## Introduction 
We are thrilled to announce that Upshot will be the inaugural partner/ strategist for [Astaria](https://astaria.xyz/), a new on-chain NFT lending platform. Astaria’s protocol introduces an innovative three-actor-model where strategists, such as Upshot, can outline the terms of NFT loans through dedicated vaults. These vaults accept capital from liquidity providers, which is subsequently lent out to NFT borrowers, enhancing the transparency and efficacy of the NFT lending process. 

By bringing [Upshot’s industry-leading machine learning models](https://upshot.xyz/post/how-upshots-ml-models-work) to Astaria's lending platform, we unlock an innovative frontier in NFT financial markets, ensuring seamless and accessible lending practices. With a proven track record of appraising over 104 million NFTs from a diverse range of over 87,000 collections, our robust quantitative analyses offer unprecedented breadth and accuracy. As Astaria strategists, we employ our sophisticated recovery rate models and risk management framework, not only to gauge the probability of loan default but also to maintain a diversified loan portfolio, protecting both liquidity providers and ourselves from potential market volatility. This collaboration embodies our shared vision of propelling a new era of NFT financialization, where seemingly “illiquid” assets can be leveraged for a new wave of DeFi opportunities. 

## A Very Brief History of NFT Lending Today
Historically, the NFT lending market has primarily operated on a peer-to-peer basis, similar to archaic barter systems. In this model, borrowers and lenders agree on terms and a smart contract handles the transactions trustlessly. This process allows for great flexibility, matching terms on a case-by-case basis. However, the peer-to-peer model inherently requires both parties to reach an agreement on terms, a process often encumbered by a divergence in perceived values and risk factors. Borrowers, often emotionally attached to their NFTs, may overvalue them, while lenders, cautious about the borrower's credibility or the volatility of the collection, might assign a higher risk premium. This mismatch in sentiment often leads to less efficient market-clearing outcomes.

In response to these challenges, the peer-to-pool model has emerged as an alternative option to allow for a smoother user experience by removing the need for individual agreements. Lenders contribute to a pool which manages liquidity, allowing borrowers to access instant liquidity. Despite pooling risks for all liquidity providers, this model offers a more scalable path that closely mirrors the fungible market where LPs can deposit capital and earn. Peer-to-pool models depend heavily on accurate valuation methodologies to set loan terms. Over-reliance on oracle-based price calculation methods (such as floor price) can leave the system vulnerable to manipulation as well as limited in usefulness. 

The alternative to avoid oracle-based manipulation is to use specialized appraisers employing nuanced, machine-learning-based algorithms to estimate NFT value, incorporating factors such as traits, previous owner history, and other relevant data points. This takes us to Astaria's unique approach - the three-actor model.

## Introducing Astaria’s Three-Actor Model
[Astaria](https://astaria.xyz/) is an on-chain NFT lending platform designed with the native DeFi user in mind. The protocol provides a system for strategists, like Upshot, to publish loan NFT terms through vaults, which accepts capital from liquidity providers and extends it to borrowers. For example, one strategist may allow a 10 ETH loan with a 10% interest rate to be taken out against a specific NFT for one month. These terms can be continuously updated as markets fluctuate, and borrowers can refinance to take advantage of more favorable terms.

This unique, three-actor model fosters competitive yields for liquidity providers and instantaneous liquidity for borrowers, all while mitigating the need for traditional, time-consuming bid-and-ask negotiation processes. With a dynamic ecosystem of strategists, borrowers, and liquidity providers, Astaria ensures market competitive rates and flexibility for loan refinancing, without the fear of forced liquidations on price changes.

![Astaria-3-Actor-Model](//images.ctfassets.net/lhkcghnr8ql4/37dWByvTEQMljUMghW73ej/3cf966af4c8ee0d56bbbd10559818102/3AM-ccb5b9d756e22d102d2c5eeba160f03a.png)

Strategists, including Upshot, within Astaria's framework have the responsibility of deploying vaults complete with loan terms matched to supported NFTs. These terms can be dynamically adjusted as market conditions change, creating a lending ecosystem that's highly responsive to real-time fluctuations. All of this contributes to a healthy, competitive balance that ensures fair and accurate terms, striking a balance between attracting borrowers and securing sufficient capital.

### Core Benefits of Astaria 
Astaria has three core benefits for users: 1) instant liquidity, 2) competitive yields and loan terms, and 3) no forced liquidations. Here's a closer look at these benefits:

- __Instant liquidity__: This feature eliminates time-consuming bid-and-ask negotiations, allowing users immediate access to a variety of loan terms offered by expert strategists.
- __Competitive yields and loan terms__: Astaria fosters a competitive environment where strategists compete for capital, ensuring beneficial market rates for both liquidity providers and borrowers.
- __No forced liquidations__: Borrowers are only subject to liquidation if their loan expires with outstanding debt. This eliminates forced liquidations due to market price fluctuations, offering additional security for borrowers amidst market volatility.

#### Benefits for Borrowers 
For borrowers, the Astaria vault system presents a unique combination of flexibility, immediacy, and value. By holding their NFTs as collateral, borrowers gain immediate access to liquidity in an instant and permissionless protocol. This design enables NFT holders to unlock the financial potential of their assets immediately, without the hurdles often associated with traditional peer-to-peer systems. Even as the NFT is locked as collateral, borrowers can still tap into its utility. 

Astaria's FlashActions feature allows temporary unlocking of the NFT to perform predefined actions, such as collecting Uniswap fees or claiming airdrops, all while ensuring the NFT is returned within the same block. Additionally, Astaria enables borrowers to take multiple loans against the same NFT, up to five times, provided the maximum potential debt does not exceed the strategist-set limit. This multifaceted borrowing process, complete with the possibility of refinancing, offers borrowers an unprecedented level of freedom and control over their digital assets.

#### Benefits for Liquidity Providers 
On the other side of the coin, liquidity providers reap significant benefits from participating in Upshot’s vault on Astaria. When they contribute capital to PublicVaults, they receive yield-bearing ERC-4626 VaultTokens, thereby earning interest on their provided funds. This model presents an attractive proposition for liquidity providers, enabling them to earn from their capital while contributing to a DeFi ecosystem. The epoch-based operational system of PublicVaults also provides liquidity providers with a sense of stability, as withdrawals need to be signaled at least one epoch in advance.

