Introduction
The Sparkles platform’s idea is to create a self-maintained community with an active marketplace for NFTs, with a vision to become a fully decentralised autonomous organisation. With the recent surge in popularity of NFTs, many people who have not even heard of Crypto before are finding themselves getting involved in a fun interactive way through NFTs.
A Non-Fungible Token, is a cryptographic token that is utilised to represent a unique asset. This “asset” can be anything digital, whether a picture, video, domain or music even a tweet! As we saw with Jack Dorsey selling his first-ever tweet as an NFT.
Why would someone pay to own a tweet, you might wonder? The same reason an art collector would splash out on a Banksy painting, the value is in owning the art and associating yourself with the artist.
But what is causing the NFT craze recently? Although being around as far back as 2017 when CryptoKitties appeared, since then, several NFT platforms with minting and marketplace capabilities appeared on the scene, such as Nifty, Rarible, SuperRare, and Opensea. Coupled with the economic factors since March 2020, where inflation is on the rise and people are searching for assets to park their cash in, saw the appreciation of Bitcoin and the broader cryptocurrency market, this surge eventually found its way to the NFT market and the reaction was Giga huge. Celebrities, artists, and athletes got involved selling various NFTs. This marked the first time that fans can have a unique connection with their favourite artist or athlete and own a rare piece of NFT that is considered valuable. The NFT market rose to around $338 Million in 2021 (Bambysheva, 2021), the total market for collectibles is deemed to be in the region of $370 Billion (Ito, 2021).
Advantages and Disadvantages of NFT
Advantages
- The opportunity of reaching a larger audience of enthusiastic collectors.
- NFTs have the edge over physical collectibles, as NFT collectors can easily verify the authenticity of an NFT on the blockchain, something you can not do easily and swiftly with physical collectibles.
- The decentralised form in which collectors can buy and sell NFTs cutting out the middleman makes it less costly and more attractive to investors.
Disadvantages
- NFTs can not be divided like you divide a fungible token such as Bitcoin into many pieces. Although collectors would welcome it, it runs the risk of over-inflating the price.
- NFTs infrastructure on many blockchains, such as the minting process, is yet to be truly simplified for the average non-blockchain savvy, making it a barrier for artists without third-party help.
- Currently, most NFTs are created and stored on the Ethereum blockchain, a proof of work system which has a high carbon footprint (Elks, 2021); it was estimated that It costs $5000 to offset the emissions from only one Beeple collection (Calma, 2021). However, Ethereum 2.0 is migrating to a proof of stake system, a much more efficient system than proof of work, but there may still be limitations to scaling.
- High gas fees on the Ethereum network have deterred many users and developers into finding alternative solutions.
Why did we choose to build an NFT marketplace on the Flare Networks?
As we mentioned above, the high gas fees that have crippled users over recent months and the negative carbon impact of the Ethereum blockchain have forced many to find an alternative. Fortunately, Flare Networks has tackled these problems as their base layer can solve the high fees issue and drastically reduce it. The Flare Consensus Protocol (FCP) is a new construction of Federated Byzantine Agreement (FBA) consensus (Flare Friday: NFTs, Bridges, and Cross-chain Compatibility, 2021). This grants flare to have rapid, low-cost transactions, and unlike other scaling methods, it does not need to base network safety on value.
Flare uses the FBA consensus, meaning there is no heavy computer usage for mining, making it the greenest option available. Flare enables other tokens to be used on their network with Ethereum Virtual Machine EVM based smart contracts. This would bring utility to XRP, DOGE, LTC, and XLM, all of which have a unique utility but nothing where each coin’s broader community can participate in and gain rewards. So Introducing these communities to a path to get involved in NFTs would be greatly welcomed by them.
Why we inspire to be a decentralised autonomous organisation (DAO)?
The term DAO was first used in 2013 but known as a decentralised autonomous corporation DAC, and it was later changed to DAO to avoid unnecessary legal entanglements (Sims,2019).
In essence, a DAO is an organisation that is made up of people or a community which have a set of rules that dictate how the organisation operates, for example, governance, decision-making, and profit distribution. DAOs convert these rules onto the blockchain through automatically enforced smart contracts (Sims, 2019).
We believe that we have a unique opportunity with the correct technological tools that are available to us today, that the Sparkles marketplace would make a great example of a DAO as it would mean
- Community-based decision-making instead of relying on one person.
- Transparency as every decision is recorded on a public ledger.
Although it takes steps to reach a fully functional DAO, most decisions can be automated once a standard set of rules is in place. This would align with the idea of from the community for the community.
Conclusion
The proposition behind the Sparkles platform is to create a self-maintained community with a functional marketplace for NFTs, with a goal of becoming a fully decentralised autonomous organisation. This goal will be realised through a well-founded idea, supported by a strong community and a well organised ambitious team. The NFT craze has only just begun, and we are lucky to be involved in them so early on as the market has barely reached $340 Million. The exponential growth is yet to arrive, but you can be assured it is coming. The decision to build on the Flare Networks came after noticing severe issues with the Ethereum blockchain as gas fees up until this moment can still fluctuate to very high costs making it unfavourable, and the carbon footprint of POW makes it inefficient for the environment. Although ETH2.0 may solve these issues, it remains to be seen. The Flare Networks fits in well here as it solves the high gas fee and is considered one of the greenest options out there, which aligns with the values we want to build the marketplace on.
The vision of becoming a fully functional DAO does not happen overnight and needs a well-structured set of rules with proper communication with every step along the way.
Reference List
Bambysheva, N., 2021. BNP Paribas Subsidiary Helps Identify $250 Million Leap In NFT Sales. [online] Forbes. Available at: <https://www.forbes.com/sites/ninabambysheva/2021/02/15/french-banking-giant-bnp-paribas-details-explosion-of-new-crypto-sector-with-250-million-sales-volume/#:~:text=In%202020%2C%20the%20trade%20volume,to%20a%20report%20published%20today> [Accessed 17 March 2021].
Calma, J., 2021. The climate controversy swirling around NFTs. [online] The Verge. Available at: <https://www.theverge.com/2021/3/15/22328203/nft-cryptoart-ethereum-blockchain-climate-change> [Accessed 8 March 2021].
Daniel Larimer noted that DAC was changed to DAO “to avoid unnecessary legal entanglements, but the concept remains the same”, Daniel Larimer “Is the DAO going to be DOA” Tecknoids News (25 May 2016) .
Elks, S., 2021. NFTs and the environmental cost of owning digital art. [online] World Economic Forum. Available at: <https://www.weforum.org/agenda/2021/03/nfts-and-the-environmental-cost-of-owning-digital-art/> [Accessed 11 March 2021].
Ito, R., 2021. TechCrunch is now a part of Verizon Media. [online] Techcrunch.com. Available at: <https://techcrunch.com/2020/03/25/the-future-of-collectibles-is-digital/> [Accessed 17 March 2021].
