Understanding CryptoShow: NFT Auction and Custody Trading Platform

This article is sourced from CryptoShow.

Driven by the continuous optimization and iteration of cross-chain projects and the gradual reduction of Ethereum Gas fees, non-fungible tokens (NFTs) have quickly emerged from their "home base" in Ethereum. From art, music, and painting to the market's hottest GameFi. In the context of the overall decline of the crypto asset market in 2021, NFTs have provided the market with limitless imaginative space.

However, the controversy surrounding the hype of NFTs is unending. Some believe they are a bubble on the verge of bursting, akin to the internet boom or the liquidity mining craze of 2020. Others believe that NFTs will continue to exist and will inevitably change the investment logic of the economic society.

In the early stages of NFT development, it is undeniable that before bringing about a complete disruptive transformation, the market seems to need more projects to innovate and experiment to thoroughly address issues such as inefficiency, slow price discovery, concentrated pricing power, profit distribution, and full value realization. In the future, whether this rapidly growing "value machine" of NFTs can become an undeniable "giant" in the capital market will be answered by time.

What is NFT?

Cryptocurrencies are divided into two major categories: one is fungible tokens (FT), represented by Bitcoin, which generally have their own main chains and use on-chain transactions to maintain ledger data. FT tokens can be substituted for one another and can be split almost infinitely. The other category is non-fungible tokens (NFTs), which have unique, indivisible characteristics.

The key innovation of NFTs lies in providing unprecedented ownership markers through a decentralized approach. What they anchor is not the value itself, but the value relationship of information and items anchored on the blockchain. In other words, NFTs represent "digital assets" issued on the blockchain, which can be game items, artworks, stocks, equity, real estate, and possess the same uniqueness and non-replicability as physical assets.

In fact, in the early stages of technological development, many NFTs already existed in some form in other digital creations, such as iconic video clips from NBA games that have circulated as securitized versions of digital art on Instagram. As Arry Yu, chair of the Cascadia Blockchain Committee and managing director of Yellow Umbrella Ventures, said, "Essentially, NFTs create digital scarcity."

Scarcity and ownership markers bring about a transformation in the way NFTs are traded: effective changes in ownership are realized through decentralization, completing the transfer and trading of asset values. Based on this, NFTs are also hailed by the market as the next trillion-dollar blue ocean market that can rival the DeFi craze. According to Reuters, market data shows that the NFT market soared to new heights in the second quarter of 2021, with sales reaching $2.5 billion so far this year, up from $13.7 million in the first half of 2020.

According to DappRader data, in August 2021, the total number of users on the NFT trading platform OpenSea surpassed 20,000, with daily trading volume exceeding the total trading volume for all of 2020 (which was only $21 million). In the global market, the daily active wallets in the Ethereum NFT category grew by 350% in the third quarter compared to the second quarter, while trading volume increased by 57% year-on-year; compared to 2019, trading volume grew by 368%, reaching a historical high of $20 million.

Market Pain Points of NFTs

However, before non-fungible tokens (NFTs) can truly bring about a disruptive transformation in the value system of the economic society based on their unique scarcity, the market seems to need more projects to innovate and experiment to thoroughly address issues such as inefficiency, slow price discovery, concentrated pricing power, profit distribution, and full value realization.

First, most NFT trading platforms do not yet support users in fully defining transactions autonomously, including pricing, issuance, and auction formats. This is reflected in the fact that the pricing power and issuance rights of NFT works are held by a few collectors and top dealers, especially for some leading NFTs, where ordinary players have almost no entry point for participation.

Second, the NFT market is still in its early stages of development. If trading and liquidity issues cannot be resolved, further development will inevitably encounter bottlenecks, and the current market surge may just be a fleeting moment. The most typical example is that current NFT auction transactions are primarily based on counterparty matching, requiring multiple parties to repeatedly quote, leading to low trading efficiency and scattered trading sentiment, which results in a lack of liquidity and slow price discovery.

Third, many NFT auction and trading platforms only support copyright holders in obtaining revenue from the initial auction and cannot gain income from the secondary market. In a sense, this replicates traditional auction formats, where NFTs become a one-time, one-way copyright sale for copyright holders.

Fourth, top artists capture the majority of market profits, while high-quality long-tail works do not have the opportunity to be fully discovered. On the other hand, since the content and metadata represented by NFTs are stored separately from the smart contracts themselves, and because the content and metadata are large and cumbersome, they cannot be stored on the blockchain. Players find it difficult to effectively value NFT works, and there are no credible price references for individual NFTs, creating a high barrier for traditional art investment enthusiasts.

Whether stemming from technology or models… numerous objectively existing issues mean that the current NFT trading field still heavily relies on the "fan economy" model of the internet era. For example, individuals with a large number of followers on Twitter, Instagram, or YouTube, as well as those who are more active in communities, are likely to have the opportunity to reach more potential customers and gain more first-mover advantages.

However, the market ultimately focuses on the value anchored by NFTs themselves, and users ultimately care about returns and experiences, not just hype. Therefore, to form the final closed loop of the NFT trading market, bridging the "last mile" of the trillion-dollar market still requires continuous iteration and experimentation around "value-driven" principles. This is also why NFT auctions are hot, but actual trading volumes are far below various swaps.

