PartyBid: A tool that allows ordinary people to participate in high-priced NFT crowdfunding

Author: Chole, Chain Teahouse

As the price of NFTs continues to reach hundreds of thousands of dollars, this field has long become a treasure trove attracting widespread attention. It is no longer surprising for an NFT to sell for $69 million or for a tweet to sell for $2.9 million. In 2021, a piece of NFT created by digital artist Beeple (real name Mike Winkelmann) sold for a staggering $69 million, making NFTs a hot topic in the media and opening the door for a series of future NFTs, many of which reached millions of dollars. Discussions about NFTs have already permeated the market, with many celebrities such as Paris Hilton, Lindsay Lohan, Eminem, and Grimes joining the NFT craze. In 2022, NFTs received widespread attention from investors, artists, and collectors.

As a result, the prices of high-quality NFTs are continuously rising, with the minimum price of CryptoPunks reaching around 120 ETH, causing many potential buyers to hesitate. Subsequently, DAOs in the NFT space emerged, such as FlamingoDAO and PleasrDAO, which pool funds from DAO members to establish vaults for investing in NFTs. For example, FlamingoDAO holds multiple CryptoPunks, while PleasrDAO purchased the Dodge meme NFT and works by Edward Snowden.

Among these applications in the NFT space, PartyBid is the most noteworthy. PartyBid is the latest mass-market NFT collective bidding product launched by PartyDAO. Unlike other competitors, it allows anyone to participate without any funding requirements or other restrictions. In simple terms, any user can create a crowdfunding campaign through PartyBid to participate in designated NFT auctions, significantly lowering the barrier for ordinary users to engage in high-priced NFT assets.

1. Project Overview

The collective power of this project is primarily reflected in the establishment of PartyDAO and the process of implementing the PartyBid product. As a fully decentralized organization, PartyDAO's initial goal was to build and release multiplayer gaming applications using cryptocurrency, employing a progressive decentralization model to provide a new standard for crypto products. PartyDAO differs significantly from many previous DAOs. In the past, most DAOs operated on a "vault + vote" model, sending funds anywhere for collective voting. In contrast, PartyDAO's mechanism is more direct and aims to deliver products directly to community members to enhance practicality.

To create PartyBid, PartyDAO assembled a cross-functional team encompassing engineering, product, design, smart contract development, security, and marketing. This team continuously works around the development of PartyDAO and PartyBid.

In PartyDAO's model, each crowdfunding campaign created for NFTs is referred to as a "Party." Interested individuals contribute funds to participate in bidding auctions. If the funds are raised and the auction is won, participants in the crowdfunding will receive a proportional share of the split tokens, and any excess funds will be refunded proportionally. If the bidding is won at a higher price, it is considered a failed auction, and the funds will be returned to the bidding users.

When creating a Party, users need to set the Party name, split token code, and provide a link to the auction item. Currently, PartyBid only supports NFT auctions on the Foundation and Zora platforms. Foundation and Zora support English-style auctions with a time limit of twenty-four hours. Once the crowdfunding pool reaches the set reserve price for the auction item, any participant in the crowdfunding can initiate a bid. After bidding starts, there is a one-day time limit; as long as the funds in the pool are topped up within 24 hours, anyone can initiate a bid at any time.

After winning a specific NFT auction, the NFT is stored in a vault jointly owned by DAO token holders, with the assets collectively owned by DAO token holders. At this point, users can receive proportional split ERC-20 tokens after the NFT is divided, and the remaining funds can be withdrawn by contributors or used with Fractional contracts. The total amount of split tokens will be raised at a ratio of 1:1000 of ETH based on the final auction results.

Fractional contracts: Since NFTs are generated on-chain, the division of ownership is easier to achieve than with physical art assets, eliminating the need for off-chain contract drafting, confirmation, notarization, and other steps, making the process more convenient. Currently, the leading players in this field are Unicly and Fractional. PartyDAO token holders can vote on setting the auction reserve price in Fractional, and then set it according to the weighted average of the token holders' votes. Typically, the reserve price requires a voting rate of 50% of the token holders; if this voting threshold is not met, the reserve price cannot be set. Additionally, the reserve price cannot be higher or lower than five times the current price. If someone is willing to bid above the set reserve price, they can participate in a timed auction or purchase the vault, winning the auction or purchase will allow them to obtain the NFT assets in the vault, while holders of the split tokens can redeem their proportional share of the vault assets sold for ETH.

The logic of PartyBid is simple, but its underlying logic captures a market that has both existing demand and room for development. In the past, pooling funds or participating in the crypto market was not a new concept. However, the operation mechanism of Party focuses primarily on purchasing NFTs, which places more than half of NFT prices around 0.5 ETH. Despite the market disadvantages such as a large bubble and many speculative projects, this conversely proves the use case of PartyBid to a large extent, which is definitely not limited to "crowdfunding to purchase NFTs that individuals cannot afford." In summary, PartyBid appears to be a tool for crowdfunding NFT purchases, but its essence emphasizes a multiplayer NFT gaming model with social attributes.

2. Team Introduction and Development Story

The inspiration for PartyBid actually came from a Twitter post. In April of this year, Dave White, a researcher at blockchain investment firm Paradigm, suggested on Twitter that everyone share their thoughts on cryptocurrency. Denis Nazarov, the founder of Mirror, replied, "We can pool money to buy NFTs," and another researcher at Paradigm, Anish Agnihotri, developed this idea into a smart contract, which he then used to win the auction for Colin and Samir's NFT work. Subsequently, Denis Nazarov raised nearly $100,000 through the PARTY token on Mirror. This led to the planning of the product, team formation, and community building, ultimately completing the product together over several months.

The team stated, "At PartyDAO, there are no hierarchical relationships; everyone shares common interests and goals, coordinating product development spontaneously. This organizational model has not reduced team efficiency. On the contrary, it has accelerated product iteration and ensured high quality." They refer to PartyBid as a "multiplayer crypto product."

3. Investment Institutions

In June of this year, PartyDAO announced the completion of a $16.4 million financing round, led by a16z, with participation from Standard Crypto, Compound Crypto, Dragonfly Capital, Uniswap Ventures, and Loot founder Dom Hofmann.

4. Community Situation

Twitter: https://twitter.com/prtyDAO, 2.3k followers

Discord: https://discord.com/invite/UGPMYjxy4w, 3,254 followers

5. Chain Teahouse Review

According to external sources, PartyBid has the potential to expand into a DAO or collective tool. Based on data observation, PartyBid is currently valued at $200 million. Although PartyBid is just one product under PartyDAO, it is expected that more products related to NFT liquidity will emerge in the future, and there will be many models evolving in terms of liquidity. Currently, there are approximately 5,500 parties and a total of 30,000 participants.

Returning to NFTs themselves, the market is currently in a deflation phase, and the development of "fractionalization" still faces many challenges. Even if it can solve the liquidity issues of NFT collectibles to some extent, holding high-priced NFTs can not only achieve capital flow through fractionalization but also potentially gain NFT premiums during market booms. However, in reality, liquidity issues still exist after NFT fractionalization; when the market encounters a downturn, liquidity mining may not effectively assist. Therefore, PartyBid attempts to change the way people collaborate and socialize in the Web3 era. Jointly purchasing which NFT is not the ultimate goal; rather, the interesting social activities created by users inviting friends to participate in crowdfunding or other collaborations are what truly matter.