TopBidder Liu Jiaying: Reshaping the Crypto Art Market through Radical Market Theory

This article is sourced from ChainDD.

The first wave in the cryptocurrency market in 2021 is undoubtedly NFTs. According to statistics from Coingecko, interest in NFTs in the crypto market surged dramatically in February, with total trading volume reaching $342 million and total market capitalization exceeding $10 billion.

The hype around NFTs was initially ignited after a series of high-priced sales of crypto artworks, peaking when Twitter CEO Jack Dorsey attempted to sell his first tweet, even gaining attention beyond the market.

Currently, active crypto trading platforms include OpenSea, Nifty Gateway, MakersPlace, Rarible, SuperRare, and VIV3, among others. They are based on different public chains and adopt a variety of models, while also issuing numerous tokens.

It can be said that NFT trading platforms are simultaneously stirring up a wave of transformation in both the traditional art industry and the blockchain industry.

Has the NFT market matured? What challenges do NFTs face as they go mainstream? What is the future direction of the NFT market? In this episode, ChainDD's On Chain invites Liu Jiaying, the founder of TopBidder, to provide a detailed interpretation of the next possibilities in the NFT auction market.

The following is a transcript of the conversation, edited and organized by ChainDD.

Liu Jiaying:

Hi, I am Liu Jiaying, known as CryptoZR in the blockchain world. I founded TopBidder in November 2020 and obtained my master's degree from the Central Academy of Fine Arts in June 2020.

TopBidder is a radical auction protocol for non-fungible assets, representing a practical application of radical market theory in the blockchain space. The TopBidder project was officially established in November 2020 and was officially launched on April 24. It is the most innovative NFT auction platform to date, ensuring creators' permanent rights at the protocol level.

Host:

Let's start by talking about NFTs. During the process of the NFT concept going mainstream, society has raised many questions about it. A typical example is the inability to understand the value of NFT collectibles. What is TopBidder's definition of NFT collectibles? Will NFTs impact the traditional collectibles market?

Liu Jiaying:

TopBidder modifies the underlying protocol of NFTs to create rNFT (Radical NFT), achieving a production and auction mechanism for non-permanent ownership-type crypto assets. rNFT is an asset form that lies between public and private ownership, fundamentally different from traditional NFTs.

In the TopBidder protocol, the issuance price of artworks monotonically increases, and there is no auction termination time; each auction represents a transfer of the NFT.

From our perspective, because the metadata of NFTs is publicly accessible, buyers' demand is not for the media files but for proof of ownership of the NFT asset. Especially for rNFTs, it also includes proof of the best patron identity for the artist, where only the highest bidder can own it.

For me personally, TopBidder is a piece of "art" created by my team and me; it changes the relationship between artists and collectors and alters the control over artworks. In TopBidder, crypto artworks can break free from platform dependency, achieving true independence and freedom.

The traditional definition of collectibles may not apply to crypto art. Since all NFT works have publicly visible media data, there is nowhere to hide. Therefore, crypto art has the potential to be treated as a public good.

Currently, I still believe that the crowd collecting NFTs is not the same as traditional collectors, and they use different currencies. Therefore, I do not think NFTs pose any impact on the traditional collectibles market. However, another interesting aspect is the future collectors; whether they will prefer oil paintings, sculptures, or artworks in the crypto world is worth observing.

Host:

Can we say that TopBidder primarily targets crypto artworks rather than traditional collectibles like oil paintings and sculptures? What types of NFTs does TopBidder currently focus on?

Liu Jiaying:

Currently, the majority of works on TopBidder are original creations using digital technology, though there are also traditional works that have been converted.

In the future, we will expand to more categories, such as luxury goods, music, AVATAR, or sports collectibles on other EVM chains.

Host:

As we mentioned at the beginning, TopBidder is a new challenger in the NFT market. How do you compete with the already mature art auction market? How do you instill confidence in both artists and collectors in this newly constructed market?

Liu Jiaying:

TopBidder is creating a new market with little intersection with the traditional art industry. The styles of content creators and the tastes of collectors differ significantly from the traditional art market, so there is no immediate need to compete directly with traditional art auction markets.

We create a community for crypto artists, collectors, and bidders through product mechanisms, smart contracts, and token design. In this protocol, every bid allows bidders to receive timely returns, and the protocol captures value for BID holders, while artists become "shareholders" of their works. This confidence is built through multiple transactions among artists, collectors, and bidders. Currently, the minimum transaction price for works published by certified artists is 1.07 ETH, far exceeding other trading platforms, giving artists more confidence to release their works.

