Sell¶

TL;DR¶

The Sell phase converts vault-held NFTs back into tokens through sequential Dutch Auctions. Pricing auctions in the associated LRT adds a third price variable on top of the buy-side currency mismatch, creating sell-side arbitrage opportunities

How It Works¶

Vault Queue ──→ Dutch Auction (priced in LRT)
                    │
                    ▼
              ┌──────────────────────────────────────────┐
              │  Start: Entire circulating supply of LRT │
              │  End:   Reserve floor                    │
              │  Duration: 1 week                        │
              │                                          │
              │  Unsold at floor: stays listed until sold│
              └──────────────────────────────────────────┘
                    │
                    ▼
              Sale Proceeds
                    │
          ┌─────────┴─────────┐
          ▼                   ▼
    Afterburner (30%)    LOOP BLV (70%)
    Buyback + burn LRT   LRT → LOOP → reserves


On sale ──→ next auction starts immediately

Dutch Auction¶

NFTs in the vault queue auction sequentially. One Dutch auction runs at a time per collection. The starting price equals the entire circulating supply of the collection's LRT and decays over one week toward a reserve floor: a minimum price in LRT below which the NFT will not sell.

If no buyer executes before the floor, the NFT stays listed at the reserve price until sold. The next auction starts immediately after sale.

Arbitrage¶

Auctions are priced in the collection's LRT rather than LOOP. Buyers evaluate the arbitrage opportunity across three moving variables: the auction price in LRT, the LRT/LOOP exchange rate, and the NFT's ETH floor on external marketplaces.

An opportunity exists when the auction price converted through LRT → LOOP → ETH falls below the external floor.

The vault queue creates a holding period between acquisition and sale. During the holding period, all three price variables (ETH floor, LOOP price, LRT price) drift independently. Queue depth determines hold duration: more NFTs in the vault means a longer wait per NFT. The longer the gap, the further prices can diverge from their values at acquisition, widening the arbitrage window.

Example¶

A Pudgy Penguin reaches the front of the vault queue. The Dutch auction starts at 1,000,000 \(PUDGYRUN\) (the entire circulating supply) and decays over one week.

A trader evaluates at 300,000 $PUDGYRUN. At current rates (0.0011 LOOP per $PUDGYRUN, 0.011 ETH per $LOOP), that converts to roughly 3.6 ETH. The Pudgy Penguins floor on OpenSea sits at 5.5 ETH. The trader buys from the auction, sells on OpenSea, and captures the spread.

The 300,000 $PUDGYRUN in sale proceeds splits: 90,000 (30%) to the Afterburner for buyback and burn, 210,000 (70%) converted to $LOOP and deposited into $LOOP reserves.