Alex Salnikov: Rarible – The NFT Transformation #382

Transcript

[Music] hi and welcome to app center this is episode 382 my name is brian crane and i'm here with sunny agarwal today we're speaking with alex sallycroft from the nft marketplace and protocol wearable let's get to the episode so we're here today with alex salnikov and we're going to speak about wearable and we're going to speak about nfts you know in the preparation for this episode i was was really kind of diving in trying

out wearable i bought a few nfts and it was just like a really cool experience and really enjoyed it also listening to alex on another interview so i'm really excited to to have this conversation about you know nft and also wearable and where this space is going so thanks so much for joining us alex thank you guys thank you for having me today so maybe you can start at the beginning so how did you get interested in in the crypto space and what has your journey been since you got involved oh that's that's a really nice question so my journey into the crypto space began in 2012 uh that was quite early i think

we didn't had anything except for bitcoin back then and uh i i'm a technical person i studied computer science and later data science in one of the best economic universities here in the country so um my my background is purely technical and when they understood how it all works on the background this powerful idea of blockchain and ultimate ownership that i as an i.t person would be able to digitally sign a transaction and without it it would never move that i i was just hooked on that idea i know it promised to change the world it promised to

change the financial system how we have it today the monetary system of bitcoin was amazing i was just drugged all over my head but to the to the space and since then i actually haven't been building anything else i'm a completely crypto native person that started his career in the blockchain space and still in the blockchain space were you working on anything before you started wearable yes yes of course we've done numerous stuff so the first project was was trading robot uh we've assembled the trading row but the market was completely inefficient it still is not efficient as as we uh wanted it to be but back back then the

simple like ema strategy would give you the massive returns and we assembled the trading robot that that was trading uh crypt and it felt amazing then we moved to build a fiat on ramp and offramp to decrypt it to bitcoin again from from local bank and card providers and we even had the bank that that wanted to allow us to process credit cards what what is only available now on the market they they didn't like fully understand what what they were doing with this thing but they were curious to try and i know at some point central bank advised uh

the banks not not to deal with cryptocurrency and um that that was it for for for on-ramp and we decided to to build an exchange a centralized exchange uh with short sales leverages futures again a little bit ahead of the market and and and below our own capabilities i would say uh we've built a nice exchange within that supported 1 million trades per second on the matching engine that was built in memory a really beautiful piece of software we struggled with liquidity on the large exchanges the large exchanges were were quite ahead of us into in that sense all over that journey we

assembled such a great team that is still working with us on wearable uh we had we have our head of design from russian big tech company yandex i don't know if our listeners know that one we have our cto who represented the country on the world physics contest we have that the talented team and and that that's the main resource that we assembled on working in this in this space because it requires team with quite unique um mindset and and skill set so yeah that's that's our journey uh in the crypts phase that's really

fascinating so how how big is that team you know that has kind of persisted through these years and can you tell a little bit about like what has allowed you guys to work together you know so well and kind of like grow together over these years what have allowed us to work together i think that's the shared mission we started working with our designer we asked them to draw us uh to create a logo type for us and we i remember this evening when we sat on the roof of some building and we're discussing blockchain and just unboarded him to this world shared this idea of how that can work

eventually with all the things uh built from scratch in in this new ideology of a free free market and he was hooked as well sometimes i think that that blockchain attracted that many great minds because it's literally the financial system building code so uh it's something that gives engineers so much power so so much so much potential to to rewrite something that's working that works now imperfectly and that was built by by people and and we are usually quite

technocratic i would say so yeah i think i think blockchain just just empowered engineers with this ability to rebuild something from scratch in code that was built by people and is not as efficient as we wanted to be so uh that's that's really touching to anybody who has this technical mind and so what brought you to nfts so you know like you mentioned that you you're mostly on the technical side so was it an artist friend or something like how did you learn about this like about this even market as a whole being that long in the blockchain space you probably know all the all the great things happening out there and

basically we we of course we knew about nfts with cryptokitties launching and all and all that uh we definitely knew about the market from the very beginning uh i think the beginning was in 2017 uh and we started building wearable in 2019 and uh i know that that was this moment when we decided that we need to build something more more fun more more emotional more more close to the user than because like all the previous projects were financial and technical and and we wanted something more fresh something new we just went out to the market we decided to create several nfts and just try them out and and there