### Loan Mechanics on Astaria 
Loan mechanics on the Astaria platform are shaped by the fine-tuned parameters defined by strategists, offering flexibility and precision in the lending process. Here's a quick overview of these parameters:

- __Loan Amount__: The loan amount, denominated in the ERC20 token used by the Vault.
- __Duration__: The loan duration in seconds.
- __Interest Rate__: The interest rate of the loan. All rates on the Astaria protocol are in simple interest and non-compounding.
- __Maximum Potential Debt__: This is the highest possible debt that can be accrued against an NFT considering all existing loans. It's a vital factor when strategizing multiple loans against the same collateral.
- __Liquidation Initial Ask__: The requested starting price of the Dutch auction if the collateral is sent to liquidation. Note that the initial auction price is set by the most senior lien in the lien stack.

These mechanics contribute to the versatility of Astaria's lending platform, allowing users to have diverse and strategic engagement with NFTs. For more in-depth information about these mechanics and how they function within the larger Astaria ecosystem, we encourage you to visit Astaria's loan term [documentation](https://docs.astaria.xyz/docs/protocol-mechanics/loanterms). 

## Upshot’s Vault Management Strategy 
At Upshot, our lending strategy is designed to minimize risk for the lender while maximizing value for the borrower. To accomplish this, we leverage Upshot's industry-leading appraisals, recovery rate models, default probability estimates, and our proprietary risk management framework. This ensemble of models and analyses ensures that our lending strategies provide fair, accurate terms, and a healthy yield, all while mitigating the risk exposure for our liquidity providers and ourselves.

From selecting high-quality NFT collections to considering future collateral value when determining loan amounts, each element of our strategy is tailored to provide optimal benefits for all stakeholders. Borrowers can take advantage of our flexible lending process where our quant team fetches all the loan terms, which are then fed into the Astaria SDK. This system allows us to offer borrowers the most current and relevant lending terms, frequently updated every 30 minutes, and lenders the opportunity to stake in our vault. 

We have also added a "kill-switch" feature that quickly responds to significant market events, further ensuring the protection of our liquidity providers. As we embark on this journey with Astaria, we remain committed to continuously improving and refining our lending strategies, based on market trends and user feedback

### Upshot’s Vault 
Upshot's initial offering will feature one unified vault, presenting several advantages:

- __Simplicity__: A single NFT lending vault simplifies management and operations, making it easier for users to understand the lending process.
- __Greater liquidity__: Consolidating NFTs from various owners increases overall market liquidity, facilitating borrower access and enabling lenders to earn interest.
- __Reduced risk__: Pooling NFTs from multiple owners spreads default risk across a broader pool of borrowers, reducing loss risk for individual lenders in case of a default.

This setup will be reviewed and potentially revised based on user feedback and demand, with plans to launch additional vaults over time to cater to varied risk profiles and lending strategies.

### Supported Collections (As of May 25, 2023) 
As of the initial launch, Upshot will support the following collections as part of our initial vault: 

- Azuki
- BAYC
- Beanz Official
- Chromie Squiggles
- CloneX
- CryptoDickbutts
- Doodles
- MAYC
- Milady
- Moonbirds
- Pudgy Penguins

We look forward to expanding our collection and vault offerings in the coming months.

### Upshot’s Methodology 
Upshot’s strategy embraces "conservative NFT lending," with terms designed to minimize lender risk while still providing value to the borrower. Core elements of our strategy include:

- __Collateral__: Borrowers provide an NFT as collateral for the loan, selected from high-quality collections with a history of stable or appreciating value.
- __Loan amount__: The amount is a function of the future collateral value, less a margin for forecasting uncertainty, offering adequate protection to the lender in case of default.
- __Loan duration__: The duration is based on the highest future recovery value over a 30-day time horizon, ensuring maximum recovery value in the event of a default.
- __Interest rate__: The rate compensates the lender for the risk involved in lending the NFTs, such as default risk and illiquidity risk.
- __Leverage__: Our initial strategy does not permit second or third lien loans.

Please note that this design is flexible, and adjustments will be made based on feedback regarding parameters such as loan amount and interest rate. 

### Our Risk Mitigation Framework
In our commitment to maximize value and mitigate risk for Astaria Vault participants, Upshot utilizes a sophisticated Portfolio Optimization framework, deeply rooted in Modern Portfolio Theory (MPT). MPT emphasizes the power of diversification, aiming to create an optimal asset allocation with superior risk-adjusted returns through careful optimization strategies.

Upshot's approach to portfolio optimization is methodical and data-driven. We begin with a collection's time-series data, utilizing daily floor prices and our in-house generated appraisals to construct robust time series. From these data points, we calculate risk and return approximations, employing different modeling methods such as mean, exponentially weighted average, or machine learning-based algorithms like Auto-regressors and GARCH.

After determining return and risk approximations, we move to portfolio selection. We employ optimization solvers to determine collection weights, thereby constructing a portfolio that meets investors' objectives within set constraints. Upon establishing collection weights, we then proceed with our capital allocation strategy.

Recognizing the limitations of traditional MPT techniques, particularly in the dynamic and sometimes unpredictable NFT market, we've integrated alternative portfolio construction methods. These include minimum spanning tree (MST) and centrality-based methods from Graph Theory, which offer a more nuanced approach to diversification and have shown promising results in terms of out-of-sample performance. This innovative strategy not only ensures that our portfolio is robust against market fluctuations, but it is also highly scalable.

## Conclusion 
This partnership between Upshot and Astaria presents a promising new horizon NFT financialization. To learn more about Upshot and our strategic approach, visit our [website](https://upshot.xyz/). For a closer look at how we're utilizing our robust machine learning capabilities with Astaria's on-chain NFT lending platform, check out our [Astaria-Upshot vault](https://astaria.xyz/lend/vaults/0xe5149d099b992e3dc897f3f4c88824eac2a6a59d). If you're interested in diving deeper into Astaria's protocol or need help navigating the platform, you can find comprehensive guides and helpful details in Astaria's [documentation](https://docs.astaria.xyz/). 

