<p><span data-contrast="none">GSR, the crypto market maker founded by former Goldman Sachs executives, caused a splash at the start of this year when it </span><a href="https://www.theblockcrypto.com/news+/129924/gsr-co-founder-says-the-crypto-market-maker-will-enter-the-nft-space-this-year"><span data-contrast="none">laid out a plan</span></a><span data-contrast="none"> to start using algorithms to trade non-fungible tokens (NFTs).</span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">A major liquidity provider for crypto projects and exchanges, GSR traded more than $4 billion a day as of January. But applying its trading strategies to NFTs — highly esoteric assets spanning art and collectibles that are linked to blockchains — is an entirely new challenge for the company. </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">“Right now, we still do it in a fairly manual fashion,” Benoît Bosc, GSR’s global head of product, told The Block. “The idea eventually is to find both ways to do it systematically, and to find ways to engage with projects, collections or marketplaces to create proper contractual relationships where we can bring liquidity to their specific space.”</span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">The market for NFTs exploded in the second half of last year. From almost nothing, NFT platforms recorded total trading volume of $3.88 billion in August 2021, according to </span><a href="https://www.theblock.co/data/nft-non-fungible-tokens/marketplaces/nft-marketplace-monthly-volume"><span data-contrast="none">The Block Research’s data</span></a><span data-contrast="none">. Volumes hit $5.63 billion in January this year, before falling off a cliff in the summer. Less than $1 billion NFTs were traded in June, and it looks as though volumes will be lower still for July. </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">But Bosc, who spent nearly 10 years trading crude oil at Goldman Sachs before joining GSR last year, is undeterred. He believes the timing is in fact “opportune” because the prices of blue-chip NFTs have fallen so dramatically. Can he be sure, though, that they will rebound?</span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">“I’m pretty confident that they’ll be back, but they might be back looking different,” he said. “I think NFTs will act as an even higher beta than the wider crypto market.” </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">His thinking is that in the event of a rebound, rising floor prices — the cheapest entry point for NFT collections — coupled with a rally in ether (the token that most NFT prices are denominated in), will give holders “squared exposure” to the crypto market. Such exposure is typically worse on the way down, too. </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <h2><b><span data-contrast="none">GS Art</span></b><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></h2> <p><span data-contrast="none">GSR has been putting at least some of its money where its mouth is. On June 21, the company unveiled </span><a href="https://www.gsr.io/insights/the-gsr-blue-collection/"><span data-contrast="none">the GSR Blue Collection</span></a><span data-contrast="none">, an assembly of 16 pieces from prized collections, such as CryptoPunks, Bored Ape Yacht Club, Fidenza and Chromie Squiggle. Fidenza and Chromie Squiggle are blue-chip collections from the generative art platform Art Blocks, a focal point of GSR’s NFT trading efforts. </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">But GSR Blue — which is comprised of pieces the company intends to hold, not trade — is only the tip of the iceberg. To kickstart the market making project, GSR first had to accumulate a sizable inventory of NFTs. Bosc said that the firm has bought roughly 175 pieces so far, and sold 15 — much of the trading in Art Blocks collections. </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">A </span><a href="https://dune.com/0xRob/archipelago"><span data-contrast="none">chart</span></a><span data-contrast="none"> compiled on Dune Analytics by the Twitter user 0xRob shows that GSR has been driving a lot of volume through Archipelago, a generative art marketplace founded in November last year and </span><a href="https://nftevening.com/new-generative-art-nft-marketplace-archipelago-backed-by-tyler-hobbs/"><span data-contrast="none">backed by Fidenza creator Tyler Hobbs</span></a><span data-contrast="none">. According to the chart, GSR has bought 1,069.56 ether’s worth of generative art on the platform (approximately $1.7 million), while selling NFTs worth 229.83 ether (around $371,000). GSR has also been trading on gm.studio, a decentralized art platform, according to Bosc. </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">OpenSea is by far and away the NFT sector’s largest marketplace, dominating volumes in good months and bad. Yet GSR appears to be trading predominantly on Archipelago, a far smaller outfit with just a handful of staff. Why? </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">In part, because of the platform’s focus on generative art and Art Blocks, which aligns neatly with GSR’s plans. The firm’s co-founder and president Rich Rosenblum told The Block in January that Art Blocks pieces are a good fit for algorithmic trading, because of the “mathematical seed” that dictates their appearance. But Archipelago’s more sophisticated bidding system also helped entice GSR.</span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">“They give us the option to create bids for collection level, but also at the trait level,” said Bosc. “So, if I said I want a slinky Squiggle, I could show bids to all of the slinkies.” </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">NFT trading is still a sideshow at GSR, with just a few people dedicated to it and a few million dollars at stake. The hope, though, is that it will help foster a smoother market in which operators will always have a buyer and seller of last resort, whatever the state of crypto prices. </span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p> <p><span data-contrast="none">“This is what is missing in NFTs — just creating the conditions for trading,” said Bosc. “And that’s part of the experiment. If you create those conditions, will they come?”</span><span data-ccp-props="{&quot;201341983&quot;:0,&quot;335559739&quot;:160,&quot;335559740&quot;:259}"> </span></p><br /><span class="copyright"><p>© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.</p> </span>