wasn't uh there wasn't even a place to create nfts out there or maybe some some some small pages that allowed you to do that and we and we minted a couple nfts and we flipped them inside the teams i saw i told one to designer he meant this this visual skate deck with ar symbol uh and and that that just felt right i had this feeling uh that we can give all the users the same sense of ownership that we all had since the beginning being that being in that uh cryptocurrency market we all knew that our money is definitely

our money that that nobody would be able to move them except for us making these transactions and this idea is so is so powerful it's so rewarding in a sense that you feel safe and we wanted to give that same sense of ownership to everybody out there not even the financially um not even the to the only financial use cases but but more broadly and nfts felt just perfect in that regard they they are visual did they have an image attached they have a name they have a description they are digestible you you can understand what is it it's tangible it's almost like an

item you can you can almost touch it and and feel it in that it is in your wallet it's just just the direct analogy of a digital item that you have in your pocket yeah it's it's it's almost literally you can feel it in your pocket when you have it on your wallet on your marble that was so amazing that explanation when i heard your your podcast on on the zero knowledge podcast that was the thing that i also remembered the most vividly was when you talked about this idea of ownership and i think you said that you think ownership is an emotion and i have never heard anybody i think say it like that and it's in now it's also interesting how

you talk about these nfts is this tangible thing you can own so i'm wondering like why is there is there something different about like nfts and sort of the sense of ownership you can have there versus you know bitcoin and cryptocurrencies well the technical idea is the same but but the the perception of that idea is much more vivid i think as i said that uh ownership is an emotion because basically an emotion is something that is wired down inside inside the human we we tend to own things we love to possess things especially scars we want

uh i know this this instinct of collectibles it's wired deep down the human nature and that's why it's it's so touching and and when you add the picture it crosses to the second like instinct it has much more like this attachment psychological attachment to the to the thing that's why i embroidered a lot of people to to blockchain and almost any one of them wanted to have at least one bitcoin and it doesn't really matter how many bitcoins you have 0.1 or 0.2 or 1.5 but they all wanted to have just one just because it's this psychologically gay and behavioral

a completely irrational thought that that you want to to have this thing and you want it to be yours as a whole and then nft gives you this idea that uh it it's so digestible this digital item is yours period it's so simple you know the first time i felt that like ownership as a motion thing i have a friend who lives in kentucky and he like has like a like 2 000 acre ranch or something there i was asking him like you know what's the point of having all this land like you don't even use it for anything it's mostly just like wooded and everything he's like you know i hear you but like sometimes when i'm just like

riding my thing like my golf cart through the uh land it's like you know that tree that i that's my tree that deer that's living there that's my dear and it's like really interesting to see that as we are gonna move now with more of like this like virtual digital world like that sense of ownership of like physical land and the objects on it is gonna like translate to like you know especially if we look at things like decentral land and things like this where it's like you know digital land and digital objects that are living in these like virtual worlds that we're going to start to inhabit exactly this this feeling is so ancient and besides you never truly own anything right right now on the internet in the current model now probably the the most uh the most reliable reliably owned thing

right now on the internet is the main name you you literally like own it with a lot of legal support all the other things your facebook page your spotify music library they they are they all are kind of not yours you're renting them from from these platforms and uh they have too much control over it and not that it's it's a really bad thing but i know can you move your library from spotify to apple music so you know you had this vision of nfts for like you know since you started variable which is like over a year ago now but then suddenly in the last like three to four months it seems the whole world has caught on to

the vision and so what's driving this massive adoption of nfts and like especially using the wearable platform today well uh i think a lot of things came to that point and i'd love to go go back to the wearable story a little bit to make sure that uh it's all uh it's online because you know when we first started wearable we didn't know we knew that nfts are great but we didn't know what what which part of them was great that's why we wanted to give our users ability to experiment on on what will be the hot thing inside nfts and we created this this platform where there is no hint of

what you are expected to create and people started creating anything some some art objects or tickets uh some some charity collectibles so there was a lot of ideas uh and and this and this uh crypto media uh crypto art segment with music and videos and pictures really spiked uh just because there is no such place on the internet right now to to sell your digital content for uh this way so that the new owner would be able to resell it so basically nft world basically created uh this level of ownership

for for the old digital content out there and and this was was it was so rewarding and and the platform was open people started to mint they started referring their friends we've put a lot of efforts into making it so easy to use and i think that's the same idea that's driving the adoption right now how about now every piece of content would have its owner and not just creator and that ownership to be transferable and solderable we added at some point we added multiple editions we added royalties support you can set up arbitrary number from zero to 100 of this subsequent sales that would be

