NFT Protocol August 2022 Development Update
NFT Protocol v3 is LIVE!
In this month’s development update we are excited to announce that v3 of NFT Protocol is now live and powering the NFT.org DEX!
We first detailed our plans for v3 in our June 2022 Development Update wherein we aimed to release v3 by the end of Q3 2022. Not only are we delivering v3 one month ahead of schedule, but we were also able to include several features in the v3 update that we’d originally scheduled to be released at the end of Q4!
NFT Protocol v3
The flagship feature in the v3 contract is undoubtedly the non-custodial swap architecture.
Additional features included in the v3 contract update include:
Swap expiration
Adjustable ETH/MATIC values
Advanced accounting
Custodial vs. Non-Custodial Swaps
With both custodial and non-custodial swaps, swap makers must sign all necessary token approval transactions required to give NFT Protocol permission to transfer assets on their behalf.
From that point a custodial swap differs in that it requires that the swap maker’s assets be transferred to NFT Protocol to be held in decentralized escrow. Once in the protocol's contract, assets can only leave the contract if:
The swap is canceled by the address which created it. In this case the assets are returned to the address which created the swap.
The conditions for swap execution are met by a counterparty. In this case the assets are transferred to the counterparty and the specified assets from the counterparty are transferred to the swap creator.
Non-custodial swaps on the other hand allow swap makers to retain custody of their assets when creating a swap. The assets involved in creating the swap can only be transferred to a swap taker who's met the specified conditions for taking the swap using the token approvals the swap maker granted NFT Protocol when creating the swap.
Native currencies (ETH and MATIC) involved in a swap cannot utilize token approvals and are thus ALWAYS required to be transferred to NFT Protocol to be held in custody when creating a swap. If users wish to retain custody of native currencies when creating non-custodial swaps they must use the wrapped ERC-20 versions.
Swaps created on the NFT.org DEX are now non-custodial by default. Users may elect to create a custodial swap via the ADVANCED drop down menu on the NEW SWAP page.
PROs and CONs
While both custodial and non-custodial swaps on NFT Protocol are stored on-chain and thus benefit from the same safety and security standards, there are additional considerations to be made when choosing between custodial and non-custodial swaps.
Non-custodial swaps require approximately 15-30% less gas to create than custodial swaps, depending on the specific type and quantity of assets involved in the swap. Retaining custody of assets also allows users to list them simultaneously on other non-custodial marketplaces and protocols and to continue to garner any holders benefits that may be associated with holding the assets.
The downside to non-custodial swaps is perhaps the largest advantage to custodial swaps and that is swap integrity. Because a non-custodial swap allows users to retain custody of their assets, users can continue to transfer the assets involved in a non-custodial swap to other wallets or sell them on other marketplaces.
The NFT.org DEX is built to identify when the assets involved in a non-custodial swap are no longer in the swap maker’s wallet, but it is still possible that a swap taker will see a non-custodial swap on NFT.org and only find out that the maker address no longer owns the assets involved in the swap upon trying to take the swap. Such scenarios can be disappointing for buyers. Because custodial swaps require that NFT Protocol holds the assets involved in decentralized escrow, buyers can be confident that if they are seeing a custodial swap on NFT.org that the assets are present and that the swap can be taken.
Swap Expiration
When creating either type of swap on v3 users can now specify a date at which they'd like the swap to expire. Once a swap expires it can no longer be taken by any user.
Swap expiration dates are approximate because NFT Protocol is only able to allow swaps to expire at a specified block height. The application estimates what the block height is likely to be at the chosen expiration date and programs the swap accordingly. Because block times vary it is not possible to program a swap to expire at a specific point in time.
Adjustable ETH/MATIC Values
Swap makers may now adjust the ETH or MATIC value on the TAKE side of swaps with a single transaction, whereas in v2 a swap maker would have needed to cancel and then recreate a swap in order to adjust the ETH or MATIC value.
Swap makers can adjust these values via the SWAP DETAILS page.
Advanced Accounting
Because native currencies (ETH and MATIC) don't have token approval and transfer functions NFT Protocol can use to automatically transfer them when swaps are executed, ETH and MATIC received in swaps and placed into a swap that’s been cancelled remain in the protocol’s smart contract and are reflected as a user balance on the PROFILE page under ‘ETH (MATIC) Balance on DEX’.
These balances in v2 would have needed to first be withdrawn to the connected wallet before being eligible for reuse on the DEX.
The advanced accounting feature in v3 allows for user balances to be used for making or taking new swaps on the DEX without first having to withdraw. This accounting is done automatically such that DEX balances are prioritized and users are only prompted to transfer additional funds if necessary when making or taking a swap.
The NFT.org DEX v3 Features
The applications team has done a wonderful job integrating the v3 features into the UI at NFT.org.
Existing v2 swaps can still be viewed, taken and cancelled. User balances on the v2 contract can be viewed and withdrawn via the PROFILE page.
Swap type (custodial vs. non-custodial) and expiration selections can be found in the ADVANCED drop down menu on the NEW SWAP page.
Swap makers can adjust the ETH or MATIC values on the TAKE side of their swaps via the SWAP DETAILS page.
External data from OpenSea is now displayed for every NFT on the NFT DETAILS page.
The infrastructure for browser push notifications is built into the app and will be activated once one final bug has been fixed.
Documentation
Complete documentation on NFT Protocol v3 can be found in our user guide at https://docs.nft.org.
Peckshield’s latest audit report for the v3 contract can be found at https://doc.nftnode.org/audit.html.
What’s Next?
Our primary focus as we wrap up Q3 and move into Q4 2022 will be on implementing royalties and a programmable fee structure into NFT Protocol.
A programmable and more dynamic fee structure will position NFT Protocol to be able to generate more substantial revenue and bring more utility to our $NFT governance token.
Royalties are essential for our ongoing vertical integration with the Blockparty platform.
Auction functionality and collection offers will also be on our agenda for the remainder of the year for the back end. For the front end we’ll be focusing on implementing a communication tool and building out a SDK so that external developers may more easily begin building on NFT Protocol.
Marketing and Consulting
With the release of v3 we feel that we are now positioned well to begin deploying a more substantial marketing campaign.
We are working with an industry consultant who is helping us improve our understanding of the market and technology within this industry so that we may optimally formulate our marketing campaign which will be executed in conjunction with a marketing agency familiar with the industry.
$NFT Token Beta Launch Programs
Because we consider NFT Protocol to still be in a beta phase until we complete the remainder of our 2022 roadmap, both the Liquidity Mining and Protocol Fee Rewards programs outlined in the beta launch announcement are ongoing.
We do, however, want to distribute the rewards yielded through these programs thus far. The deadline for this rewards disbursement will be the moment at which this newsletter was published. We plan to execute this disbursement in September 2022 and more information on when and how this will happen will be announced in September.
Conclusion
With the v3 release NFT Protocol is now more clearly the leader in decentralized NFT trading infrastructure and providing what is undoubtedly the safest and most secure means of trading NFTs available.
There is no place more safe and secure to store NFT orders than on-chain and the NFT.org DEX is the only platform that allows this to be done in a non-custodial fashion.
We hope you enjoy the NFT.org DEX powered by v3 of NFT Protocol and we look forward to continuing to improve upon the best decentralized NFT trading tool on the planet throughout the remainder of this year!