# Pikapool Primer

:::info
:bulb: TLDR; NFT mints create MEV and large negative externalities on Ethereum, projects shouldn't need an auction expert to launch, and Pikapool is a private mempool for expressing NFT bidding preferences and internalizing demand. [Check out our docs here!](https://www.pikapool.cool/docs/)
:::


**Contents**
1. On NFT MEV
2. What is Pikapool
3. Market Size
4. Team

## On NFT MEV

MEV is an existential threat to Ethereum as well as all distributed ledger systems. MEV can be combatted at the smart contract level, or via off chain services which create more desirable transaction orderings (ex: wellfare maximizing, etc). Dutch auctions are a popular mitigation mechanism that are used in both DeFi ([Maker's liquidations](https://docs.makerdao.com/smart-contract-modules/dog-and-clipper-detailed-documentation#instant-settlement)) and NFT mints ([Azuki's Crowd Sale](https://twitter.com/AzukiOfficial/status/1481145589836382213?s=20&t=HOv_xqg12jA6SmUe7Lycxw)). Alternatively, some projects like Art Gobbles have elected to use a [100% Allow Listed](https://decrypt.co/113312/rick-morty-art-gobblers-nft-influencer-ethics) mint to eliminate MEV (and price discovery).

One of the more infamous NFT MEV creation events is the Bored Apes Otherdeeds mint which [rejected the use of dutch auctions](https://mirror.xyz/0x3ae401F245034dAe25af1e2f9b9Bb8F006b1Dc6e/ErZMh-0TTwMrAKPJ1hlDcjvNfZvQ998G-B-oTS6BVQk) and generated over $100m in NFT MEV.


For arbitrage & liquidation MEV, [CowSwap](https://cow.fi/) and [Rook Finance](https://app.rook.fi/en/trade) are the main order flow auctions in production (handling [$20B](https://dune.com/cowprotocol/cowswap-v2) and [$300M](https://dune.com/rook/rook-ecosystem) respectively), along with Flashbots & `mev-boost` at the full block auction layer. NFTs account for a large portion of economic activity on Ethereum, [recently over 15% of transactions contain an NFT transfer](https://flipsidecrypto.xyz/edit/queries/045d58b1-f77c-48ec-b08a-6226c424bd37), and yet this segment is largely untouched by MEV services.

***:zap: If NFTs are one of the killer apps of Ethereum, then the emergence of an NFT orderflow auction is very likely; enter Pikapool. :zap:***

## What is Pikapool

Pikapool is a private mempool that allows any NFT project to supercharge their minting process by redirecting up to 80% of MEV back to the project. By importing our typescript SDK and inheriting a small solidity library, any NFT project can utilize Pikapools auction infrastructure to create a mint and maximize mint revenue (or in the future metrics like hodler scores).


NFT MEV is a unique market; while arbitrage and liquidation bidders are highly specialized searchers, most NFT bidders are regular NFT enthusiasts. Because of this, ***ease of use and fun are two of Pikapool's core tennets***. Pikapool gives projects the opportunity to create unique and exciting minting experiences that are not limited by gas prices, public mempools, and transaction inclusion anxiety.

If Pikapool exists forever as centralized infrastructure, we will have failed the Ethereum ecosystem. The ***second core tennet of Pikapool is commitment to progressive decentralization***. To this end we are desiging our future system, the ***Scalable NFT Ordering and Routing Engine*** aka ***S.N.O.R.E*** which hopes to address problems around credible auctioners, bid inclusion proofs, and auction tampering assurance.

***:zap: If NFT MEV is to be captured, then the market winner will have have a combination of focus on UX, as well as having long term alignment with decentralization goals of Ethereum.:zap:***

## Market Size

We define a metric for NFT MEV called `Excess Gas`. To calculate `Excess Gas` for a single NFT during a mint `Excess Gas = (gas_price_at_mint - avg_gas_price_pre-mint) * gas_used`. To calculate `Excess Gas` for the entire mint you do this for each mint transaction and sum. `Excess Gas` represents the immediate addressable MEV opportunity, but the pikapool auction can also be used as a wedge into the minting market and is thusly juxtaposed with that market size later on.

Below is a break down of mints in the last 2 years by tranches of `Excess Gas`. Two quick takeaways are that the market is skewed towards a couple very high value mints, and that NFT MEV has aligned with market trends and decreased since the "bear market" begun.


The ***total market size*** for NFT mints is depicted below, as well as the minimum addressable `Excess Gas`, both from mints in the last 2 years As can be seen the ***Otherdeeds NFT drop represents ~40.6% of the addressable Excess Gas market***.

<img src=https://i.imgur.com/Lln53t7.png width="500" height="350">

If you're like us and believe that the NFT market won't just rebound, but instead will continue to grow in the next decade, then a very simple revenue model for Pikapool follows below which looks at revenue if we were to experience a similar 2 years in NFT markets.


***:zap:The total market for this opportunity is somewhere between 148k to 6.8M Eth present day. ($236M - $10.8B USD @ $1600/Eth) :zap:***

## Team

We're made of the best pokemon trainers in the game.

<br />

<img src=https://i.imgur.com/gIgX1j0.png width="250" height="250" style="float: right;">

**Ash Keccakum** - Experienced Block Builder and MEV Relay Operator

**Crasher Wake** - On-chain sleuth and Defi Protocol Operator

**Viola** - EVM Bytecode Wrestler

**Arceus** - Seasoned Boiler Room Mechanic

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:::info
:bulb: Fun Fact : The name pikapool comes from the small woodland creature meme in the builder space introduced by Beaver Builder, which can be seen as a continuation of the food coin memes in DeFi 2017. While popularized by Pikachu in pokemon, [a Pika is a real, and cute, animal](https://en.wikipedia.org/wiki/Pika)! The team does plan on retiring the name pikapool as the product becomes more mature, but for now it exists as a fun go to market meme strategy.
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