downstream to you as a creator this whole idea was was so powerful and and pandemic definitely accelerated the situation people started to look over over the new concepts of of how they can how can they engage with the audience and i think like from from inside it feels kind of it's not that space started to boom last for the last three months uh it it was growing constantly on the behind uh like exponentially two x months to months at least and that feels slow from the beginning it's like one two five ten one hundred

and and then i know at some point there is an inflection point and everybody's uh and and this process be comes from the undercover to be open and and people and people are are all over it suddenly i think nba top shot definitely played a bill a big role in bringing that space forward um the team behind the first nfgs ever the the first most popular nfts ever cryptokitties they created this game uh with credit card support with this large ap rights holder nba that just unleashed unleashed this this mass adoption

so i'm wondering if you could go in a little bit this idea of like ownership in the nft context because you know you said one thing i'm curious about here like you know because he said oh you can like truly own an nft but then on the wearable platforms there's also this thing about right if you have like resales uh maybe some percentage goes back to the original creator so i'm wondering like how can you actually enforce that and you know if kind of people really control it you know they can transfer ownership how do you know what they paid or it's a great question so the way it works

right now uh when you create an nft this percentage of royalties is backed in the asset and it looks like just a number inside the asset and basically any platform can decide whether to respect that royalty stream or not obviously you can't enforce royalties payout on the transfer level if i just transfer this item from one of my wallets to another i don't originate the sale and i i don't i don't pay anything and i i don't i don't stream this royalty stream to anyone so it's not really that enforceable because you can always make this otc trade by

just taking somebody's else's money and sending them this token directly but in reality uh a lot of platforms respect this this royalty royalty field and and working together on respecting in more uh people are by coding platforms that say we won't we won't do that so there is like this self-regulation in the market everybody understands that empowering the creators that they created the item in the first place is important for the for the public space for for everybody here in the nft and the nft market just people on that that's really fascinating and i guess it almost is then more sort of a

statement right that's like made by the artist when they create the nft that's like intrinsically part of the nft it's like oh i would you know i sort of demand or ask for on these resales that like you know each time i get 10 or 25 percent but would it be possible and have you guys considered you know like like the link between that and the actual legal right yes that's just right question i would say so i think the closest analogy out there for the nft market is that you're trading uh ip rights to something you're saying that this

digital item belongs to you and digital item is mostly just just an intellectual property over something so uh and when we see how the market works we can almost feel that it recreates this ap market part turns so sometimes people sell an nft and they are totally okay with the new owner doing anything with it they are okay now you own this thing you can print it you can burn it you can use the image or audio on the video or the video however you want uh i know print it on the t-shirt and make some money

over it and and they're completely free about it on the other hand there are artists that are saying you know i want you to have non-exclusive right to that item and you you're free to use it the way you want but i will be uh using it as well and by the way i don't want you to make any money out of using that image except for reselling the nft itself so you can't use it in in any website or any commercial enterprise so it really just a license several types of licenses that inherently are built in into that world it's not yet public and explicit about the licenses

but i i strongly believe that the market would adopt these licenses and you would you would see that this nft gives you specific rights over the content according with this big document saying every part of what you receive and what you and what you don't receive and we're working internally on one of those features to make sure that you will be able to do that but i'm pretty sure that if you just say in the description what are the rights that would be respected by by legal authorities if if if there was was ever a dispute ownership has emotion i think that's something i've started to get a little bit recently but i also always just felt that ownership like usually implies like certain capabilities right as the owner of it

of something i can do something that other people cannot this is why like a lot of the earlier nft art i was like but i don't i'm not i don't fully get it right like i don't i can see the gif even if i'm not the owner but then i think what what changed it for me was hash masks because hash masks came along and said hey as the owner you can name this artwork and to me that was like a big like oh wow okay this is like ownership implies certain capabilities that non-owners do not have and it's like then you get to be part of this living artwork where it's like you know it's this character that has this like history of names and stuff and so what are new types of capabilities that

you see coming where art can become more nfdr can become even more interactive and interact with its owners than traditional art we pioneered the space with introducing something that's culture we hide an arbitrary piece of permanently they own would be to access that people instantly found a ton of use cases they started this as an instruction how to obtain the physical item or uh mark cuban did this this nft that allowed the owner to have a telephone call with him uh that that's just the pioneering of of this

