Today, we are excited to unveil Reservoir, a web3-native NFT order book protocol.
The NFT market exploded in 2021, yet it still remains relatively immature and illiquid. Most secondary trading happens on a single marketplace, orders are stored in centralized databases and the market making industry consists of a few bots making low-ball offers.
This is largely because NFT marketplaces follow a monolithic model, tightly coupling their front-ends, order books and swap contracts, which fragments liquidity and creates bottlenecks for innovation.
Reservoir unbundles this model with an open and permissionless order book that aggregates all liquidity into a single shared pool.
Reservoir’s modular architecture is a new primitive that unlocks powerful possibilities:
Reservoir is not another marketplace. It's a new layer in the stack, designed to complement the layers above and below. WAGMI.
By fully embracing the web3 principles of open data and composability, Reservoir aims to unleash a wave of innovation at all layers of the stack, bringing vastly improved liquidity to NFTs.
When designing an order book, you typically have two choices: optimize for cost (store orders off-chain) or optimize for openness (store orders on-chain). On Ethereum, where 80% of NFT value is traded, off-chain order books have dominated (Open Sea, Rarible, etc), because it's too expensive to store most orders on-chain. Ironically, the more secure a chain is, the more it pushes storage off-chain.
Reservoir introduces a 3rd option. Orders are stored on-chain, but on a different chain. Because orders are self-contained signed messages, they don't need the full might of Ethereum to secure them. Instead, Reservoir uses Arweave as a low-cost "Data Lake" for raw order storage. It's cheap enough that marketplaces can still offer the free listing experience that users expect, and secure enough to guarantee permissionless data availability.
Anyone can run the open-source Reservoir Indexer that combines raw order data from Arweave, with ownership data from Ethereum, to trustlessly reconstruct the state of the order book. Sprinkle in an advanced metadata indexing engine and you get the Reservoir API, a one-stop shop for building liquidity-powered NFT applications.
Normally Arweave's five minute block times would be too slow for a fast-moving order book, but here's the cool part: we don't actually need to wait for blocks to be confirmed. Because the orders are targeted at a different chain, the Indexer can ingest them as soon as they hit the mempool, making the Reservoir Order Book real-time, highly available and globally consistent.
Reservoir is live on Ethereum, powering a number of applications that you may have already seen. Today we are lifting the curtain and inviting the NFT community to get involved in a number of ways:
Explore - Try some of the Apps already built with Reservoir:
Collaborate - Contribute to the ongoing design and development:
Build - Start building on top of the Reservoir API