We invite you to embark on this journey with us as we redefine the boundaries of ownership in the world of NFTs. This partnership with Astaria allows individuals to navigate an expansive range of unique use cases for their jpegs, unlocking unprecedented ways of engaging with NFTs. Together, we are transforming the concept of asset ownership, breaking down barriers and bridging the gap between the world of DeFi and NFTs. Join us in this exciting new chapter as we unlock the potential of NFTs like never before by visiting our [vault](https://astaria.xyz/lend/vaults/0xe5149d099b992e3dc897f3f4c88824eac2a6a59d).

Astaria has partnered with Upshot bringing Upshot lending strategies to their platform.

Upshot Unveils Strategic Partnership with Astaria as Inaugural Vault Strategist

We often get asked the question: how do I pick the right NFT?

As a result, we’ve created a series of buying guides that we will be releasing over the next few weeks to provide a quick primer on various NFT collections.

We are thrilled to present you with the first of this series, the ultimate buying guide for the Art Block's NFT project, Chromie Squiggles.

In this guide, we'll provide you with all the information you need to know about Chromie Squiggles, including the history of Squiggles, the most important traits to pay attention to, notable holders and how you can get your hands on one of these blue-chip NFTs.
Let’s dive in!

(Disclaimer, nothing written in this article is financial advice. DYOR.)

## A Brief History of Chromie Squiggles
Created by Erick Calderon, pseudonymously known as [Snowfro](https://twitter.com/ArtOnBlockchain), Chromie Squiggles are the first NFT project of Art Blocks, a platform for generative art projects.

It all started back in 2017 when Snowfro was dabbling with coding, projection mapping, 3D printing and generative art. While holding a day job in the tile business, Snowfro learned about CryptoPunks and instantly became fascinated by the idea of provable digital ownership. It clicked to him that the blockchain was one of the best mediums for generative art distribution. Unlike CryptoPunks which presented all 10,000 outputs themselves, Snowfro realized that you could use a smart contract to let claimers produce a random generative output.

Before Art Block’s innovation, generative outputs were mostly curated, letting the artist and creator select their favorite outputs and discard the rest. Snowfro flipped this model on its head and created a new model where every piece of art created was minted directly from the collector through a contract. It creates a world where artists must meticulously select their algorithms, as they have no control over the final set that is minted.

Beyond being the first Art Blocks project, Chromie Squiggles are unique for pioneering new ways for people to interact with digital art. They are both animated and interactive: viewers can click to toggle the color cycling, use the spacebar to change the background color, and use up/down arrows to change the color rotation.

## What traits are the most important?

At a first glance, Squiggles may all look quite similar. However, one look into their dazzling color array, you will notice that there is quite a variety of possible outcomes.
The main two differentiators of squiggles are in the type and the spectrum. There are 6 types of squiggles: normal, slinky, fuzzy, ribbed, bold and pipe. And there are four types of spectrums: normal, HyperRainbow, Full Spectrum and Perfect Spectrum. Squiggles are then further segmented by color direction, color spread, height, start and end color, steps between and segments.

![squiggles 101 traits ](//images.ctfassets.net/lhkcghnr8ql4/2SjljmUxJbreuMeWR8aM7U/7a4d8fff74c7e1ec2976a93091ffbfd2/squig_101_traits_populated.png)

### Perfect Spectrum Squiggle
![Perfect Spectrum Squiggle](//images.ctfassets.net/lhkcghnr8ql4/41xVqdHKtACeIwEnP0BdWN/14af8516bbd5b0115c6cd18c9534b2ea/image8.png)

The undisputed grail of Chromie Squiggles is the Perfect Spectrum Squiggle. Each of the 256 colors is represented exactly one time. Perfect Spectrum Squiggles comprise 0.20% of the entire collection and are the most rare outcome. At the time of this writing, there are 22 Perfect Spectrum Squiggles in existence with an average appraisal of 292.5 ETH.

### Full Spectrum Squiggle

![Full Spectrum Squiggle](//images.ctfassets.net/lhkcghnr8ql4/a9FyVhVDkzEV4Wr3Fzh3v/dbb4ddeb598f87c7cdd2f4abb64dcfcc/image6.png)

A Chromie Squiggle is considered a full spectrum squiggle if the number of hues displayed come within 1% of perfect. There are only 2 combinations of color spread, segments, and steps between segments that will create a full spectrum. This makes full spectrum Squiggles about twice as common as a perfect spectrum squiggle. Full Spectrum Squiggles comprise 0.40% of the outputs. At the time of this writing, there are 42 Full Spectrum Squiggles in existence with an average appraisal of 177.01 ETH.

### Solid Color Squiggles

![Solid Color Squiggle](//images.ctfassets.net/lhkcghnr8ql4/6QDnqUTCriNZByXPpEoKS7/a62e605ed6991949ba93ee31ea49d2cb/image3.png)

Squiggles with only 13 color hues displayed essentially look like solid color Squiggles. Thirteen hues is the lowest amount of color hues displayed in a Squiggle. There are 6 slinky Squiggles and 1 pipe Squiggle that fit this description with an average appraisal of 24.74 ETH.

### Bold HyperRainbow Squiggle
![HyperRainbow Squiggle](//images.ctfassets.net/lhkcghnr8ql4/0eKkaDsrkm23TzYqtSySq/14880f73644e6b134bd5bcf797190b71/image1.png)

Bold HyperRainbow Squiggles are fat and colorful. They are the combination of the bold type and the HyperRainbow spectrum. There are only 7 of these squiggles that exist today with an average appraisal of 185.27 ETH.

### Day 0 Squiggles
![Day 0 Squiggles](//images.ctfassets.net/lhkcghnr8ql4/2TqNExsLqMcvmb6l6kDzOF/38edd55e1a565627deb3ca39b34a09ae/image4.png)

There were only 542 Squiggles that were minted on the first day that Art Blocks launched the project. These Squiggles are affectionately known as Day 0 Squiggles.

### Pipe HyperRainbow Squiggles
![Pipe HyperRainbow Squiggles](//images.ctfassets.net/lhkcghnr8ql4/eIzmPZ4uSHPOx2M9rjFq1/06f5ebd5541804538dcd97b7bb221300/image2.png)

Pipe HyperRainbows are funky and loud. They are the combination of both the pipe type and the HyperRainbow spectrum. There are only 4 Pipe HyperRainbows in existence right now with an average appraisal of 186.37 ETH.

