NFT x DeFi: Deep dive into LUSD Chicken Bonds' Dynamic NFT
October 11, 2022
The LUSD Chicken Bonds release marks the arrival of a brand new type of DeFi protocol deeply intertwined with a generative NFT collection. Chicken Bonds introduce a unique form of bonding, never harnessed before by any other protocol. And lastly, it brings some excitement and fun into the DeFi bear market - it will be an ongoing experimentation packed with learnings.
This article will focus on the NFTs and highlight why they mark a milestone in the evolution of DeFi & NFTs. We have packed a fascinating blend of features into Chicken Bonds NFTs - stretching every boomer's imagination:
- Play-to-Mint: The only way to mint the NFT is to take part of the LUSD bonding in Chicken Bonds.
- Dynamic NFTs - three NFTs in one: Your NFT will evolve its visual appearance from egg to scared or proud chicken depending on your actions during bonding.
- Special attributes: Liquity users have higher chances to get rarer NFTs: open loans, LQTY staking and other on-chain activities will boost their probabilities
- Animated, generative on-chain collection: the NFTs can be rendered directly as SVGs from on-chain data and each representation contains an animated element.
- Surprise NFT gift card: a bonding NFT egg is also a great gift because it’s not only an NFT but has also a fixed LUSD value attached to it. And when users interact with it to claim or cancel the bond they will get a surprise Chickening In or Chickening Out NFT. A neat way to reward and engage your employees or community.
The inception of the Chicken Bonds NFT
Since users can bond any amount of LUSD, at any time, using an NFT is the most efficient way to keep track of their deposits. Thus, the CB NFT started as a purely technical feature.
However, we quickly realized it was a unique opportunity to improve the Chicken Bonds experience by making it more engaging and rewarding: the idea of building a fully fledged generative NFT collection was born.
With this playful component, a new fun challenge arises for users: should they optimize their economic profit from bonding or rather decide in favor of their NFT collections? It will be an explorative journey for every user: will your decisions be driven by rational or emotional factors?
Three art pieces in one NFT
Each LUSD bond is an NFT which contains three different art pieces but only one is visible at the time depending on the user’s bonding state:
- Bonding - egg: When a user creates a bond, he obtains an egg NFT representing his deposit.
- Chicken In - proud chicken: If the user claims his bond, the egg evolves into a proud chicken.
- Chicken Out - scared chicken: If the user cancels his bond, the user obtains a scared running chick instead.
The first NFT is a special one, as it is a technical requirement — a necessary part of the protocol that has been given a neat visual element to go with. Having the bonds as an NFT enables users to easily transfer, or re-sell them. Since the Egg NFT is a claim upon the bonded assets, transferring the NFT transfers the underlying assets — the situation is exactly the same as with Uniswap V3 LP NFTs.
The Chicken In and Chicken Out NFTs have no functionality in the Chicken Bonds system and are just a visual memory of your bond and actions. At this stage there are no assets tied to the NFTs anymore.
The visual art
The art for the Chicken Bonds NFT was made by Luchador, NFT artist and dev, creator of an eponym collection and Play to Earn game: Luchadores. Our team has then iterated on the svg provided to adjust the rarity formulas and attributes allocations to make the experience as engaging as possible.
At Liquity, resilience is a serious concern never overlooked – be it for protocols or NFTs art. The Chicken Bonds NFTs visuals are no different and received the Liquity touch: the art is an SVG, fully onchain. There is no third party hosting or pinning required: the art for your Chicken Bonds NFTs will be available as long as the Ethereum network synchronizes.
Chicken Bonds NFT Attributes details
Egg NFTs have four basic attributes that are partially inherited when the NFT evolves into a Chicken In and Chicken Out NFT.
🥚 Egg NFT (Bonding stage) attributes
The egg is the simplest NFT and it will be displayed while you are bonding. The egg NFT has four attributes and a cute motion element: it wiggles when you wait a bit.
- Border: the color of the border
- Card: the color of the card (background)
- Egg: the color of egg
- Egg Size: size of the egg, scaling up with the size of the bond (from 100 LUSD bonded to the large size reached for >100k bonds).
There are a total of 4’056 combinations. The card border and color as well as the egg size carry over when the NFT evolves during a Chicken In or Out. Here is the full list of attributes and their probabilities:
To ensure the eggs are compelling and satisfying, there is an additional rarity ponderation step: the affinity.
Amongst the attributes, some are rarer than others, such as the Gold or Rainbow color variants. To still make the NFT as compelling as possible, we’ve introduced a notion of “affinity”: it makes the allocation of attributes from the same family more likely if you already have one.
Thus, an NFT that rolls a rainbow border (5% base chance) will have better chances at a rainbow card (4% vs the usual 2%). If it rolls the rainbow card too, it will again have better chances than usual to roll a rainbow egg (5% vs the usual 2%).