and people are are experimenting uh i'm pretty sure that the big part of nfts would be tied to this uh a nice example of that can be using nfts as a key to something for example a key to decentraland party that you cannot visit otherwise or just the subscription key to interact with some with some smart contract an ethereum blockchain that you cannot interact until you own that key that can work almost as a subscription to something that does not have this transactional fees some free service that you can access only if you have this key

so a pr part of the nft is as the experience is definitely on the horizon on the creative side of the question we have the platforms like async art that allow you to create this dynamic nfts built in several layers where you can sell each layer separately and the owner of that layer has the capability to move that layer on the master canvas or to change the color of that layer on the master canvas and then you you own the part of this collective artwork that that can be changed with the owners tweaking it sideways that's only the beginning

how do some of the these things work technically like so for example like the hidden data like how do you actually accomplish that like you know if all the data on the chain is fully public how do we make it so some data is only accessible by the owner that's that's a very extremely important question so right now this data is serving by us is served by us it's not on chain it's not public we make sure that the owner of nft gives us a signature confirming his wallet ownership and then we stream that data to the person so there is no a great solution to that yet so the best probably idea is something that new cypher tried to

introduce or introduced i'm not really sure is proxy re-encryption when you can re-encrypt the data i was talking with my co-founder just last night about this exact thing we were because we saw the new cypher and keep like merger and we're like hey wait new cypher like we could do that with nft is like that's really cool yeah oh so i i'm big fan my personal dream i know at some point i have this i know let's try to just explore so i think this streaming of content is extremely powerful so as spotify assault the piracy online because you can't really download

the library arbitrary they it's a stream to you one song at a time so you can't literally access it faster than then you can hear it the same can apply to the to the nft metadata so it can be streamed only to the owner and or to the owner of any other key nft and for this to work as this drm basically for the decentralized world data i think that that's really powerful because right now this with this all metadata being public the economy is missing this this access rights you you were completely right when you

said that as an owner you should be able to do something and if you if you are able to access something only if you're an owner that's that's the basic that the most basic building block out there you know i've been actually looking quite deeply into some of the nft standards um one of the things that was a little bit concerning to me right now is like the amount of centralization that's uh happening within a lot of the nft stuff so like like you guys might even like the data hiding the data stuff like you know right now it's totally dependent on verbal system but you know like you mentioned you know ideally we want to move it to like new cipher and stuff like that but like even things as basic as like where the metadata of nft is stored

i had thought that more of the metadata would be being stored on chain or maybe at least a hash of a metadata would be stored on chain but like once i looked into it i'm like oh wow it's lit the nft is literally just pointing at a url to fetch the data from and it's like this can be like centralized urls and people are storing metadata on like aws and things like that and then what was really kind of funny to me was uh yesterday there was a artist who like you know sold all their artwork and then after they did that they replaced all of them with p they did a literal rug pull where they replaced all of the pictures with like pictures of like persian rugs and i thought that was like really funny and

it's like how do we like promote better standards in the space like you know obviously you can solve this by using things like ipfs or filecoin or sciss.net or whatever but like it seems that this is not the standard right now and so how do we how do we like nudge the ecosystem towards that excellent question and ideas so i think it's really important to understand that on-chain isn't the place for the metadata at all so all all the metadata for the nfts cannot be fit into the on-chain data blockchain isn't really suitable when you upload something on chain on the ethereum blockchain

it gets stored on 10 000 nodes at least so you can't really upload a gigabyte worth of video and two to ten thousand thousand nodes that's why most of the nfts and nft providers and nft server they choose ipfs as a storage option ipfs is much better because it works on on hashes of the content so when a picture is uploaded to ipfs and then the metadata is uploaded to ipfs it gives you a hash of that metadata and this talking uri the url that you were referring to it has the hash so uh that's that's the ideal scenario for now because ever if if you have this

important nft out there you can literally become the another provider for for the metadata to be served like obviously file coin and other decentralized storage solutions like rv are are the perfect are the perfect use cases for the metadata you can even have this royalty stream backed into the metadata uh that that would pay for backed in the token that would pay for the metadata storage and how to promote that it's it's really simple you just need to to tell people where the metadata is stored uh for you can you can you can look it over right now if you go to either scan you will find

your nft contract and you will find you click the read contract and there would be this token uri uh method in the contract that would require you you to paste and token id there and you would see where the metadata is stored if you see a centralized ap centralized url then then that means that this metadata is completely free to change uh while of the file file coin and ipfs allows you much much of a better protection so i think i think yeah i almost feel that at some point we will see this small check mark on the nft that would say