### Bold Full Spectrum Squiggles
![Bold Full Spectrum Squiggles](//images.ctfassets.net/lhkcghnr8ql4/23T7utR8ItyEzRpY3EMvHb/f41070f93872a1a76992876eee03bde9/image7.png)

To date, there are only 4 of these chunky creatures that have been minted. These Squiggles have an average appraisal value of 197.405 ETH.

### Triple Spectrum
![Triple Spectrum Squiggles](//images.ctfassets.net/lhkcghnr8ql4/5fJVgSRPNg3hN009S6YpAz/5213c99f06c6a85ae56683e9ce227e89/image5.png)

SquiggleDAO identified this unique metatrait known as the elusive Triple Spectrum. A Triple Perfect is a Squiggle with exactly 768 color hues, which is equivalent to having three consecutive Perfect Spectrums within one Squiggle. 

## Notable Holders

Overall, the group of Squiggle holders is full of smart cookies. There are 2,787 unique holders of Chromie Squiggles, who hold an average of 3.5 Squiggles each. The average gmi score, a score that grades NFT collectors based on past NFT trading performance, of a Squiggle holder is quite high at 769/1000. 

Additionally, 27%+ of the Squiggle holder base has a gmi score of 900+. Given that Squiggles were one the first generative Art Blocks project, it makes sense that holders are fairly OG to the world of crypto and NFTs. 

### 0xd1102a265c1325059e72797f71be37481db1e588

[0xd11](https://app.upshot.xyz/user/0xd1102a265c1325059e72797f71be37481db1e588) is by far the largest Squiggle holder right now with 1006 Chromie Squiggles. The mystery wallet minted nearly all of his Squiggles 2 years ago and has been essentially dormant since the mint, aside from a small handful of other Art Blocks activity. The Squiggle value inside 0xd11’s wallet is appraised at over 21,400+ ETH. The wallet has never sold a Squiggle -— talk about diamond hands.

### 0x31a5ff62a1b2c0f030aee1661eab6513ae676e23

[0x31a](https://app.upshot.xyz/user/0x31a5ff62a1b2c0f030aee1661eab6513ae676e23) is the second largest Squiggle holder with 413 Squiggles in possession, valued at 9,300+ ETH at the time of this writing. The wallet is also a Top 10 holder of CryptoPunks as it holds 93 Punks today.

### Snowfro

Snowfro, the creator of Chromie Squiggles, is the third largest holder with 367 Squiggles. As one would expect for the founder of Art Blocks, this wallet is filled with gems like 15 Ringers by Dmitri Cherniak, 6 Fidenzas, 10 Archetypes and much more.

### SquiggleDAO

[Squiggle DAO](https://www.squiggledao.com/) is a community that has banded together around the $SQUIG token to jointly purchase Chromie Squiggles. Currently, the DAO holds 301 Squiggles and is the fourth largest holder of the collection. SquiggleDAO has the goal of acquiring as many Squiggles as possible, including rarer types, for the DAO treasury and it make it the largest collection of publicly viewable Squiggles in the world.

### Gmoney

[Gmoney](https://twitter.com/gmoneyNFT), the founder of 9dcc and Admit One, is one of the most influential NFT thought leaders in the space. He is the proud holder of 272 Chromie Squiggles valued at over 5,400+ ETH at the time of this writing. Gmoney recently purchased a reverse fuzzy Squiggle for 50 ETH.

## Historic Chromie Squiggle Moments
### Venus Over Manhattan
In February 2022, Venus Over Manhattan, a prestigious art gallery founded by Adam Lindemann, presented an exhibition of Snowfro’s Chromie Squiggles in collaboration with Infinite Objects. The exhibition comprised of 51 previously minted Chromie Squiggles organized by their visual characteristics. The show marked Snowfro’s debut solo gallery exhibition.

### Sotheby’s Auction
In 2021, [Sotheby’s offered ten unminted Chromie Squiggles](https://metaverse.sothebys.com/chromie-squiggle-mint-it). The lot sold for $478,800 on December 13, 2021 to @_metasmurf. This was a historic moment for not only Chromie Squiggles, but also the NFT world, as it was one of the first major events in traditional auction houses embracing on-chain generative art.

### 9dcc ITERATION-02 Collaboration
ITERATION-02 is a collaboration between 9dcc and Snowfro that celebrates generative art creation on-chain and then translates that to generative garment. For this collaboration, the iconic Chromie Squiggle was be remixed with 9dcc’s visual identity as a collection of randomly generated NFTs. Each holder of 9dcc’s ITERATION-02 received a unique 1 of 1 physical 9dcc tee featuring their newly minted NFT printed directly on the garment.

## Liquidity and Volume
At the time of this writing, there has been 60,328 ETH worth of Chromie Squiggles in trading volume, which is in the top decile of all-time NFT collections when you remove wash-trading. Volume of Chromie Squiggles hit its peak in August 2021, during the peak NFT bull run market, with 1,000+ squiggles changing hands over the course of just 30 days. While volumes have fallen quite a bit since those days, the weekly trading volume remains healthy at 385 ETH traded during the week of this writing. 

At any given time, there is only about ~2-4% of all Squiggles that get listed, which is extremely low for a collection. This is a good indication that most Squiggle collectors intend to hold onto the collection for the time being. 

## So how do I get my hands on a Squiggle?

At the time of this writing, 9734 Chromie Squiggles have been minted. The collection will cap out at 10,000, meaning there are only that there are only 266 Squiggles that have yet to come out of the generator. Public minting for Chromie Squiggles has been permanently paused. The remaining unminted Squiggles are now reserved for manual distribution to collectors and community members over a longer period of time.

Unless you think that you will become one of the top 266 community members or friends of Snowfro in the coming months, your best bet is to watch the Squiggles that get listed for sale or place an offer on an existing Squiggle. If you would like to get your hands on one of these joyful creatures, check out [Upshot’s NFT aggregator](https://app.upshot.xyz/collection/0x059edd72cd353df5106d2b9cc5ab83a52287ac3a:0:999999) which compiles all of the major marketplaces so that you can view all of the Chromie Squiggle listings in one place.

## And, how do I access Squiggle financialization products?

Beyond just owning a historic NFT with immense value, one of the main benefits of owning a Chromie Squiggle is in the emerging financial markets that are developing around blue-chip NFT projects. The convergence of both NFTs and DeFi offer an extremely interesting intersection of possibilities for NFT-based financial products and services, such as NFT-backed loans and NFT perpetual markets.

