Source/LongHash
Source/LongHash
NFT is a hot new field in the currency circle recently. According to NonFungible.com data, the average sales price of each NFT product in 2019 was mostly less than $50, and from August to September 2020, the average daily price was higher than $100, and users’ willingness to pay for digital products increased significantly. Usher in a new round of outbreaks.
NFT (non-fungible token) refers to non-homogeneous tokens, which are irreplaceable and indivisible, representing "unique". A fungible token like bitcoin, where any bitcoin is equal to any other bitcoin, and you can buy fractions of 1 BTC. But non-homogeneous tokens (NFT), such as CryptoKitties, where one token represents a piece of digital art, are irreplaceable and indivisible.
There are also such assets in traditional finance. For example, a dollar is fungible, and you can exchange one dollar bill for any other. But the unique artwork of the Mona Lisa is a non-fungible asset that cannot be replaced by other paintings the way two dollar bills are interchangeable.
At present, the most popular NFT protocol in the blockchain ecology is Ethereum ERC-721, which is usually used to make tokens for confirmation of rights in DApp/DeFi products.
According to NonFungible.com data, the average daily transaction volume of NFT projects in 2020 will increase by about 105% compared with last year, showing strong market demand.
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NFTs on Bitcoin and Ethereum
In 2016, on-chain card games based on Bitcoin's Counterparty protocol became popular on a small scale, laying the foundation for the future NFT ecological application. The Cryptokitties game in early 2018 became very popular on the Ethereum public chain, and the Ethereum public chain has since become an important choice for NFT developers. In recent years, as the demand for NFT asset transactions has increased, trading platforms such as OpenSea and Rarible have become the main traffic portals in this field.
In early 2018, four developers of Ethereum defined the ERC721 standard. ERC721 provides basic functions for tracking and transferring NFTs, including transferring tokens from one account to another, obtaining the current token balance of an account, obtaining the owner location of a specific token, and the total supply of tokens available on the network, etc. information. Each NFT token is marked with a unique Token-ID in the ERC721 contract and cannot be changed throughout the contract life cycle.
At present, the ecology of mainstream public chain NFT products mainly focuses on digital asset transactions in the field of decentralized games and art collections. From the Counterparty protocol in 2014 to today's Ethereum blockchain, most of them are of this type.
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Tezos NFTs
FA2 (TZIP-12) is a multi-asset interface released by Tezos in early 2020. This set of standards supports a variety of tokens and applications, allowing users to create and manage their NFT assets on the Tezos blockchain.
The command-line tools produced by TQTezos can help developers create NFT assets more quickly. For example, making an NFT token on the Tezos blockchain that calls an external protocol such as an image stored in IPFS requires only a few simple steps. When the simple tutorial for making NFT was released, many NFT artists were eager to try it online.
For example, a game called “Emergents” by Tezos co-founder Kathleen. In this game, users can trade their favorite cards like an AMM (Automatic Market Maker). All transactions are based on the native token (tez) but will be presented in the form of legal currency, which is convenient for non-blockchain native users.
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The fusion trend of NFT and DeFi
Under the influence of DeFi products in 2020, the new generation of NFT products are more combined with DeFi protocols, and NFT products have gradually changed from simple collection-type confirmation certificates to more complex financial certificates.
Following the saturation of the market for Yield Farming series products, the developer community has turned its attention to products that combine NFT and DeFi applications, and soon gained the support of blockchain-native users. This type of product is called "GameFi", which is a compound word of Game+Finance, because mainstream NFT products have entertainment attributes, and the introduction of incentive mechanisms later has financial attributes.
This kind of new product combining DeFi and NFT is mainly used to confirm the rights of financial certificates and solve the utility problem of NFT. Generally, the utility of NFT assets is low. With the implantation of the popular overseas "GameFi Gamification" design mechanism, NFT assets have become more functional such as "mining", "bidding", etc., which is very suitable for product developers to cold start their projects.
Take yinsure.finance as an example. This is an NFT project built on Ethereum that provides insurance contracts. Users can generate NFT tokens according to the policy, and each NFT token (yNFT) corresponds to an insurance policy with a specific period and insurance amount. These yNFTs can be freely traded on the NFT platform after they are generated. According to data from the Opensea platform and the OKex research report, the first-month transaction amount of the NFT insurance policy on its platform has reached 5,000 ETH.
With the influx of DeFi users, the market's requirements for the security and efficiency of the underlying platform are gradually increasing. Ethereum's high gas costs and security issues still plague product developers.
On the other hand, for other PoS competing chains such as Tezos, data from the public Carthagenet test network shows that the deployment of Tezos contracts has increased significantly in recent months. In Q3 2020, the volume increased by nearly 70%. As of September 2020, 80.3% of the contract calls on the Tezos mainnet come from entrustment, and DeFi oracles and decentralized transactions accounted for 17.8% and 0.4% respectively. The ecology of Tezos decentralized financial applications is gradually prospering.
Tezos is also actively enriching its ecosystem with new infrastructure such as Harbinger and Kaiko price oracles, decentralized exchange Dexter, and on-chain stablecoin protocols USDtz and tzBTC.
In the near future, we will see more integration between DeFi and NFT. As NFT products gradually step out of the "entertainment collection" ecology and become more and more valuable, developers' demand for safe performance and efficiency also increases.
This article is part of the partnership between LongHash and the Tezos Foundation, but the views expressed in this article do not necessarily represent those of the Tezos Foundation.
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