Host:

The current NFT market mainly relies on public chains like Ethereum and EOS. How do you avoid congestion and high transaction costs?

Liu Jiaying:

Currently, TopBidder's art issuance platform is based on Ethereum. The team has simulated in numerical models that the transaction fees on Ethereum are lower than the auction costs relative to the unit price of art works.

Moreover, the project's governance token BID is distributed through auction mining to subsidize bidders, further reducing auction costs and incentivizing bidders to place bids on artworks. Of course, there are some transactions that may fail due to not being packed. We designed a custom bidding mechanism where users can raise the auction price, and the portion of ETH that exceeds the current market price will be automatically refunded upon completion.

Host:

Another question that has been raised during the mainstreaming of NFTs is environmental concerns. For the traditional collectibles and art world, questioning whether NFTs are environmentally friendly seems like a very valid angle. How do you view this issue?

Liu Jiaying:

POW has energy consumption issues. To address this, Ethereum is transitioning to POS and building layer 2 solutions.

In the future, NFTs on Ethereum will transform into energy-efficient applications. There are already POA or POS chains like BSC and MATIC that are taking on some NFT issuance and trading demands. TopBidder will align with the public chain it relies on in terms of energy efficiency.

Host:

I noticed that the project introduction mentioned radical market theory. Why use this theory as the design basis for the NFT auction market? In what ways does TopBidder's governance model reflect radical market theory?

Liu Jiaying:

When we decided to enter the NFT space, we aimed to create a completely different NFT platform. We sought theoretical support from economic theories, and fortunately, we found radical market theory, which cannot be realized in the real world but can be perfectly implemented in the blockchain world. First, I believe NFTs are not suitable for "collecting," so we created rNFT, turning NFTs into "public assets" that anyone can forcibly transfer at a price 10% higher.

In other platforms, NFTs can only be sold once, while in our protocol, rNFTs can be auctioned permanently and circulate indefinitely.

Characteristics of radical markets:

1. Private ownership leads to monopolization of collectibles, causing unnecessary secondary market losses.

2. In radical markets, every item is priced and auctioned, with auctions ongoing indefinitely.

3. Each item's owner values their item and pays a Haberg tax.

4. rNFT is a non-permanent ownership-type asset (Vickrey public good). The highest bidder can temporarily own the asset but cannot own it permanently. If another person bids higher, ownership is transferred.

5. rNFT is an on-chain realization of a zero-tax Vickrey public good, using zero tax to reduce transaction friction and save gas consumption in radical markets.

The combination of radical markets and radical auctions is necessary to fully realize system efficiency: without corresponding incentives for bidders' bidding risks, rNFT assets lack price discovery agents, making the price discovery process slow and preventing artists from receiving the latest market returns in real-time.

Host:

Next, please briefly explain what TopBidder's governance model looks like. How does the governance model built on radical market theory differ from other DAOs?

Liu Jiaying:

60% of BID distribution will be completed through a 5-year auction mining mechanism, achieving incentives for bidders while also providing regular subsidies to artists, which is a key mechanism for building a core community.

BID holders can earn protocol income through weekly yield farming, which is 18% of all NFT auction income. Additionally, one year after the product launch, the project will initiate governance, granting BID holders voting rights on system parameters and reserve fund usage, such as whether artist certifications are approved, homepage recommendation voting, and protocol revenue sharing adjustments.

During the bidding process, collectors will earn BID mining rewards and receive 30% of the price difference as profit. In our community, artists and collectors have formed a symbiotic relationship.

As a crypto art issuance platform, there are high content requirements. In the first year, we will adopt an expert governance approach, with recommendations from professional art schools and social media certifications to initialize the community. After one year of product release, governance will be initiated, using quadratic voting, which is similar to other projects in governance processes.

Radical markets are mainly used for NFT auctions and price discovery, with little relation to the governance system.

Host:

What is the total issuance of TopBidder tokens? How will they be distributed?