### NFTfi
[NFTfi](https://nftfi.com/) is one of the primary places where you can use your Chromie Squiggle to get a crypto loan. The platform allows NFT holders to borrow wETH, USDC, and DAI by collateralizing their NFTs in exchange for loans provided by lenders. NFTfi operates with a peer-to-peer loan mechanism where potential lenders can see your underlying Chromie Squiggle asset and decide if they want to offer you a loan. 

### X2Y2 
[X2Y2](https://x2y2.io/) is another platform where you can use your Chromie Squiggle as collateral to borrow ETH from other lenders using a peer-to-peer lending mechanism. X2Y2 NFT loans offer you the ability to accept a loan on your NFT and send ETH to your wallet; in return, you must repay the amount of ETH with interest before the due time. If you fail to repay the loan, it grants the lender the ability to obtain your Chromie Squiggle as collateral. 

## In Conclusion

Finally, know that if you have made it this far in our Squiggle buying guide, you are already on the right track. There really is no wrong purchase when it comes to Chromie Squiggles, as they hold a significant place in NFT and generative art history. As always, buy and collect the items that you like and would feel excited to own, regardless of external value. We’re extremely excited about the future of Chromie Squiggles and the future NFT financialization capabilities that these spunky creatures will unlock.

All the information you need to know about Chromie Squiggles, including the history of Squiggles, the most important traits to pay attention to, notable holders and how you can get your hands on one of these blue-chip NFTs.

The Ultimate Buying Guide for Chromie Squiggles 

Decentralized Autonomous Organizations, or DAOs, have been making waves in the world of finance and investment in recent years. These digital entities are designed to operate on a decentralized blockchain network and are run by smart contracts that automatically execute predefined rules and decisions. 

With the rise of blockchain technology and the [NFT market](https://upshot.xyz/post/nft-markets-are-maturing), and an increasing interest in [decentralized finance (DeFi)](https://www.techtarget.com/whatis/definition/decentralized-finance-DeFi), investment DAOs have emerged as a promising new way to invest in digital assets such as NFT tokens and cryptocurrencies.

This article will take a closer look at investment DAOs and how they work, including the benefits and risks associated with investing in them. We'll also explore some of the most popular investment DAOs currently in operation and provide tips on how to evaluate investment opportunities. 

## What is an Investment DAO?

Investment DAOs are comprised of groups of people who pool their resources together to invest in various digital projects and assets they may not have been able to invest in individually. The decisions on what to invest in are made democratically by members of the DAO, using a voting system that is executed by the smart contract. The rules and guidelines that govern the DAO's investments are also set by the members themselves. 

Unlike traditional investment funds or companies, investment DAOs are completely decentralized—there is no central leadership, and it is governed by the community. It is typically open to anyone who wants to join and become a member. 

### DAOs in the DeFi Space

DAOs and DeFi also share a mutually beneficial working relationship. DeFi, or decentralized finance, is a form of peer-to-peer finance enabled by various Layer-1 blockchain protocols, such as Ethereum, Avalanche, Solana, and Cardano. 

DeFi eliminates the need for intermediaries, such as banks and brokers, and allows users to self-custody their assets in their wallets using their private keys. This increases the speed and lowers the cost of financial transactions, and enhances the transparency of transactions.

Many DeFi applications are built on top of DAO structures. For example, a DeFi protocol that allows users to lend and borrow cryptocurrency can be built on top of a DAO that controls the governance of the protocol, including decision-making around how the protocol will be updated or improved. DAOs can also be used to manage funds for DeFi projects, such as investment funds or liquidity pools.

## How Do Investment DAOs Work?

DAOs function by providing a community-driven approach to investment, with rewards for members and a focus on long-term growth and success.  

All the resources in a DAO are managed by a predefined logic which can be modified by members using a democratic system. The purchase of assets and allocation of resources are designed to be transparent and user-centric. 

Here’s an overview of how they work: 
- __Creation__: An investment DAO is created by a group of individuals who come together to form a decentralized organization. The DAO is created on a blockchain, such as Ethereum, using smart contracts that govern how the DAO operates.
- __Funding__: Members of the DAO pool their resources by contributing cryptocurrency to the DAO's treasury. This provides the DAO with capital that can be used to make investments.
- __Governance__: Members of the DAO have voting rights and can participate in decision-making processes that determine how the DAO's funds are invested. This can include voting on which assets to acquire, when to sell assets, and how to manage the DAO's portfolio.
- __Transparency__: All transactions and decisions made by the DAO are recorded on the blockchain, providing transparency and accountability to members of the DAO and other stakeholders.
- __Rewards__: Depending on the DAO's structure, members may receive rewards for their participation and contributions to the DAO. This can include a share of the profits generated by the DAO's investments, or other incentives such as tokens or other assets.

## What Are Investment DAOs Used For?

Investment DAOs are often designed to invest in digital assets, but they can also be used to  invest in traditional assets such as stocks or real estate.

### NFTs

Collector DAOs are when individuals pool funds to acquire and issue NFTs. For example, [APE DAO](https://t.co/vsgMPHWuEZ) allows for the fractionalization of NFTs so multiple users can own a fraction of the same asset. 

DAOs can also help raise funds and create engaged communities for different NFT projects by allowing people to determine the most profitable projects. Members get to determine the investment direction through token-based voting. DAOs also create incentives and rewards that encourage members to participate. This can support community governance and also help smaller projects or creators develop a dedicated community. 

### Other Crypto Projects

DAOs are not limited to any specific category, and their utility can extend across various use cases, including protocols, philanthropy, publishing, and even social media.

Some notable DAO projects include [AssangeDAO](https://assangedao.org/), which helps in supporting WikiLeaks and its founder by accepting cryptocurrency donations. 

[VitaDAO](https://www.vitadao.com/) supports biotech scientists by investing in longevity research through an IP-NFT, and The LAO is an investment fund that supports the blockchain ecosystem.

### Real Estate

Real estate DAOs create a platform for users to manage the administrative environment of a property,  by tokenizing the asset. Through tokenization, the barrier to entry for real estate investments is lowered and allows investors to purchase fractional ownership of a property. Members can buy stakes in properties for as low as $50. These tokens provide holders with voting rights in decision-making processes, such as repairs and maintenance. 

