# NFT Liquidity Pools
## What is an NFT liquidity pool?
A NFT liquidity pool consists of ADA paired with a given NFT collection. Unlike a token pair in a fungible DEX, the ratio of the relative value two assets does not necessarily need to be 1:1. For example, you could create a liquidity pool with 30% of the ADA value of the NFTs, paired with the NFTs (rather than fully backing 100%).
There are two prices for the asset, a buy price and a sell price. There is a spread between the buy/sell price.
## Price mechanics
When a user buys an NFT out of the liquidity pool, they are effectively adding ADA to the pool and reducing the number of NFTs in the pool, so the price goes up by a certain amount (the "curve" amount).\
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When a user sells an NFT into the liquidity pool, they are removing ADA from the pool and increasing the number of NFTs in the pool, and the price will go down by the curve amount.
## Curve Types
**Linear** - the price will go up/down by a fixed amount.
**Exponential** - The price will go up/down by a fixed percentage of the price.
**Constant product (AMM)**- Similar to how fungible DEX liquidity pools work, this model can also be used for NFT liquidity pools.
The existing pools currently have linear bonding curves. Exponential and constant product curve types will be released in Q1 2024 alongside community liquidity. The smart contract development for this has already been completed.
## Multiple buys/sells
Just as with liquidity pools for fungible tokens, when a user buys/sells, there is a price impact. The more NFTs a user buys/sells, the greater the impact.\
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Let's work through an example with a collection called the Ape Society, using the linear bonding curve.
As you can see, the buy price 2800 and the sell price is 3200, with a linear curve amount of 400.\
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If you buy one NFT out of the pool, the price of the remaining NFTs increases by the curve amount.\
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If you buy multiple NFTs at once (you can do this by selecting multiple), you will see that there is a price impact...you will get the first for 3200, the second for 3600, the third for 4000, etc.
The same logic applies for selling, you'd sell the first NFT at 2800 ADA, the second at 2400, the third at 2000, etc.
## Unique properties of NFT liquidity pools
### Get instant liquidity for your NFTs
The most basic utility of these NFT liquidity pools is that they can often have tighter spreads for NFT collections than other NFT marketplaces, so you will frequently find that the sell price on CSWAP's liquidity pool is often higher than the best collection offer for that NFT collection on other marketplaces. This has a stabilizing effect for the NFT ecosystem as users can more easily get instant liquidity for their NFTs.
### Cherry-pick your favorite NFT
The first thing you will notice is that unlike on a traditional NFT marketplace, all assets within an NFT liquidity pool on CSWAP are the same price. This means that for the same price, you can cherrypick your favorite NFT from the selection of NFTs in the pool.
### Swap out your less desirable NFTs for your favorite NFTs
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Another way you can use the pools is to use them to swap a less desirable NFT for one you like more.\
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To do this, you can simply sell an NFT into the pool. This will drive the price down by the curve amount, and then you can immediately buy the desired NFT out of the pool. The only fees you will be paying are the platform fees (total: 3%) when selling into the pool, plus royalties, on the sale transaction.
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