Not Flipping True! That’s usually the first response when people hear of JPEGs and PNGs being swapped for exorbitant sums on the open market. Payments giant Visa recently got in on the act by purchasing a Cryptopunk, a 24 x 24 pixel image NFT of the generative collection, for $150,000 and using it as their Twitter profile picture.
Big celebrities are currently falling over themselves to mint and launch their own NFTs to their adoring fans, while every day new generative collections — bears, cats, apes, sushi; you name it and someone is trying to do it — are being released to the Discord communities and being snapped up by the madding crowd. The Solbears of Soltopia sold out in 5 seconds, and collections like BAYC and their mutant offspring MAYC are seeing their prices escalate to that of small and sometimes not so small houses.
What is an NFT?
Yet what exactly are NFTs? NFT stands for Non-Fungible Token. Put simply, an NFT is a blockchain-signed certificate of ownership over a digital piece of media. They are copyable — anyone else can download the image, but just like the security of a traditional blockchain instrument, it’s impossible to falsify (to a crypto-educated buyer) the ownership of an NFT. Yet they do not have a single value, even a changeable one, that can be swapped for another one. At any point you can trade Bitcoin for its current market value. With NFTs, to sell, someone must be willing to buy it at the price you ask. It’s like trying to sell a piece of jewellery you handcrafted. You set the price, but someone has to pay.
Think of it like this: there are a hundred hotel rooms garnished with Van Gogh’s Starry Night, but only one original exists. The same is true for NFTs, and the associated kudos and value-investment puts a price on that, just like it does in the “real-world” of artistic collectibles. These NFTs also have utility — doubling up as tickets for exclusive access to content (a la Stonercats) or by being deployable in a game-environment, where your specific ownership of an NFT can unlock its features. Developers are only just beginning to play with possibilities of NFTs, with tradable card games, ticketing for real-world events, and NFTs that can interact with one another to create new ones being explored.
The Challenges Facing NFTs on Ethereum
This all started, as many blockchain innovations do, on Ethereum. Ethereum is still the blockchain that inscribes the majority of NFTs for the open market, and to buy them you need ETH. This, however, is fraught with the usual Ethereum complications. As transacting on Ethereum is expensive, the possible solubility of the market is even more fraught than when trading with traditional fungible tokens.
The fees for minting an NFT on Ethereum are an impediment to any small-time artist looking to sell some of their art, as they’d have to get a substantial price for it to make it worth the cost. For buyer’s too, even collecting “cheap” NFTs on Ethereum can rack up as the gas costs for each transaction start stacking up. Ethereum can be slow, too — too slow for a red hot marketplace. Finally, when 20,000 people all pile into a minting session to get themselves a generative rock, not everyone makes it. Those who pay a higher gas surcharge are more likely to get their artwork. Moreover, transactions can go through even though the collection’s NFTs are already sold out, meaning you’re left with a gas bill and not much more to show for it. It means that, much like the real art world, Ethereum NFT markets are a bit of a whale’s playground, which can inhibit the explosive growth the space is seeing. You need the average user involved to truly ramp an economy to what it can be.
How Ethereum Marketplaces are Struggling
What’s more, having a website API or systems architecture that interacts successfully with the Ethereum blockchain is proving to be a headache even for the most committed organizations. Opensea’s smart contract has consumed as much as 15% of the gas on the Ethereum chain transacted on any one day, so the appetite for NFTs is clearly on the charge.
However, there are plenty of reports of people’s collections going missing (although they are still registered on the blockchain) and listings updating sporadically enough as to impinge upon the fluidity and fairness of the market. More perniciously, scammers have been quick to load fake NFTs onto this marketplace, and innocent buyers have lost their money. OpenSea has not sorted out its safety issues, and is currently fighting a rearguard action trying to get its users their money back and throw off the shroud of unscrupulous behaviour that plagues the site.
Bots ruin the user experience
Finally, bots are also running riot on the OpenSea platform, “bidding below floor on pieces, then cancelling bids once accepted but prior to executing” according to Mike Dudas. What this does is lower the price on the asset which they can then scoop up and relist at proper prices as the seller becomes frustrated or concerned, but the bot’s action stops any legitimate buyer purchasing the piece as it is consistently already “been sold.” The reverse is possible, as bots are quick enough to see if a bid price is accepted, cancel it before transaction finalizes, then relist at a higher price ad infinitum. Ethereum’s transaction speed doesn’t help any of these matters, and trawling the OpenSea marketplace can feel a lot like traversing shifting sands.
Solana’s NFT-inspired Explosion
Enter Solana. It’s not a fix for the marketplace issues around NFTs (we’ll get to that later), but it does offer a far more accessible user experience for NFT beginners who want to start collecting and minting. Solana has seen runaway price-action success throughout the start of September, and many observers attribute that to the explosion of NFT-based activity on the platform.