This process also brings transparency to the siloed market, as all transactions are recorded on a blockchain ledger. Users can also benefit from increased liquidity and lower transaction costs associated with traditional real estate investments. Examples of real estate DAOs include Lofty AI, Arrived Homes, and Vesta Equity.

### Startups

Startups and institutional investors are leveraging DAOs to build a new model for community action on the internet.  Through built-in governance and treasury management features, they allow members to contribute funds in exchange for equity or voting rights without having to go through traditional channels.

Venture capital firms are further exploring new methods to attract more funding and participants into the space. One of these is the use of [hybrid DAO financing models](https://academy.moralis.io/blog/business/why-businesses-should-adopt-a-hybrid-dao-model) that imitate initial coin offerings (ICOs).

## Benefits of Investment DAOs

Investment DAOs offer several advantages over traditional investment funds or companies, including:

### Democratization & Inclusivity 

DAOs provide a platform for individuals from all over the world to come together and pool their resources to make investment decisions. Since DAOs operate on the blockchain, they are accessible to anyone with an internet connection regardless of geographical location or social status. 

### Transparency

DAOs operate transparently on the blockchain, allowing members to track all investment decisions and financial transactions. This transparency ensures that all members have visibility into the DAO's operations, reducing the risk of fraud and mismanagement.

### Lower Fees 

Investment DAOs can offer lower fees than traditional investment vehicles, such as mutual funds or hedge funds. Since DAOs operate on the blockchain, they can eliminate many of the costs associated with traditional investment vehicles, such as administrative fees, fund manager salaries, and middleman fees.

### Risk Diversification 

Investment DAOs allow members to pool their resources and invest in a diversified portfolio of assets, reducing the risk of losses due to the failure of any individual investment. This diversification can help to protect investors from market volatility and ensure a more stable return on investment.

### Liquid Investments 

DAOs can provide investors with access to liquid investments, such as cryptocurrencies or other blockchain-based assets. Since these assets are traded on public exchanges, they can be bought and sold quickly and easily, providing investors with greater flexibility and liquidity.

## Investment DAO Risks

Despite the numerous advantages, investment DAOs also carry some risks. 

- __Smart contracts__: If there are flaws in the smart contract's code, the DAO could be vulnerable to hacking, bugs, or other technical issues.
- __Regulatory risks__: The regulatory environment for DAOs is still uncertain in many jurisdictions. This uncertainty could result in legal or regulatory action that could impact the DAO's operations. 
- __Market risks__: Like any investment vehicle, DAOs are subject to market risks, including volatility, liquidity, and losses. 
- __Reputation risks__: DAOs operate on the blockchain, which means that all transactions and decisions are visible to the public. This can make it more susceptible to attacks from hackers, which can damage reputations and impact a DAO’s ability to attract new members or investments.
- __Fraud__: Some DAOs can be used as an avenue to trick people into fraudulent investments. 

## Investment DAOs to Know in the NFT Space

As NFTs and crypto have become a more mainstream investment opportunity, there are several prominent Investment DAOs to know in the NFT space.

### 1. SquiggleDAO
![squiggle dao logo](//images.ctfassets.net/lhkcghnr8ql4/3HsJ74gZx83cAbhNVsqTc2/124615d73dcedd0b9ddb1abe1a136084/squiggle_dao_logo.png)

[Squiggle DAO](https://www.squiggledao.com/) is a digital art organization focused on collecting, curating, and investing in generative art and NFTs. It seeks to improve users' access to crypto art and NFTs by tokenizing artwork and allowing artists to maintain their ownership of the work while sharing in its rewards. 

Squiggle DAO aims to build a sustainable digital art ecosystem that benefits both artists and collectors. Squiggle NFT serves as the pass to Squiggle DAO, and it currently has a floor price of 12ETH.

Also Read: [The Ultimate Buying Guide for Chromie Squiggles](https://upshot.xyz/post/buying-guide-chromie-squiggles)

### 2. PleasrDAO
![PleasrDAO logo](//images.ctfassets.net/lhkcghnr8ql4/2WjVJYJqv7LOzQYlpli3t5/230c5f20abec6f15ca036ca9b5b35e4f/PleasrDAO_logo.png)

[PleasrDAO](https://pleasr.org/#) is a collective of DeFi leaders, NFT collectors, and digital artists that acquire culturally significant pieces. The DAO's mission is to collect digital art that represents important ideas, movements, and causes. PleasrDAO is experimenting with community and fractional ownership of art, using DeFi to add and disseminate value. The group has also been launching live auctions with notable figures such as Edward Snowden and Daniel Ellsberg.

### 3. Flamingo DAO
![Flaming DAO logo](//images.ctfassets.net/lhkcghnr8ql4/3smEuUOOgmU2XEZLoOzNsX/61c2748d3a477794c404f558ac771623/Flaming_DAO_logo.png)

[Flamingo](https://docs.flamingodao.xyz/) is a DAO exploring investment opportunities for blockchain-based assets. These NFTs include digital art, collectibles, in-game assets, and other tangible assets that help create, monetize, and incentivize online content.  As of 2022, Flamingo’s portfolio included 215 CryptoPunks and 22 Bored Apes, with an estimated value of $1 billion. 

### 4. Bit DAO

[BitDAO](https://www.bitdao.io/) is an open platform for proposals voted on by BIT token holders, supporting the builders of the decentralized economy through pledged contributions, product development, specialized initiatives, R&D labs, and token swaps. It is governed by token holders and focuses on principles of community-driven decision-making and collaboration.

### 5. Davinci DAO

[Davinci DAO](https://davinci.gallery/) is a decentralized autonomous organization that aims to foster creative collaboration and innovation in the arts and cultural sector. It was founded by Misha da Vinci, an experienced web3 leader, and is supported by a community of holders. Davinci DAO provides a platform for community-driven decision-making, funding, and support for artists and creators, with a focus on empowering marginalized groups and promoting diversity and inclusion.

## How to Make Your Own Investment DAO

![portait](//images.ctfassets.net/lhkcghnr8ql4/1AerkBWodRZvqU5WImMUCG/fb37726dd80306c70bf215257fd5a1fb/portait.png)

### 1. Encode & audit a smart contract

Encoding a smart contract:

1. Write the smart contract code using a programming language suitable for smart contracts, such as Solidity.
2. Compile the code into bytecode, which is the low-level code that can be executed on the blockchain.
3. Deploy the bytecode onto the blockchain using a tool like Remix or Truffle.

