Overview
JPEG'd allows blue-chip NFT holders (BAYC, CryptoPunks, etc.) to deposit their NFTs as collateral and borrow PUSd, a synthetic stablecoin specific to the JPEG'd protocol. The model is similar to MakerDAO — users open collateralized debt positions (CDPs) and mint stablecoins. The twist is using NFTs instead of fungible tokens as collateral. JPEG'd also integrates with Curve for PUSd liquidity. The concept is creative, but it combines two struggling markets — NFTs and novel stablecoins.
Smart Contracts
The protocol implements CDP mechanics with NFT-specific adaptations — floor price oracles, NFT vault custody, liquidation auctions, and PUSd minting/burning. The integration with Curve for PUSd liquidity adds composability. The contracts are technically interesting but complex, combining NFT valuation challenges with stablecoin stability requirements.
Security
JPEG'd has been audited, though the combination of NFT price oracles and CDP mechanics creates unique attack surfaces. Floor price manipulation is the primary concern — if oracle prices are manipulated, CDPs could be improperly liquidated or the system could be drained. The protocol has navigated the NFT downturn without a stability crisis, which is noteworthy.
Liquidity
Low liquidity for both the JPEG token and PUSd stablecoin. PUSd's Curve pool has limited depth, making large mints or redemptions challenging. The NFT collateral is inherently illiquid, creating structural risks if mass liquidations occur during market stress.
Adoption
Limited adoption constrained by the NFT market downturn and the limited utility of PUSd compared to USDC or DAI. The protocol serves a very specific niche — blue-chip NFT holders who want to borrow against their NFTs and are comfortable holding a protocol-specific stablecoin.
Tokenomics
JPEG token provides governance over the protocol. The tokenomics include ve-model locking for governance power. Protocol revenue comes from CDP interest and liquidation fees, which are minimal given current activity levels. The token has declined significantly from its peak.
Risk Factors
- NFT market decline reduces collateral values and borrowing demand
- PUSd stablecoin has limited utility and liquidity — chicken-and-egg problem
- Floor price oracle manipulation is a critical vulnerability
- Combining two struggling markets (NFTs + novel stablecoins) compounds risk
Conclusion
JPEG'd is creatively designed, combining MakerDAO-style CDPs with NFT collateral. The 2.4 score reflects interesting protocol design against the double headwind of a declining NFT market and limited demand for protocol-specific stablecoins. The concept may be ahead of its time — or it may be solving a problem that doesn't exist at scale.