CryptoShow's NFT Assetization Solution

1. Product Introduction

CryptoShow is the first decentralized, permissionless NFT auction and custody trading platform based on BSC, supporting the buying and selling of digital assets under the BEP-721 and BEP-1155 standards. Users can empower and trade assets through pricing issuance, various auction formats, NDR, AMM, and more, while also providing various liquidity enhancement solutions.

2. Core Logic

2.1 Participation Process

• Issuance (Copyright Holder)
• Custody Trading (Speculator)
• Privatization (Collector)
• Based on this, the innovative introduction of NDRs aims to effectively address many pain points in traditional NFT trading and circulation processes through the two core links of public issuance and privatization.

2.2 Core Target

• Core Target NDR (NFT Depository Receipt)
• Splitting leading NFTs into multiple standard BEP20 protocol NDRs, which are priced in the market through AMM (will later be upgraded to BEP-1155 protocol).
• Initial liquidity comes from issuance and ends with the establishment of privatization invitations.
• AMM uses a classic inverse price curve to ensure broad pricing.

2.3 Public Issuance

• The number of depository receipts is determined by the number of participating addresses at the time of issuance.
• Issuance through whitelist acquisition, ascending price auctions, and funding share subscriptions.
• Public issuance will retain 10% of the auction amount and NDRs as part of the initial liquidity plan.

2.4 Privatization Invitation

• Holding a sufficient amount of margin allows for the submission of a privatization invitation for the corresponding NFT of NDRs.
• A privatization invitation can be submitted if the price is 120% higher than the proposed price; if the NDRs' quotes do not maintain above 95% of the invitation price within the shortest stipulated period, the privatization is deemed invalid.
• If the NDR quote meets the requirements during the invitation period, privatization is established, and the privatization amount will be fully paid out to the holders of NDRs.

3. Core Advantages

• Upgraded issuance methods and fairer pricing methods, transforming traditional single-point bidding decided by a few people into multi-point continuous bidding.
• Fragmented minimum trading units provide traders with opportunities to participate in the pricing of top artworks.
• Providing sufficient pricing references for investment collectors, allowing traditional investors to enter the NFT investment and collection field more.
• Giving various works ample pricing and growth opportunities, enabling emerging independent authors to have better opportunities for discovering the value of their works.
• Amplifying issuance value, allowing the copyright holders of works to obtain continuous full-chain revenue.

CryptoShow Product Functions and Rights Introduction

1. Core Services

• NFT Asset Auction Platform: Minting, Publishing, Auctioning, Transferring
• NFT Assetization Solution ------ NDR (NFT Depository Receipt)
• Mining
• Crowdfunding

2. Service Scope

• Crypto Collectibles
• Crypto Art
• Virtual Space Control
• Identity / Rights Certification
• Game Items Based on BEP-1155 Protocol

3. Rights Distribution Among Trading Parties

Public Fundraising Proceeds

• Issuer: 70%-90%
• Additional Platform Token Governance Pool: 5%-25%
• Liquidity rewards for the previous NDR project: 5%

Liquidity Trading Fees

• Issuer: 60%
• Additional income for the platform token governance pool: 40%

Privatization Buyback

• NDRs Holders: 90%
• Issuer: 5%
• Additional income for the platform token governance pool: 5%

CryptoShow Platform Governance Token SHOW

SHOW Issuance Plan: Total Supply 1,000,000,000 (1 Billion)

• Seed Round: 5%
• Strategic Round: 13%
• IDO-LBP Ascending Price Auction: 2%
• LP/ Trading / Single Token / Fragmented LP Mining Pool: 40%
• NDRs Trading / Liquidity Rewards: 18%
• Community Activity Treasury: 10%
• Team Incentives: 10%
• Liquidity Reserve: 2%

SHOW Token Application Logic

• Fundraising Certificate: 10%-20% of NDRs in the public issuance phase are exclusively available to SHOW holders.
• Revenue Certificate: Represents rights on the CryptoShow platform, earning chain revenue rewards.
• Governance Voting: SHOW will serve as a representative for governance and decision-making.
• Linked Trading: SHOW will be minted as a BEP-1155 Token linked to NDRs trading.

Disclaimer

This article does not include any content related to contractual relationships. It should not be construed as constituting any form of prospectus or solicitation for investment or investment advice; nor does it involve any offer or solicitation to purchase any securities in any jurisdiction in any way. To avoid doubt, please note that this protocol has not been fully formulated. Any statements regarding this agreement are forward-looking statements that merely reflect CryptoShow's intentions regarding the operation of this agreement. There are known and unknown risks that may lead to results differing from forward-looking statements.

CryptoShow does not intend to express investment, financial, legal, tax, or any other advice, and any conclusions drawn from statements in this article or made by CryptoShow in other ways should not be construed as advice in any jurisdiction.

The purpose of using tokens is as a means of payment for services provided within the protocol ("Services"). The purchase, ownership, receipt, or possession of tokens does not come with any rights, whether express or implied, other than the right to use the tokens as a means to enable their use in accordance with the applicable terms of use for the services provided within the protocol.

Tokens do not represent or grant any ownership or equity, shares, securities, or equivalent rights, or any rights to receive future income shares, intellectual property, or any other form of participation or rights related to CryptoShow, service providers, or any of their affiliated companies, except for any rights related to the provision and receipt of services, but subject to the applicable terms, conditions, or policies that participants in the agreement may adopt.