DNFT: Exploration of Cross-Chain NFT Protocols
Is NFT about to be detonated?This article is from Blue Fox Notes
The Future of NFTs Has the Potential to Rival the DeFi Sector
In the early days, NFTs were primarily digital collectibles and digital artworks, but the connotation of NFTs goes far beyond that. The future of NFTs will be a field that can rival the DeFi sector. For more on NFTs, you can refer to the previous article from Blue Fox Notes titled "The Frenzy of NFTs."
Regarding the NFT craze, Blue Fox Notes has also discussed it before, especially the high-priced auctions of Beeple's NFTs, the rise of NBA Top Shot and CryptoPunks, which have led to a surge in NFT trading volume. Additionally, several NFT platforms, such as OpenSea, Rarible, Nifty Gateway, and Superare, have also rapidly emerged. This field shows the momentum of the early development of DeFi.
Although the market has recently entered a relatively cool period, in the past 30 days, according to data from Nonfungible, as of the time of writing, there have still been over 95,000 transactions, with sales exceeding $248 million.
(Over 95,000 transactions in the last 30 days, Nonfungible data)
According to statistics from Cryptoslam, as of the time of writing, there are 12 platforms in the realm of crypto collectibles that have exceeded $1 million in NFT sales in the past 30 days, including Cryptopunks, Meebits, and NBA Top Shot.
(12 platforms with sales exceeding $1 million in the last 30 days, Cryptoslam)
According to statistics from Cryptoart, although the popularity of crypto artworks has declined recently due to the overall market impact, the total sales volume in April still reached around $100 million, with historical sales exceeding $600 million.
(Sales volume of crypto artworks, Cryptoart)
This does not include financial NFTs, data NFTs, music NFTs, etc. The potential in these areas has yet to be fully explored and showcased. For example, the University of California, Berkeley, plans to express data related to gene editing and cancer immunotherapy in the form of NFTs and auction them using NFTs.
(Auction of NFT data, Bloomberg)
Some musicians have even started selling their new works in the form of NFTs, allowing buyers to receive future sales royalties from the music NFTs. This model will have a profound impact on the future of cultural industries such as music and film, and these are just new attempts that have only just begun.
It is expected that in the future, there will be a large number of NFTs emerging in various fields such as finance, gaming, collectibles, art, music, film, and data. This will be an extremely large market.
The Gradual Emergence of Cross-Chain NFT Demand in the Multi-Chain Era
With the development of DeFi and NFTs, Ethereum's current capacity cannot support a large-scale NFT ecosystem. In this case, one approach is to expand using Layer 2 solutions, and another is to develop through a multi-chain model. With the development of multi-chains such as Polkadot, Solana, Heco, and BSC, NFT assets on different public chains are also beginning to grow continuously.
Against this backdrop, protocols for cross-chain NFTs have started to attract attention, and developers are already laying out in this field, with DNFT being a cross-chain NFT infrastructure based on the Polkadot ecosystem.
DNFT is a Cross-Chain NFT Protocol Based on the Polkadot Ecosystem
DNFT is a decentralized cross-chain NFT protocol built on Polkadot Substrate. It aims to become the infrastructure for NFTs in the multi-chain era, providing various basic services such as NFT asset generation, trading, maintenance, recycling, data processing, and governance. Developers can build various products related to NFT assets based on the DNFT protocol, including creation, trading, analysis, derivatives, and data. According to its official materials, it has received grants from the Web3 Foundation, Heco, and BSC.
In simple terms, DNFT aims to provide underlying cross-chain infrastructure services for various NFT activities currently taking place. This can be seen from its architecture.
Architecture Design of DNFT
(The architecture of the DNFT protocol, DNFT protocol)
The above diagram shows the architecture of DNFT. The DNFT protocol includes a protocol layer, a cross-chain layer, and an application layer. In the protocol layer, DNFT includes modules for NFT generation, decentralized trading, NFT maintenance, NFT recycling, NFT governance, and token economics; the cross-chain bridge can connect multi-chain ecosystems such as Polkadot, Ethereum, BSC, and Heco, providing cross-chain liquidity for NFTs; at the same time, the Polkadot ecosystem can share its security and achieve free cross-chain interaction; the application layer includes NFT markets, NFT games, NFT artworks, NFT data, and NFT DeFi, among others.
(Main components of DNFT, DNFT protocol)
It can be seen that DNFT has five main components: DataNFT, DataStorageWithTax, DataSwap, DAO governance, and AI-kit. In other words, it provides infrastructure services for NFT generation, storage, trading, transfer, and protocol governance. Additionally, its AI toolkit offers some unique services, attempting to create a universal data framework for personal data and AI models through data ETL and data labeling, which may revolve around NFT data-related plans, but the white paper does not provide further details, and specifics await future disclosures.
DNFT plans to integrate ERC721 and ERC1155 standards to achieve more powerful NFT descriptions. In the DNFT protocol, storing NFT data requires tax payments, which are not one-time payments but long-term payments to support storage costs, thus ensuring the long-term sustainability of NFTs. If NFT holders do not pay taxes on time, their NFTs will be reclaimed and auctioned.
