Comprehensive Interpretation of Polkadot NFT Infrastructure: Progress, Planning, and Development Space of DNFT
As more and more NFT projects need to operate on multiple chains to attract more users, cross-chain trading and operation of NFTs have become a necessity.
Looking back at the history of NFT development, each bull market has had a representative NFT project leading the market.
In the first bull market, Colored Coin (BitcoinX) became known to everyone. Colored Coin can mark various unique assets, similar to stamping a line of information on a 1-dollar bill that says "can be exchanged for 1 share of Tesla." This attempt allowed more people to understand the possibilities of blockchain and Bitcoin beyond transactions.
In the second bull market, the explosion of CryptoKitties caused severe congestion on Ethereum, bringing NFTs into the public eye for the first time. At that time, CryptoKitties had nearly 20,000 users, contributing to transactions worth 40 million dollars. The most expensive cat, "Dragon," was sold for 600 ETH (equivalent to 170,000 dollars at that time).
In the third bull market, which we are currently experiencing, NBA Top Shot has rapidly brought NFTs into the spotlight, with over 1 million users and total sales exceeding 600 million dollars. The most expensive single item sold is nearly 390,000 dollars, which is a dunk moment by LeBron James paying tribute to Kobe.
According to Coingecko data, as of June 2021, the overall market value of NFTs peaked at over 18 billion dollars, accounting for about 1% of the total cryptocurrency market value. Before August of last year, the NFT market was almost negligible. The change in data indicates that the NFT market has completed its development from 0 to 1.
Based on the historical transaction volume of the NFT market tracked by nonfungible (excluding NBA Top Shot, only tracking NFT data on Ethereum), the NFT market showed historically high activity in the first quarter of 2021, achieving a record weekly trading volume of 173 million dollars in the first week of May.
The past history and various data confirm the development space of the NFT market, while the sale of crypto artist Beeple's work for nearly 70 million dollars at Christie’s auction successfully brought NFTs and crypto art into the mainstream. Additionally, since the pandemic, traditional business models have shifted from offline to online, leading people to move more activities to the internet, accelerating the development of the digital age, and the characteristics of blockchain, such as transparency and immutability, are empowering this shift.
As a tool for displaying assets on the blockchain, NFTs are further expanding the types and scenarios of on-chain assets, making it possible to represent various assets that could not previously be represented on-chain. Currently, NFT use cases cover collectibles, artworks, games and virtual worlds, sports, fashion, and the on-chain representation of real-world assets, quietly disrupting related industries.
However, major NFT projects and assets are primarily concentrated on Ethereum. Given the limitations of Ethereum's network throughput and the occasionally high and volatile gas fees, more and more NFT projects and platforms are choosing to operate on independent public chains such as Flow, WAX, BSC, Near, and Heco, as well as Ethereum sidechains like Polygon, XDai, Ronin, and layer-two scaling solutions like Immutable X. In the top 20 NFT sales rankings on Dappradar, 8 slots are already occupied by projects based on Flow, WAX, Polygon, and BSC networks.
As more and more NFT assets are generated across various blockchain networks, and as more NFT projects need to operate across multiple chains to attract more users, cross-chain trading and operation of NFTs have become a necessity. The cross-chain NFT protocol DNFT, based on the Polkadot ecosystem, is a forward-looking project aimed at this trend. The project aims to monetize data assets across platforms and has successfully completed a million-dollar angel round of financing, holding its first IDO on Mantra DAO.
According to DNFT CEO Jason Liu, the DNFT protocol is developed based on the Polkadot Substrate blockchain framework, providing various foundational services such as NFT asset generation, trading, maintenance, recycling, data processing, and governance. Developers can create various products related to NFT assets, including creation, trading, analysis, derivatives, and data, based on the DNFT protocol, aiming to become the infrastructure supporting NFT cross-chain operations in the Web 3.0 era.
It is understood that DNFT chose to develop on the Substrate framework to provide cross-chain infrastructure services for the increasingly frequent and rich NFT assets from the ground up.
From the DNFT protocol architecture diagram, we can see that the DNFT protocol layer includes modules for NFT asset creation, decentralized NFT trading/auction, NFT maintenance taxes, NFT recycling mechanisms, DAO governance, NFT minting mechanisms, token economics, and stablecoin mechanisms; its cross-chain bridge can connect multiple ecosystems such as Polkadot, Ethereum, BSC, Heco, and OKExChain, providing cross-chain liquidity for NFTs; the application layer includes NFT stores, NFT games, NFT artworks, NFT data, and NFT DeFi applications.
The DNFT protocol consists of five main components: DataNFT, DataStorageWithTax, DataSwap, DAO governance, and AI-kit, providing foundational infrastructure services for NFT generation, storage, trading, transfer, and protocol governance. The AI toolkit is a unique innovative feature and service of DNFT: by using data ETL and data labeling, it creates a universal data framework for personal data and AI models.
According to Jason Liu, the AI-kit allows users to upload data and AI models and NFT-ify them, which is a brand-new attempt. DNFT combines machine learning models with blockchain NFTs, allowing data and AI models to circulate more widely. The project has also received nine rounds of grants from the Web3 Foundation due to this innovation.
To support cross-chain circulation of NFTs, the native token of the DNFT protocol is essential. The total issuance of the DNF token is 100 million, of which 30% will be used to incentivize users who support its bid for Polkadot slot leasing. DNF is the gas fee settlement token for the DNFT network and also serves as the governance token for DNFT DAO, allowing token holders to participate in the construction of the DNFT ecosystem.
Additionally, the protocol token DNF initially exists as an ERC20 version, and after launching the mainnet, there will be a native DNF token. The DNFT protocol plans to build a cross-chain bridge to achieve bidirectional exchange between ERC20 DNF and native DNF. The DNFT protocol uses Polkadot's XCMP to achieve shared security between Polkadot ecosystem projects, enabling interoperability between parachains.
In other words, the DNFT protocol helps NFT assets achieve internal cross-chain interoperability based on the Polkadot ecosystem and realizes heterogeneous cross-chain interoperability through the cross-chain bridge, meaning that DNFT protocol ecosystem users can freely exchange between the Polkadot and Ethereum ecosystems.
Currently, the team has launched a testnet demo based on the DNFT protocol, allowing a glimpse into its applications in assets, markets, mining, IGO, games, art, and data. Users can create NFTs, engage in NFT-related mining activities, buy and sell NFTs, participate in crowdfunding for NFT games, play NFT games, and take part in NFT art and data-related tasks. Jason Liu stated that the team will allocate 10% of the project budget to support NFT creators, independent game developers, and IPs from other fields to join the DNFT platform.
Undoubtedly, DNFT's initiative provides fertile ground for more NFT application scenarios, offering an entry point for more practitioners in related industries to enter the NFT space, while also contributing to the development process of diversified assets and data in cross-chain circulation and transfer under the Web3 context.