Auditing a smart contract:

- Review the smart contract code to identify potential security vulnerabilities, such as reentrancy attacks, integer overflows, or unauthorized access.
- Use a tool like MythX or Slither to perform automated security checks on the smart contract code.
- Conduct a manual code review by a team of experienced smart contract developers to identify any potential issues that may have been missed by automated tools.
- Test the smart contract using a testnet or private blockchain to simulate different scenarios and ensure that it functions as expected.
- Have the smart contract audited by an independent third-party auditor who specializes in smart contract security.

### 2. Determine rules of governance

DAOs must identify the key decisions that need to be made and the criteria for making them. This involves determining the roles and responsibilities of token holders, developers, and other community members. Once these roles are defined, the community can create a set of rules and procedures for decision-making, such as a voting system or a proposal process. 

### 3. Use a DAO management platform 

DAO management platforms guide you through the process of creating a DAO in straightforward steps. 

Using these platforms, there's no need to build a smart contract from the ground up. They essentially serve as a bridge between you and the blockchain, allowing you to deploy your DAO without any coding. 

Some of the most frequently used platforms for creating a DAO include:
- [Syndicate](https://syndicate.io/)
- [Colony.io](https://colony.io/)
- [Aragon](https://aragon.org/)

### 4. Incorporate appraisal capabilities 

Appraisal capabilities are crucial for DAOs and other funds investing in NFTs due to the infrequent trading of NFTs, which makes it difficult to determine the net asset value (NAV) of underlying assets and the price of ERC-20 tokens issued to investors. 

To fetch data about the current market price of an asset or the value of a particular index, a DAO can use machine learning models. [Upshot](https://upshot.xyz/post/how-upshots-ml-models-work) provides the easiest alternative to incorporating appraisal capabilities without having to build one from scratch. 

By utilizing Upshot's appraisals, DAOs can establish an accurate estimate of the value of NFT holdings, create a specific fund admin function for NFT investments, and make informed decisions through the purchase of fairly priced assets. This transparency enhances investor confidence and ultimately supports the growth of the NFT market.

### 5. Raise tokens or other funds

There are several ways to raise funds through a DAO, including:

- Initial Coin Offering (ICO)
- Community funding
- Token sales

When a member of the DAO submits a proposal for a new initiative or decision, the proposal is deliberated and voted on. Each token holder is given a certain number of votes that is proportional to the value (ERC-721) or number (ERC-20) of their tokens. 

If the proposal receives a majority of the votes, it’s implemented by the DAO. Proposals may typically include changes to organizational operations, such as hiring employees, developing new projects, or acquiring assets.

## Other Opportunities for Investment DAOs & NFTs

Upshot assists investment DAOs to find the right assets to put their money in. With over 74 million assets from over 67,000 collections appraised and refreshed hourly, Upshot is an Industry-leading NFT appraisals and financial tool for the entire NFTxDeFi space. 

You can leverage Upshot’s cutting-edge technology by: 

- __Deal finding__: Discover the best deals in the NFT market with Upshot's appraisals seamlessly integrated into our NFT aggregator. 
- __Real-time portfolio tracking__: Keep a pulse on the value of your NFT portfolio with our near real-time appraisals, and make adjustments based on the latest market trends.
- __Build smarter trading strategies__: Gain an edge in the market by using Upshot's API. Our appraisals, liquidity analyses, and advanced stats can help you increase your chances of success.
- __Identify and track smart collectors__: Our novel grading index for NFT wallets, known as gmi, helps you identify and track the smartest collectors in the market. Use this information to stay ahead of the competition.

[Get started with Upshot.](https://upshot.xyz/) 

  Learn about the advantages of using NFT Investment DAOs and how they can help you maximize your returns. 


Ultimate Guide to Investment DAOs (For NFTs, Crypto, and More) 

## Introduction
The world of investing has been transformed by the rise of digital assets, and none more so than NFTs. These unique digital assets have captured the imagination of investors around the world, and there is now a growing demand for indexes that can track their performance.

[__Upshot Indexes__](https://app.upshot.xyz/indexes) offer a new approach, providing index methodologies and API endpoints for developers to create index products that track the performance of a basket of NFTs. This allows projects to offer exposure to a broad range of NFTs or specific segments of the market. For example, developers might use Upshot to build an NFT index that tracks the performance of blue-chip NFTs or Yuga Labs NFTs.

## The Basics of NFT Indexes and ETFs
NFT indexes allow investors to track and gain diversified exposure to the world of non-fungible tokens without the need to purchase individual NFTs. These indexes function similarly to traditional indexes by tracking a basket of assets – in this case, NFTs – that meet specific criteria such as rarity, popularity, or historical value. Key benefits of NFT index funds include ease of entry, diversification, reduced time and knowledge requirements, and improved liquidity.

To learn more about the intricacies of NFT index funds and how they compare to traditional index funds, read our in-depth blog post [__here__](https://upshot.xyz/post/introduction-to-nft-index-funds).

### Challenges of Building NFT Indexes
Creating NFT indices presents a unique set of challenges such as limited scope when tracking floor NFTs, pricing complexities, and liquidity and capacity concerns. To learn more about these challenges, please refer to our [__previous blog post__](https://upshot.xyz/post/introduction-to-nft-index-funds) on NFT indexes more generally.

#### Limited Scope When Tracking Floor NFTs
Presently, NFT index funds predominantly focus on tracking the floor prices of NFT collections. However, this approach fails to capture a complete picture of the range of outputs that are in a collection, as some collections contain highly-valuable rare NFTs that are worth significantly more than floor NFTs. Consequently, this limited scope results in an inaccurate representation of the true diversity and value potential of a collection.

#### Pricing Complexities
NFT indices typically weight-adjust their construction based on the floor price the various collections within the index. This does not take into account the collection as a whole, which would require pricing algorithms to better understand the value of the entire collection. Developing sophisticated pricing models for NFTs can be challenging due to the unique characteristics of each asset and the lack of historical data compared to traditional financial assets.

#### Liquidity and Capacity Concerns
NFTs are non-fungible, low-velocity assets. This characteristic poses challenges for NFT indexes in that oftentimes there is not sufficient capacity in the open market to rebalance the portfolio. Moreover, the acquisition and disposal of NFTs can be time-consuming and expensive, potentially hampering the fund's ability to manage its portfolio efficiently and effectively.