The Degenerate Ape Academy is credited with leading the charge, and was the harbinger for beginning of SOL’s meteoric rise, but other projects have quickly followed suit, with Soltopia’s Solbears and Solcats gaining extraordinary community traction, and gaming projects like Aurory and Kaiju Cards also seeing success. The fact is, due to Solana’s fast transaction speeds and low costs, minting on the blockchain is far more accessible that it ever could be on Ethereum, and this has brought the more average punter who might have baulked at Ethereum NFTs burdensome minting and trading costs and disavowed the whole process before giving it a chance. Solana is quickly establishing itself as the second go-to blockchain for new NFT projects, and judging by the jam-packed launches of new collections — more than two a day — the momentum has only just begun.
Ongoing Challenges with Solana NFT Marketplaces
However, much like Ethereum, the state of Solana NFT marketplaces is currently shambolic. Solanart — the most successful — is plagued with problems that you already see on OpenSea. The listings don’t update regularly, giving a lopsided view of the market. What’s more, there is clearly a lot of behind-the-scenes horse-trading going on, with some collections given primacy on the marketplace and others not — and some not even listed at all. New competitors like Digitaleyes have ropey UIs at best, and the less said about Solsea together, but we will. Solsea was trumpeted as Solana’s version of Opensea, but the countdown to launch was suspended at 9 minutes for over 12 hours and, when it finally did launch, hundreds of people got scammed out of their SOL due to the ineffective listing controls implemented by the team.
To be fair to these marketplaces, they probably couldn’t have predicted the insane demand for Solana NFTs and the weight that put on their servers, and these are teething problems you hope to see eradicated as time goes by and the Solana NFT marketplace matures. Although, judging by OpenSea’s issues, that might be a faint wish indeed.
Fairness and NFTs
There are also issues with fairness with traditional mint races that take place when a new collection is launched. We all know AIs are taking over. Traditional “mint parties” involve — like trying to buy a ticket to a large festival like Glastonbury online — a bit of “fastest finger first” for those involved. Sadly, bots have fast fingers. Added to the speed and diluted mint cost of Solana NFTs, there are real fears that sophisticated bots are gobbling up most of the available supply before dumping them onto the marketplace.
This negatively impacts price and, for all the talk of people loving the artwork, the death spiral that can be induced by this behavior on a collection’s prices can strangle their viability and community hype right out of the gate. We’re not dealing with fundamentals here (although with the advent of gaming launches and increasing talks of “utility” for NFTs, we might soon be), we’re dealing with the quintessence of the human scavenger soul, so momentum and desire is everything. Like Digimon and Slinkies, NFT crazes can evaporate overnight, leaving holders with nothing more than a collection of sometimes not-so-pretty JPEGs. If crypto is the stock market on crack, NFTs are crypto doing speedballs.
How Atlas’s Marketplace Will Make Potential Real
Atlas is currently building the most advanced hybrid cross-chain DEX on Solana. We have always considered Solana a sleeping giant whose Proof of History validation, cross-chain wormholes, and lightning fast and low cost transactions make it the blockchain of the future. It’s why we chose to build on it. It’s no surprise to us to see NFTs taking off on the Solana blockchain as it offers a real alternative to Ethereum. We believe, in time, that Solana will overtake Ethereum in the NFT space, and Atlas will be part of it.
Designing Fair Access to NFTs
Atlas plans to launch a marketplace that brings fairness to the NFT space. Fairness is the greatest challenge facing this inchoate market. Atlas will build launchpads that exclude the impact of bots and not let one wallet mint hundreds of a collection. This ensures that there is an equitable distribution of chance to all those attending mint parties, as we believe that, by successfully creating this atmosphere, it will only add to the hype of these events and help propel the value of NFTs on the market.
We also hope to solve some of the enduring problems for new artists who want to mint NFTs, by offering an all in one sweatshop to mint and put NFTs up for sale directly. Finally, we want to leverage the inherent advantages of Solana to create a fast-paced, always updated, on-chain marketplace that truly captures the collectible trading frenzy that NFT collections can inspire, and give voice and heart to the wonderful art and the artists that create it — while seeing they are amply rewarded.
Our NFT launchpad system was designed to ensure a fair process from start to finish, whilst reducing load on the infrastructure.
Tackling the problem
Thus, all auctions will be time-limited, with participation opening at a pre-announced date and time. Prior to the start of the event, users will be able to connect their wallets, complete a captcha, and obtain raffle tickets. Let’s assume that the launch price of each NFT is 1 SOL — then, you deposit 1 SOL for 1 raffle ticket. At a later stage, we will accept other tokens like $ATLS, or xToken for X project. Do mind that for the sake of fairness, wallets will have a limited and preset number of tickets defined for each project. As the launch timer runs out, an on-chain lottery will commence using the ‘verified random function’, by leveraging our integrated oracle. After the raffle, you can connect your wallet and claim the NFT won — if luck was not on your side this time around, you can simply claim back your deposit.
Our superior tech means we don’t need to charge gouging fees from creators to cover the costs, and Solana’s tiny transaction fees means buyers will pay almost exactly the price listed on the artwork. The Atlas DEX will capture the lightning of Solana NFTs and harness it to make a fair, fun and profitable playing field for all involved. It will take time, we will launch it in 2022, and change the Solana NFT marketplace when we do.