In addition to regular market transactions, the decentralized NFT trading of the DNFT protocol also plans to offer various auction models, such as English auctions and Dutch auctions.
Homogeneous and Heterogeneous Cross-Chain Interoperability of DNFT
In the DNFT protocol, DNF is its native protocol token. Initially, there will be an ERC20 DNF, and when its mainnet is launched, there will also be a native DNF token. The DNFT protocol plans to build a cross-chain bridge to enable the exchange between ERC20 DNF and native DNF.
(DNFT cross-chain layer, DNFT protocol)
Additionally, the DNFT protocol uses Polkadot's XCMP to achieve shared security between Polkadot ecosystem projects, enabling interoperability between parachains. This means that internal cross-chain interoperability can be achieved based on the Polkadot ecosystem, and heterogeneous cross-chain interoperability can be realized through cross-chain bridges.
The Token of the DNFT Protocol Serves the Ecosystem
The DNFT protocol has two types of tokens: one is a stablecoin, and the other is the native protocol token. The stablecoin of the DNFT protocol adopts a model similar to MakerDAO, but it is collateralized with DOT tokens. By over-collateralizing DOT tokens, stablecoin dUSD is generated. With dUSD, value-stable payments can be made within the DNFT protocol. For example, the pricing for purchasing NFTs can use dUSD instead of DOT or ETH tokens.
DNF is the protocol token of DNFT, used for governance, ecosystem initiation, and growth incentives of DNFT. When the DNFT mainnet is launched, it plans to provide grant incentive programs for NFT and gaming projects, with DNF becoming an important tool for incentives. Through DNF incentives, more projects will be introduced to the DNFT protocol, thereby building the protocol ecosystem.
The DNFT white paper mentions that the DNFT protocol will use 30% of the DNF tokens to incentivize users who support its bid for Polkadot slot leasing. Additionally, DNFT also plans to operate on Kusama, and its token KNF will also be airdropped to DNF holders.
So, what value can the DNF token capture?
In addition to governance value, DNF also has a buyback and burn mechanism. As we can see above, a portion of the fees generated from NFT trading, storage taxes, recycling auctions, etc., will go to the DAO. Of course, these token economic mechanisms and the value capture mechanisms of DNF can also be upgraded and iterated through DAO governance.
The DNFT Protocol Also Adopts DAO Governance
DNFT also adopts DAO governance. At the project's inception, the project party selects the parameters and various matters of its NFT protocol. After the DNFT protocol runs in the Kusama ecosystem, it will launch its mainnet, and its governance will gradually transition to DAO. The economic model of DNFT, development planning, protocol iteration, treasury management, and incentives for NFTs and games will all be decided by the community. Community decisions will be made through the DNFT Council, which consists of DNF token holders.
Development Path Design of the DNFT Cross-Chain NFT Protocol
From DNFT's planning, it is divided into four stages. The first is the TNFT stage, which mainly tests the core modules of the protocol. The second is the KNFT stage, which is a pre-operation stage that will participate in the Kusama ecosystem and the auction for Kusama parachain slots.
The third stage is the official operation stage of the DNFT mainnet, which will participate in the Polkadot parachain slot auction while launching the DNFT mainnet. At this stage, it also plans to launch NFT and gaming grant incentive programs to encourage NFT and gaming projects to enter the DNFT ecosystem. The fourth stage is the Ethereum DNFT stage, where it will deploy its DNFT protocol modules on the Ethereum network and explore direct cross-chain applications between the Ethereum and Polkadot ecosystems.
Products in Testing for DNFT
Based on the DNFT protocol, any developer can build various NFT-related applications. Currently, the DNFT team has launched a testing product called nftstore based on the DNFT protocol, which includes NFT-related content such as markets, mining, cross-chain bridges, games, art, and data.
(Testing interface of nftstore based on DNFT protocol, DNFT protocol)
(NFT market of nftstore, DNFT)
(Data NFT market of nftstore, DNFT)
Users can create NFTs, engage in NFT-related mining activities, buy and sell NFTs, participate in crowdfunding for NFT games, play NFT games, and engage in NFT artworks and NFT data-related tasks. Nftstore is currently still in testing.
Conclusion
Currently, Ethereum is the smart contract platform with the strongest network effects, but due to its scalability issues, other chains have also seized some opportunities during this window of DeFi and NFT explosion. Additionally, with the arrival of Polkadot and smart chains, the multi-chain era will become a reality to some extent.
In this context, the demand for cross-chain NFTs is gradually becoming apparent. People are issuing their NFTs on different chains and have a need for NFT asset interaction across different chains. DNFT is a decentralized cross-chain NFT network based on Substrate, attempting to provide infrastructure services for cross-chain NFTs, including NFT generation, trading, maintenance, and DAO governance. From its products, it will extend its reach not only to NFT collectibles and NFT artworks but also to NFT games and NFT big data.
From the trend of NFT development, cross-chain NFTs are an inevitable path for its horizontal expansion, and this has only just begun. We look forward to more explorations of NFTs coming to fruition.