An interesting consequence of affinity is that it makes rolls from the same family, such as Rainbow Border / Rainbow Card / Rainbow Egg a bit more accessible. Thus, the rarest of all eggs are disparate matching of rare attributes.
For instance, at the egg state, a very rare combination is a Rainbow Border / Gold Card / Luminous egg with a large size:
The egg will be displayed while you are bonding. Once you Chicken In (claim bond) or Chicken Out (cancel bond), you will lose your egg forever. To keep your egg - you need to keep bonding.
🐣 Chicken Out NFT (Scared Chicken) attributes
Let’s start with the Chicken Out NFT which is the simplest of the two. Indeed, while Chickening In, the NFT inherits these three attributes of the Egg NFT and gains a new one, the Chicken Color:
- The Egg Size (now Chicken Size)
- The Card Color
- The Border Color
Тhe Chicken Color is rolled, with 30% odds of being the same color as the egg. In total, there are more than 52k combinations possible.
To keep going with the very special Rainbow Border /Rainbow Background / Luminous Egg (RRL Egg from now on), here is how it would evolve if Chickened Out:
🐔 Chicken In NFT (Proud Chicken) attributes
The most interesting evolution of the NFT occurs when a user Chicken In. The Chicken In NFT has these main types of attributes:
- It inherits the Egg attributes in the same way as the Chicken Out NFT (egg size, border color, card color).
- The chicken color rarity can be influenced by users (see below)
- It gains news attributes that are only available for Chicken In NFTs
- And also potentially gains bonus attributes based on the wallet's on-chain activity.
Thanks to the additional Chicken In attributes, the amount of possible combinations at this stage skyrockets to more than 31 millions.
Inherited Egg Attributes
These three attributes are the same as for the Chicken Out (see section above):
- Egg Size (now Chicken Size)
- Card Color
- Border Color
The chicken color is the most special attribute. You can improve your chances to get a rare color like bronze, silver, gold, rainbow or luminous as follows:
- If your egg had already a special color, chances are higher that your chicken will also have a special color
- An open Trove in Liquity (LUSD loan) boosts your chances further to get a rare color - the bigger the better.
Chicken In Attributes
Moreover, when Egg turns into Proud Chickens, they get four new attributes. Each one is rolled randomly to determine which variant is obtained.
- The comb (head piece), with 9 variants
- The tail, with 9 variants, too
- The beak, with 4 variants
- And finally, there are 3 variants of wings
To get back again to our RRL Egg, here is how it could look like if Chickened In:
Special Chicken In Attributes
There is an additional series of attributes exclusively available for the Chicken In NFTs. These attributes, unlike the others, are not rolled at random or derived from the bond properties. Instead, they are allocated based on your on-chain activities observed on the wallet minting the bond:
- A chicken leg band: user having a Liquity Trove open
- A treasury badge: having LQTY in your wallet as well as staking LQTY on Liquity directly, or via Pickle pLQTY vault
- A Llama badge: having voted for the LUSD/3pool or LUSD/FRAX CRV gauge (veCRV holders).
The Liquity trove (1) also provides a rarity amplification factor, providing better odds at rare colors (Bronze to Luminous) depending on the trove size. Staking LQTY and gauge voting provides additional attributes visible at the bottom of the card.
Chicken In additional attributes are determined at the moment the users Chicken In. Thus, the conditions necessary to obtain the special attributes need to be fulfilled before this point for the attributes to be obtained.
Note: Only Troves created directly by the wallet are accounted for, which excludes Troves created with tools like DeFiSaver (DSProxy). However, DeFiSaver is working on integrating Chicken Bonds, stay tuned.
Trading Chicken Bonds NFTs
All Chicken Bonds NFT are transferable, and can be traded on the usual NFT exchanges, with a 0% creator fee.
⚠️ If you are selling an Egg, keep in mind that it contains the claim on the underlying LUSD, recoverable by Chickening Out. Make sure to price your Egg accordingly.
Forward thinking considerations
Just like bLUSD, the yield-amplified LUSD-backed ERC20 token produced by the Chicken Bonds would make for an exciting collateral across DeFi, the Egg NFT has interesting properties in that regard too.
Indeed, since the Egg NFT (bonding phase) contains the claim upon the assets, it would be a prime NFT to use as collateral. If a liquidation was ever required, the lending service could simply seize the NFT, chicken out to recover the LUSD, and compensate the user debt. With Egg NFTs as collateral, bond holders will be able to leverage bonds, enabling even more refined strategies.
LUSD Chicken Bonds are an exciting new primitive at the crossroads of DeFi and NFT. We are looking forward to see how the experiment will keep unfolding and to see what kind of integrations could be built on top.