Key Highlights
- Bands.fun has launched “Onchain ETFs,” which allows users to create and trade automated portfolios of Solana tokens and NFTs
- The launch comes amid a surging “NFT Strategy Season” on Solana
- These new on-chain funds will offer new utility for NFTs and direct fan-artists’ royalties
A new platform named Bands.fun has introduced a novel financial product called “Onchain ETFs,” launching on October 6. This debut comes with a period of booming activity and innovation in the market for Non-Fungible Tokens (NFTs) on the Solana blockchain.
(Source: SolanaFloor on X)
The project, which received backing from Alliance DAO, aims to merge decentralized finance with digital collectibles. It allows users to create and trade bundled portfolios, known as “bands.”
It can contain various Solana tokens or NFTs. These portfolios are fully managed on the blockchain and use automated systems to sustain their value.
How Programmable ETFs Work On-Chain
The platform simplifies a complex area of traditional finance. Users can create their own “band” by selecting a mix of assets. For example, a band could be made up of specific percentages of different Solana-based meme coins.
Once set up, the band operates automatically. A small fee is taken from every trade made within the band. This fee is then used to automatically buy back the band’s own token from the market.
This process reduces the total number of tokens available, a mechanism designed to increase the value of the remaining tokens over time. For bands that contain NFTs, the system works similarly, using trading fees to acquire more assets.
This turns static digital images into dynamic, income-generating portfolios. This technology is powered by Meteora AG’s liquidity systems, which help make these bands easy to trade while including protections against market manipulation.
NFT Strategy Season Introduces New Financial Models on Solana
The launch of Bands.fun occurs during what is being called an “NFT Strategy Season.” This refers to a wave of new projects that are treating NFTs not just as collectibles, but as assets within automated investment strategies.
This trend is helping the NFT market recover from a major downturn that occurred between 2022 and 2023. The current activity is reminiscent of a similar trend on the Ethereum blockchain involving Dynamic Asset Tokens (DATs). These DATs acquire valuable NFTs and use trading fees to support their market price.
On Solana, projects like Pudgy Strategy are using the same model, buying Pudgy Penguin NFTs and using fees to create buying pressure. This new model presents an alternative to previous platforms that were accused of encouraging rapid selling.
Loopholes in the New Ecosystem
The rise of on-chain ETFs and NFT strategies brings some opportunities, but it also comes with some risks.
For example, its supporters are seeing it as a way to add real utility to NFTs. For example, in the music industry, artists like Grimes and Kings of Leon have used NFTs to sell exclusive content and experiences, generating millions and creating a new way for fans to support creators.
This model can allow artists to share royalties directly with their supporters, bypassing traditional record labels.
However, the space remains highly volatile and speculative. The value of Solana’s native token, SOL, can experience sharp swings, which directly impacts these on-chain funds.
On the flip side, some critics warned that these complex financial products can be risky and are sometimes compared to trendy but unsustainable fads.
Despite these concerns, the successful launch of Bands.fun has sparked a series of discussions on the internet amid the current bullish trend in the cryptocurrency market.
At the time of writing this, Solana (SOL) is trading at around $234.34 with a 9.2% hike in a week. The total market capitalization of SOL is standing at around $127.83 billion, according to CoinMarketCap.
