When the ERC-721 standard arrived on Ethereum one of its first uses was within entertainment and most notably through CryptoKitties. Mixing collectivity and video games, these little virtual cats have since gone on to inspire many projects in the years that followed.
NFTs have since proliferated and found utility within games, the art industry and the sports industry which has begun to use NFTs to promote content to fans. In 2020 with the advent of decentralized finance (DeFi), a new sector of projects and companies began to expand NFT use cases and merge them with DeFi concepts.
NFT Protocol is one such project seeded by Blockparty which is building robust decentralized exchange (DEX) infrastructure for the non-fungible asset class and evolving into a full-fledged decentralized autonomous organization (DAO).
Last week NFT Protocol deployed v1 of its DEX onto Ethereum mainnet for its private alpha testing phase with two primary features: ERC 721 to ERC 721 swaps and ERC 721 to ERC 20 swaps.
Using the DEX entails a “maker” creating a listing by placing an ERC 721 or a quantity of ERC 20 tokens into the DEX’s smart contract and specifying the parameters that need to be met by the “taker” in order for the exchange listing to execute. After a listing has been created it can be found on the DEX’s ‘browse’ page. The “taker” selects the desired listing from the ‘browse’ page and, upon meeting the listing’s parameters for transfer by placing the NFT specified by the “maker” or the type and quantity of ERC 20 specified by the “maker” into the DEX’s smart contract, the exchange is executed.
The versatility of these swap contracts allows for a new level of liquidity to be brought into the NFT ecosystem. Whereas on existing platforms like OpenSea and Rarible buyers can make offers only for listed NFTs, on the NFT.org DEX buyers can create buy orders for any ERC 721 token that NFT sellers can sell into much like on any traditional crypto exchange!
An additional feature for these swaps is the ability for a “maker” to “whitelist” a specific ETH address or set of ETH addresses when creating a listing such that the listing can only be fulfilled by the whitelisted ETH address(es). This feature is useful for situations in which a NFT seller has found a buyer or group of potential buyers and simply needs a quick, easy and affordable way to execute the trade or sale in a trustless and decentralized fashion – much like an escrow service.
Even though crypto generally appeals primarily to an adult audience, this kind of NFT swap functionality appeals to the inner child who reminisces of trading Pokemon cards on the playground!
The NFT.org DEX in its v1 & alpha phase charges a flat fee of .001 ETH to the “taker” for ERC 721 to ERC 721 swaps and a 1% fee denominated in ETH to the “taker” for ERC 721 to ERC 20 swaps. These fees are subject to change at any time through the NFT Protocol DAO’s governance process.
Future versions of the NFT.org DEX will support the ERC 1155 standard, facilitate NFT minting, and allow users to bundle NFTs together into a listing. This bundling functionality will add a whole new dimension to the NFT Protocol ecosystem by making complex transactions such as trading one CryptoKitty for several Gods Unchained cards much easier.
NFT Protocol and Immutable X, Ethereum’s first ZK-rollup L2 for NFTs now powering the popular online trading card game Gods Unchained, recently announced a partnership wherein NFT Protocol will be among the first NFT projects to be given access to Immutable X’s revolutionary technology and developer grants program.
Immutable X will allow for gasless trading, selling and minting of NFTs through the NFT.org DEX. Once users deposit ETH or Ethereum tokens like ERC 721s or ERC 20s into Immutable X transactions can take place without gas and still be settled onto Ethereum mainnet.
Although NFT Protocol was seeded by its development partners at Blockparty, it is already well on its way to evolving into a DAO powered by its governance token $NFT. DAO governance currently happens through NFT Protocol’s Snapshot page where token holders can submit proposals and cast votes on proposals weighted by their holdings. Establishing a Discourse forum, however, is on the project’s near-term agenda. A Discourse forum will allow NFT Protocol’s governance process to more closely resemble that of Uniswap and Yearn so that it can more effectively leverage its governance pool funds in order to attract contributors to the project, expand and expedite protocol development and grow its DAO.
The NFT Protocol team is working with an experienced DeFi lawyer to establish further token utility similar to what can be found elsewhere in the DeFi space that will come into play in the future as NFT Protocol continues to build out its protocol and grow its DAO. DEX fee sharing among those staking $NFT and participating in the protocol’s governance is certainly on the table for the future as the NFT Protocol DAO grows and the project becomes more decentralized.
NFT Protocol’s development partner Blockparty will integrate the $NFT token as well as the NFT.org DEX into its platform. Although Blockparty is building its own secondary marketplace, it will be directing certain types of secondary market activity towards the DEX. Blockparty also has some lucrative membership- and access-based $NFT token integration ideas currently under review that will give the $NFT token additional utility once implemented.
After v1 of the NFT.org DEX beta launches on Ethereum, NFT Protocol will adapt and deploy its DEX onto Dapper Labs’ Flow blockchain (home of the uber-popular NBA Top Shots). Blockparty has always had a close working relationship with Dapper Labs who has been more than helpful in preparing the Blockparty and NFT Protocol team to build on Flow. Further down the road the DEX will also be adapted for and deployed onto any other chain with significant NFT activity through the project’s DAO and governance process. The long-term vision for NFT Protocol is to have decentralized exchange infrastructure on all chains with NFT activity and to have that infrastructure become cross-chain compatible.
Aside from basic decentralized exchange functionality, NFT Protocol’s long-term vision also includes leveraging its protocol to bring more dimension and utility to the NFT space at large through an innovative means of collateralization of both physical and digital assets using NFTs.
Thanks to projects like NFT Protocol bringing new levels of liquidity, utility and dimension to the NFT ecosystem the future for the NFT space couldn’t be brighter! Between Blockparty building the Shopify of NFTs and NFT Protocol bringing decentralization into the NFT space and enabling everyone to create, sell and trade NFTs – the two entities working together give rise to a really neat ecosystem!