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The NFT.org DEX Public Beta Launch
Since our last newsletter in October 2021 the NFT Protocol team has been heads down building and refining our flagship product: a 100% on-chain, decentralized NFT trading platform powered by NFT Protocol - v2 of the NFT.org DEX.
We spent weeks gathering feedback and listening to insights from users participating in our private alpha testing phase. We’ve persevered through the challenges associated with building a rich and intuitive UI/UX around our feature set whilst adhering to the principles of decentralization. We are at last happy to announce that we will be launching v2 of the NFT.org DEX into a public beta phase on April 21st, 2022!
The NFT.org NFT DEX - v2
The NFT Protocol project was conceived by Blockparty in August 2020. NFT Protocol was to be a decentralized NFT trading protocol that would first power the NFT.org DEX and then be vertically integrated with the Blockparty platform.
The first version of the NFT.org DEX was released as an alpha stage product in May 2021. As development on v2 of the NFT Protocol smart contract quickly progressed, however, it became prudent at that time to redirect all of our frontend development efforts towards building around the v2 smart contract which now powers v2 of the NFT.org DEX.
With v2 of the NFT.org DEX we set out to build a product for the NFT space that we believe to be the future of NFT trading:
100% decentralized and on-chain
Community-driven by design
The Status Quo: Why It Needs To Change
The hybrid on/off-chain NFT marketplace architecture that’s become prominent in the NFT space has its benefits and drawbacks. This architecture is complex and most often consists of several smart contracts that interact with each other and with off-chain components.
Generally speaking, these marketplaces require you, the user, to give them a signature by signing a message with your wallet and the signature is stored off-chain on centralized servers and used to authorize on-chain asset transfers on your behalf when a buyer buys your asset or when a seller accepts your offer for an asset.
This minimizes the number of transactions that require users to pay gas by allowing listings and offers to be made by simply signing a message with the connected wallet, but as we’ve witnessed time and time again this complex architecture is plagued by attack vectors and prone to regular downtime.
100% Decentralized & On-Chain
NFT Protocol is an improvement to this model in terms of safety, security and availability because it allows offers, listings and trades to be submitted and executed 100% on-chain - i.e., without relying on user signatures stored off-chain or any other off-chain components - and collects zero user information.
NFT Protocol requires that users sign on-chain transactions which transfer the assets to the protocol in order to create listings or offers. 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.
NFT Protocol's smart contract has been audited by Peckshield. The contract's code and Peckshield’s audit report will be published for public inspection on April 21st, 2022.
Whereas the hybrid NFT marketplace architecture oftentimes leads to user behaviors that render them vulnerable to phishing and malware attacks, NFT Protocol and the NFT.org DEX bring users into a direct relationship with open-source, audited code. This eliminates all third-party risk and places the security of the system entirely into the hands of the user and the user's own private key security practices.
Furthermore, because NFT Protocol is 100% on-chain it is not subject to the sorts of censorship, user obstruction and downtime some hybrid marketplaces in the NFT space oftentimes demonstrate. If it’s on-chain it can be traded via NFT Protocol 100% of the time. The blockchain doesn’t discriminate nor does it sleep.
One of the major issues facing the NFT space is the relative lack of liquidity available for NFTs. The multi-asset trading facilitated by NFT Protocol and the NFT.org DEX can improve the liquidity available for NFTs by allowing NFTs to be paired with more liquid NFTs and/or fungible asset types.
NFT Protocol and the NFT.org DEX allow complex and dynamic offers and listings to be made using any combination and quantity of supported asset types.
Supported Asset Types
As the NFT space continues to grow and expand there will be a growing number of blockchains hosting NFT activity and catering to different niches within the NFT space.
We will launch v2 of the NFT.org DEX on April 21st, 2022 on both Ethereum and Polygon mainnets.
NFT Protocol is designed for easy deployment to any EVM-compatible blockchain.
An additional tool we’ve built which we call NFTnode is our chain indexer/parser and database architecture that is constantly scanning our supported blockchains for relevant data contained in each new block and for changes in the metadata referenced by each token on our supported blockchains and building and maintaining a database that the frontend of the NFT.org DEX can reference.
At this stage NFTnode is very resource-intensive, but also designed to extract and store data from any EVM-compatible chain.
In this way we are prepared to expand the NFT.org DEX to any EVM-compatible chain on which we see sufficient NFT activity. Part of our longer-term vision as outlined in the section below is also to expand to non-EVM blockchains.
We believe that a decentralized NFT trading platform such as NFT Protocol should not only be driven and influenced by its user base but it should also give back and reward them as well.
The $NFT Governance Token
The $NFT token represents rights to participate in the NFT Protocol governance model at gov.nft.org & https://snapshot.org/#/nft/all. The governance model is a mechanism by which the $NFT token holder community can affect project and product evolution, approve expenditures from the governance pool of $NFT tokens and manage the NFT Protocol Treasury (fees collected by the protocol).