Liu Jiaying:

There are a total of 100 million BID tokens, with the distribution rules as follows:

• Generation methods:

o Auction rewards (60%)

o Team (releases start 6 months after the product officially launches, linear unlocking over 33 months, 20%)

o Community fund reserve (volunteer rewards, capped at 50,000 tokens per month, 3%)

o Artist certification subsidies (1,000 tokens subsidized after passing artist platform certification, 1%)

o Crypto art community (direct airdrop to crypto art collectors, 1% unlocked 30 days after product launch)

o Early volunteer airdrop and grant (rewards for core community and developers, 1% unlocked 30 days after product launch)

o Community round fundraising (releases start after product launch, linear unlocking over 6 months, 6%)

o Market and strategic cooperation (releases start 6 months after product launch, 3%)

o LBP and DEX liquidity provision (liquidity guidance completed before product launch, 5%)

Host:

In recent years, the blockchain industry has seen constant shifts in trends. DeFi, DEX, NFTs, etc., are all hot topics in industry development. How will TopBidder continuously adapt to these new trends and hotspots? In other words, how can TopBidder sustain better development?

Liu Jiaying:

TopBidder positions itself as an NFT auction protocol with the core goal of creating NFT liquidity. Based on the premise of sufficient liquidity for rNFTs, the project can derive new businesses such as NFT swapping and NFT collateral lending, collaborating with traditional DeFi projects and protocol combinations.

Regardless of how trends change, capturing the essential characteristics of NFTs for business innovation is the team's top priority.

In the first week after launch, TopBidder generated $2.07 million in revenue, with a transaction amount of 72.95 ETH, auctioning 22 artworks. On one hand, TopBidder will attract more excellent artists; on the other hand, it will also form new logics within the crypto collector community. We also plan to introduce new rNFT categories to expand the NFT consumption market.

Host:

What are TopBidder's short-term plans after launch?

Liu Jiaying:

First, we will improve the artist certification process to attract more artists. Second, we will expand business types to other EVM chains, reduce auction costs, and achieve a state where natural auctions can occur without tokens.

We will then create a cross-chain transfer bridge for NFTs, converting traditional NFTs into rNFTs. Once there are enough assets, we will begin exploring NFT swap-related businesses.

Host:

Next, let's discuss common questions about NFT platforms. First, regarding replicas. Opensea has seen instances of copying crypto artworks for auction multiple times. Has TopBidder optimized for this issue?

Liu Jiaying:

TopBidder will first certify artists; only works from certified artists will enter the public browsing area.

Additionally, price represents consensus; TopBidder's genuine prices will quickly enter market pricing, reaching a high within minutes. Price discoverers, as savvy arbitrageurs, will not purchase fake works, leading to a significant price difference between genuine and counterfeit works.

Host:

While NFTs provide artists with a means to earn more money online, they have also led to new forms of copyright infringement. Many unauthorized NFTs have appeared in the market. How do you avoid related risks?

Liu Jiaying:

All works in TopBidder's public browsing area must be certified, ensuring quality. The platform's legal agreements will stipulate that artists are responsible for the originality of their creations.

Our current extensive work mainly focuses on verifying the authenticity of issuers, which is crucial for copyright protection.

Host:

The popularity of NFTs has certainly sparked some pessimistic views. Many believe that NFTs are a huge bubble. What is your perspective on this issue?

Liu Jiaying:

Based on the average and median transaction prices, it is far from being a bubble. In fact, there may not be a bubble at all; if we look at the average market price of current crypto artworks, the vast majority of decent works sell for less than 1 ETH. We cannot only look at a few high-priced works, as they do not represent the overall market situation. Of course, the prices of rNFT artworks on TopBidder will be much higher than on other platforms.

Host:

The digitalization of assets has always been a topic of interest in the blockchain industry. Some voices believe that NFTs will greatly accelerate the process of asset digitalization. What is your view on this issue? Will NFTs be the beginning of digital assetization?

Liu Jiaying:

Asset digitalization needs to consider whether it is on-chain or off-chain assets.

First, we can categorize NFTs into two types: functional NFTs and non-functional NFTs. The former emphasizes functionality, reflected in access rights to ENS or virtual real estate; the latter emphasizes metadata, where tokens are only used for ownership rights. Asset digitalization should refer to the former. If we are to digitalize, it starts with tokenizing on-chain assets. Today, Uniswap V3 has just been released, and the rights of liquidity providers are tokens that are NFTs.

At the same time, crypto real estate like Cryptovoxels is quite suitable. However, the tokenization of traditional financial assets requires endorsement from authoritative institutions, which has been attempted since 2017 but has high barriers.

Additionally, digital assetization and asset digitalization are two different concepts. For instance, images on Weibo, Twitter, and Instagram can all be issued as NFTs.

Currently, some platforms are already trying this, which can provide creators with new income sources beyond copyright, and this is also TopBidder's main focus.