## Introducing the Upshot Indexes: Empowering Projects to Create More Expressive NFT Financial Infrastructure
Upshot has constructed a set of NFT index methodologies to enable other projects to build more expressive financial primitives for NFTs with our API. By providing the framework and tools necessary for designing and maintaining NFT indexes, Upshot aims to enhance the accessibility of the NFT space and open up opportunities for more meaningful capital allocations as well as more interesting financial innovations.

Leveraging our quant team’s extensive research and experience in constructing indexes for less liquid financial assets, Upshot's initial set of indexes track core sectors of the NFT space. This initial set of indexes include the Upshot Yuga Index, Upshot Art Blocks Curated Index, and Upshot PFP Index. These methodologies can be used to track the performance of specific segments of the NFT market or the broader market as a whole, with updates available on an hourly cadence.

By equipping index creators with robust and accurate pricing methodologies, Upshot empowers them to overcome common challenges like liquidity constraints, capacity issues, and the accurate valuation of assets within a collection. Through this approach, Upshot facilitates the growth of the NFT index ecosystem, making it more diverse and catering to a wide range of investor preferences and risk appetites.

### Presenting Upshot's Premier NFT Index Methodologies
Upshot is launching three initial index methodologies that cater to various NFT market segments: the Upshot Yuga Index, Upshot Art Blocks Curated Index, and Upshot PFP Index. 

#### Upshot Yuga Index
The methodology behind the Upshot Yuga Index monitors the performance of collections under the Yuga Labs umbrella, weighted by appraisal-based market cap. This methodology captures some of the most liquid NFT collections, enabling developers to offer exposure to verticals such as PFPs, metaverse, generative art, and gaming in a single index. The Upshot Yuga Index includes collections such as Bored Ape Yacht Club, Otherdeed for Otherside, Mutant Ape Yacht Club, CryptoPunks, Meebits and Bored Ape Kennel Club. 

To view more details around the methodology of the Upshot Yuga Index, visit [__here__](https://app.upshot.xyz/indexes/yuga). 

#### Upshot Art Blocks Curated Index 
The methodology behind the Upshot Art Blocks Curated Index tracks the top 20 Art Blocks Curated NFT collections, enabling developers and projects the ability to offer exposure to cutting-edge generative art. This index construction is composed of the following collections: Chromie Squiggle by Snowfro, Fidenza by Tyler Hobbs, Ringers by Dmitri Cherniak, Gazers by Matt Kane, and Archetype by Kjetil Golid among others. 

For more information on the methodology of the Upshot Art Blocks Curated Index, click [__here__](https://app.upshot.xyz/indexes/artblocks-curated).

#### Upshot PFP Index
The methodology behind the Upshot PFP Index tracks the top 20 PFP (profile picture) collections, weighted by appraisal-based market cap. This index represents a significant portion of the NFT space, with many PFP projects driving social identity, community engagement, and network value within the digital realm. The Upshot PFP Index includes collections such as CryptoPunks, Bored Ape Yacht Club, Azuki, Clone X, Pudgy Penguins, and Doodles. 

For more information on the construction of the Upshot PFP Index, click [__here__](https://app.upshot.xyz/indexes/pfp).

## Ways to Use Upshot’s NFT Index Methodologies  
#### Utilizing Upshot's NFT Index API as a Price Oracle for Perpetuals
Upshot's NFT Index API endpoint can be utilized as a powerful price oracle for the creation of NFT perpetuals. Perpetuals are a type of financial derivative that allows traders to take long or short positions on an underlying asset without an expiry date. In the context of NFTs, perpetuals can enable traders to speculate on the future price movements of NFT collections or the overall NFT market without actually owning the underlying NFTs.

The Upshot NFT Index API endpoint provides access to novel index constructions and price feeds that are crucial for calculating the index value and ensuring that the perpetual futures accurately track the performance of the underlying NFT collections. This includes information such as weighting based on appraisal-determined market caps of various NFT collections included in the index. Additionally, the API endpoint allows users to retrieve historical index prices, which can be used to analyze price trends, develop trading strategies, and assess the risk and return characteristics of the NFT market.

By leveraging the Upshot NFT Index API endpoint as a price oracle, creators of NFT perpetual futures can benefit from a robust, reliable, and up-to-date source of pricing information. This not only ensures that the perpetual futures are accurately tracking the performance of the NFT market, but also helps to establish trust and credibility among traders and investors participating in the NFT perpetuals market. 

#### Unlocking Holistic NFT Market Insights for Analysts and Researchers 
Upshot's NFT Index API is a powerful tool that enables analysts, researchers, and media organizations to gain a comprehensive understanding of the NFT market. NFT indexes offer a novel method for analysts to understand the NFT market, as they provide a holistic perspective on the rapidly evolving landscape, moving beyond the limitations of individual collections and enabling a more comprehensive analysis.

By breaking down the NFT market into different segments, such as art, gaming, and PFPs, analysts can identify trends and patterns within each category. Tracking the performance of NFT indexes over time enables the identification of market movements, emerging trends, and potential investment opportunities. Utilizing Upshot’s NFT API, analysts can generate valuable insights by creating in-depth reports, research papers, or news articles, which in turn assist investors, enthusiasts, and the general public in making informed decisions and staying up-to-date on the latest developments in the NFT market.

## Conclusion
The launch of Upshot Indexes marks an exciting new chapter in the rapidly evolving intersection of DeFi and NFTs. As the NFT market continues to mature, we can expect to see more projects leveraging these NFT indexes as a way to offer exposure to this exciting new asset class. By providing developers with robust methodologies and an easy-to-use API endpoint to build with these NFT indexes, Upshot is paving the way for a future where the financialization of NFTs unlocks new investment opportunities and enhances our understanding of this dynamic market. 

To learn more about the technical details of Upshot's offering, we invite you to explore our [__developer API documentation__](https://docs.upshot.xyz/reference). If you're ready to start building your own NFT index products, you can sign up for access to [__our developer portal__](https://developer.upshot.xyz/signin). As NFTs continue to reshape the digital asset landscape, we believe that innovative financial infrastructure, like Upshot Indexes, will play a vital role in driving the development of novel financial primitives. 

Introduction article to Upshot Indexes: A New Era of NFT Exposure.