3.1 Overview

NFT Brick Trading is trading NFT beneficiary equity securities, in which investors can purchase the securities (bricks) of a specific existing NFT (an original NFT) or pool of NFTs as the underlying asset at the price of IBO (Initial NFT Brick Offering), promising to liquidate the NFT underlying asset(s) at maturity and provide the liquidation profits. The transactions are made in a competitive quote trading method for a certain period on the exchange, which can be liquidated through counter-trading (sell) even before expiration.

• According to standardized contract terms, users trade standardized NFT bricks on the NFT Brick Exchange (XBRIK).

• The transaction price is set at present regardless of the price level of the underlying NFT asset at a certain point in the future.

• A transaction is a one-way contract in which the NFT Initial holder is obliged to provide liquidation profits to the NFT brick holders at the time of liquidation.

• Transactions can be liquidated (sold) at the price of NFT bricks formed on the exchange before expiration.

Economic Benefits of NFT Brick Trading on XBRIK

NFT brick trading on XBRIK provides various economic benefits to brick issuers, brick traders, NFT vendors, and NFT markets.

Market Participant	Benefits
NFT Initial Holder (Brick Issuer)	Drive NFT price increase Accomplish additional revenue (IBO revenue and etc.)
Trader (Brick Holder)	Broaden new investment opportunities Gain market profits & liquidation profits
NFT Vendor (Creator or Project Team)	Acquire additional royalties or secure funds for the project Expand business into Web 3.0 (marketing & user basis)
NFT Distributor & etc. (Marketplace, Agent)	Vitalize NFT communities Prospect reasonable NFT prices

“As a result, XBRIK will fully pioneer the NFT derivative finance market, maximizing liquidity provision to the existing NFT market.”

In addition to the simple transaction of buying and selling NFTs in the marketplace, NFT owners will have the opportunity to operate derivatives using their NFTs as underlying assets. NFT owners can earn IBO revenue through the issuance of bricks. They can also increase the price of original NFTs by activating transactions and communities on the Brick Exchange (XBRIK) that have been supplied with liquidity. Furthermore, it can drive expectations for the price increase by providing efficient methods to control the fluctuation of original NFTs, and it could prevent the price drop.

XBRIK will provide new opportunities to invest in various projects and earn profits from them. It would be a great chance to invest for those who prefer to trade or invest in NFTs than owing them. If the bricks are purchased through the IBO after the issuance of the NFT bricks, the brick holders are more likely to buy them at a price lower than the expected price of the bricks traded in the order book. IBO brick holders can expect capital gains by selling bricks at a high price in the order book or holding them until maturity to obtain liquidation profits. Most traders can also aim for capital gains from price fluctuations of bricks before expiration. XBRIK will bring more investors and traders into the NFT market centered around artworks and games.

There are no restrictions on who can issue bricks on XBRIK: artists, game companies, real estate developers, crypto project teams, NFT marketplaces, cryptocurrency exchanges, stock exchanges, or companies on fiat. Bricks are issued independently and exclusively based on the initially issued NFTs, regardless of their business. We refer to all the people who first published the original NFT as vendors. XBRIK will facilitate these vendors' entry into the NFT market or, broadly, the Web 3.0 market. In XBRIK, they can directly issue bricks to raise funds through IBOs, promote their business, or secure a white list of users. If the vendor is a creator, they could get royalties regardless of whether they directly own the original NFT.

In the crypto market centered on NFT, there are NFT marketplaces, NFT publishers, agents, market analysts, marketers, etc. They are widely spread from the starting point to the end point of the NFT business.XBRIK’s brick trading will be recognized as an opportunity to expand their businesses. XBRIK trades derivative securities based on original NFTs and provides additional community opportunities to all market participants related to original NFTs. In addition, since bricks also have the characteristics of future products with an expiration date, it also provides a function to project the future price of the original NFT or the future value of the business associated with it. XBRIK converts the reasonable future value of the original NFT into concrete numbers while communicating with the market, along with the function of adding market value based on liquidity.

As a result, XBRIK will fully pioneer the NFT derivative finance market, maximizing liquidity provision to the existing NFT market.

Types of Brick Products

Bricks to be traded in the order book through the IBO must be issued with the original NFT as an underlying asset. The NFT, the underlying asset of the issuance of bricks, is, in principle, unlimited in scope. In addition, the types of brick products are classified according to the liquidation method, maturity, issuance leverage, and many original NFTs and are managed in a standardized information system.

Brick Categories

The types of Bricks issued and traded in XBRIK will be classified into the following five types at the beginning of the service.

• Artwork Bricks • NFT Game Bricks • Real Estate Bricks • Cryptocurrency Bricks • Project Bricks

The Artwork area, which led the early NFT market, is suitable for the issuance of bricks as it has generalized the perception of NFTs. You can secure stakes of the artwork NFTs, which are traded at high prices, and receive profits from the sales or price changes of the original NFTs. In the case of game NFTs, the NFTs of game items are used as the underlying assets for the issuance of bricks. Artwork and game NFTs are NFTs themselves, so unless bricks are issued for multiple NFTs at once, these NFTs can be directly issued into bricks.

Real estate bricks, which are issued as beneficiary certificates of real estate, can be issued after minting the agreements for development, operation, and profit distribution into one NFT. If a real estate NFT is already minted as an original NFT in the marketplace, bricks can be issued using this NFT as an underlying asset. Bricks can also be issued for part or all cryptocurrency projects. This means that bricks can be issued for the entire cryptocurrency project, or bricks can be issued for a certain amount of cryptocurrency for the sale or promotion of cryptocurrency. The cryptocurrency will be used as the primary method for distributing profits; in some cases, other virtual assets may be used instead. In addition to cryptocurrency projects, bricks can be issued for various online and offline projects.

XBRIK will continue to diversify brick products such as cultural assets, securities or ETFs in the fiat market, and self-developed ETFs in the future.

Liquidation Type and Standard Maturity

The maturity liquidation method of bricks is divided into sale liquidation and purchase liquidation. The sale liquidation distributes the profits generated by selling the underlying asset to a third party. The purchase liquidation method is when the brick issuer repurchases the original NFT, and the purchase price is distributed to the brick holders. In addition, the brick issuer can set the standard expiration at the time of issuance of the bricks, and this period ranges from a minimum of 3 months to a maximum of 1 year (1-month increments). A brick issuer can propose an extension of maturity at the expiration time. With the approval of a majority of brick holders at this time, the maturity can be extended by the standard expiration period (DAO voting).

Liquidation Type		Standard Maturity
	3 Months ~	~ 1 Yr	Perpetual
Sale Liquidation	SL 3 M brick	SL 1 Yr brick	SL Perp brick
Purchase Liquidation	PL 3 M brick	PL 1 Yr brick	PL Perp brick
Option Liquidation	OL 3 M brick	OL 1 Yr brick	OL Perp brick

In option liquidation, the issuer can choose between sale liquidation or purchase liquidation at the time of liquidation. And perpetual bricks without maturity may be considered later.

Leverage Type and Number of underlying Assets

Leverage can be applied when issuing or buying bricks. On the other hand, the number of actual underlying assets constituting the NFT, which is the underlying asset of bricks could be more than one.

No. of Underlying Assets		Leverage Type
Issuing Leverage	Short Buy Leverage	Short Leverage
Single Asset	●	●	○
Multiple Assets	●	●	○

XBRIK can issue bricks regardless of the actual number of underlying assets, and enables the application of leverage for issuance and purchase. However, in the case of short selling, we are considering applying it after the initial service stabilization of XBRIK.