The $NFT token is also used to determine the protocol fee charged to swap takers on the NFT.org DEX. More information on the $NFT token and protocol fees can be found here.
The goal during Phase 1 of our plans for the $NFT token this year is to incentivize early adoption and liquidity provision, increase $NFT token distribution, build a foundation for long term viability of the protocol and reward existing $NFT token holders.
NFT Protocol governance has approved funds from the governance pool to be allocated towards a liquidity mining program which will run the duration of the beta phase of the NFT.org DEX. During this period Ethereum addresses which create a swap containing 1 or more NFTs (on either side of the swap) that is taken on the NFT.org DEX will be eligible to claim $NFT tokens when the program claim window opens upon culmination of the beta phase. $NFT tokens from the program will be allocated on a “per swap taken” basis - i.e., the token pool for the program will be divided by the total number of qualified swaps taken during this three month period and each address will be eligible to claim a number of tokens according to how many qualified taken swaps were created by each address.
NFT Protocol governance has approved up to 1.5 million $NFT tokens to be allocated towards this program, but the size of the token pool for this program will ultimately be determined by the NFT Protocol core team. If upon analyzing DEX usage data after culmination of the beta phase the core team feels more than 1.5 million $NFT tokens are required to serve Phase 1’s goals the amount exceeding 1.5 million $NFT will need to be approved by governance.
More details on this program can be found on the NFT Protocol governance forum here.
Protocol Fee Rewards
Any $NFT token holder who holds tokens throughout the beta phase AND participates in at least one governance action during the beta phase will be eligible to claim a portion of the protocol fees gathered throughout the beta phase.
The lowest quantity of $NFT held by a given address throughout the beta phase will be used as the basis for this calculation.
For example - token holder A holds 30,000 $NFT when the beta phase begins but sells 10,000 $NFT during the beta phase and finishes the beta phase holding 20,000 $NFT. Token holder A would thus be considered to own 20,000 $NFT in the total pool of eligible $NFT tokens. If the total pool of eligible $NFT tokens is determined to be 1,000,000 $NFT tokens, token holder A will be eligible to claim 2% (20,000 / 1,000,000 = .02) of the protocol fees gathered throughout the beta phase.
We are targeting Q3 2022 for a v3 launch and beta phase culmination which will mark the end of the liquidity mining and protocol fee rewards programs.
The long term success and viability of NFT Protocol, the NFT.org DEX and the $NFT token depend largely upon adoption of the protocol and platform and their ability to generate revenue.
It is for this reason that v3 of the NFT.org DEX will include a programmable fee structure. A programmable fee structure will not only permit a more dynamic, value-based fee structure, but also allow the fee structure to be adjusted as needed to ensure the success and viability of the protocol and platform and support the value of the $NFT token.
In this way the launch of v3 of the NFT.org DEX will represent a shift away from the focus being on increasing $NFT token distribution and towards building revenue potential and thus new opportunities and mechanisms for $NFT token holders to participate in governance, approve expenditures from the governance pool and manage protocol fee distribution and allocation.
As indicated in the section below, v3 of the NFT.org DEX will mark the first phase of vertical integration with the Blockparty platform. Phase 2 of our plans for the $NFT token will thus include additional utilities and incentives for Blockparty creators using NFT Protocol.
Beyond Beta: The NFT.org DEX v3
While v2 of the NFT.org DEX is already a timely and revolutionary addition to the NFT space unto itself, there is no shortage of upgrades and improvements we can make in order to elevate the decentralized NFT trading experience.
The first set of backend upgrades we plan to make after the v2 launch will be intended to prepare NFT Protocol to power Blockparty’s secondary marketplace and lay the foundation for a thriving $NFT token economy:
Programmable fee structure
Flow blockchain integration
$NFT rewards claim contracts
While we work on these backend upgrades, the frontend team will be working on:
Chat - a means of communicating with others to negotiate trades and sales
Push Notifications - receive notifications when events pertaining to your address(es) occur on NFT Protocol
$NFT rewards claim interface
A SDK for developers who want to build a custom frontend around NFT Protocol
Additional backend features on our wish list for this year include:
Collection offers - where a swap can be taken with any NFT from the specified collection
Enabling ETH balances on the DEX to be used on the DEX
Programmable swaps - where a user can edit certain types of swaps without having to cancel/recreate swaps
We couldn’t be more pleased to be delivering the NFT.org DEX to the NFT space and to $NFT token holders at a time when the perils of the hybrid NFT marketplace architecture have never been more apparent.
We hope you enjoy the NFT.org DEX as much as we enjoyed building it.
Please join us on Telegram or Discord where we’d be happy to receive your questions and feedback!