Earnings: For creators launching new collections, hedging a portion of their minting fees ensures they protect a stable value of their earnings, reducing the risk of losing revenue to market downturns.
Long-Term Security: By hedging minting fees, creators can use the secured SOL to fund future development, marketing, or community engagement, ensuring the long-term success of their project.
Earn Passive Income While Hedging
SOL-Based Rewards: While the percentage of the collection is hedged, the deposited SOL earns rewards over time. This creates an additional revenue stream for collection owners and the holders, enabling them to grow their investment even while safeguarding against market risk.
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