if that metadata is stored securely or not another technical uh challenge what you know i actually tried to mint uh some nfts on wearable uh probably almost four or five months ago now and you know for content we're actually trying to mint uh some nfts for epicenter with all the cover art from you know the past five six years uh of which you'll have one after this episode i guess but you know we were trying to mint like 400 nfts and the gas prices were just way too high and the i i decided not to do the minting then i was like all right let me wait a little bit until the gas prices go down and

uh lo and behold that never happened so now they're like 5x of what they were when i originally tried doing it so how do we solve this problem for like users like you know you know especially for artists who like have a lot of artwork that they're trying to sell and like until they know that there's a buyer having to pay thousands of dollars just to mint the nfts is a bit quite high and so have you have you guys looked into things like gasless minting and things like that where like how i was the simple thing i was thinking of like why can't as an artist i just have a signature off-chain signature and that the first buyer you know offload the gas cost onto the first buyer so what are some of the ways of doing

this that you've been thinking about yeah that's the most important problem in the whole ethereum space right now the gas prices obviously again the gas prices come from this understanding of the security you're paying for your stuff to be stored on that many computers that you you have the best security guarantees out there and and your idea and about gasless minting is obviously on the table several several marketplaces uh already implemented that and we will implement that too in the future but the ultimate solution would be i think the market is moving towards a multi-chain

world when nfts would be able to freely move across different environments being layered once and layer two solutions you can start creating your nft on something like medic and then if it gets really popular and it's expensive and you want to start using it as a collateral and some landing service on the ethereum main net you can move it across the bridge and and and now it will be living on ethereum the same things happens with flow we have we have an enormous amount of requests about trading nba top shot cards at some secondary marketplaces so that's the real future for the nfts luckily we have this blazing fast layer

twos built on zk roll ups right now such as starkware uh or or zk dk sync they they are the real future for for the scalability of the blockchain you know i think that point about like the gas fees are representative of the security you're getting from the network and because you're paying for this to be stored on all these computers and all that and so like you know part of it is like do the nfts really need the same amount of security as the maker dao for example you know like maybe not and so what do you think about like the dapper labs approach where like

with the flow blockchain and like do you think that we're gonna see like a specialized blockchain that's like really focused on nfts or do you think that like nfps are gonna start to sort of exist on all these like layer twos and like if if the latter then like how do we deal with all this uh ux overhead of like dealing with nft is on different chains there's been all these like issues concerns these days which i don't quite fully understand but people like oh what if like you start double minting nfts on different chains and does that like destroy the uh scarcity benefits and all that so how do you think about some of these things extremely valuable thoughts so i think you're totally right in by saying that

nfts do not need the same security guarantees as a 100 million dollar worth of tokens uh stored in ethereum blockchain so we'll definitely see and we are already seeing this nft tailored blockchain flow that's literally their thesis one one concern here is the securitization of the nft market what we see with the projects like nftx that allow you to create a funds for nft or or projects like upshot protocol that allow you to price nfts and understand how much do they cost in order to create the better

lending systems or or any other solution that requires interoperability between financial services and nft providers so i think to me it feels like there will be at two spaces one of which will be blazing fast for this media mft is let's say where the new facebook uh new social network built on nft uh thesis would be and and the second uh where this financialized entities that are work as an asset class would be stored and operating probably that would be in some environment where

d5 market would go and and with moving across across these environments you're again extremely right about the double minting and stuff it's much more hard to to move an nft across the bridge than any other erc20 token because you need to move the contract and uh what if there was no contract like that on another network so ultimately there will there will be always the origin network for the nft and an origin network for some contract of nft and so far it looks like you will be only

able to mean an nft inside the specific collection on the only on its origin so if if the first contract was created on ethereum network and then you decided to move this nft over to flow then you would be able to create nfts only on the theorem network inside the specific collection that we are referring to if this collection was created on flow and you moved a couple of them to ethereum then you will be able to mint only on flow that's where the market is moving so it's kind of a multi-chain energy standard is what the market needs well i believe some people in the cosmos ecosystem actually were developing something like that so we should uh sync up on that so you mentioned

the idea or maybe social network based on nfts and i would love if you could you know we've talked already about like some of these weird possibilities you know with like artworks where different people own different layers they can change them and in a way we're talking about like new modes of interaction new modes of like uh collaborating with each other new sort of economic relationships that emerge from this and you know then you mentioned sort of they said oh maybe the next social network would be built on nft so i would love if you could just like what are some of the craziest most exciting maybe far out ideas

like things that you think could happen or products people could build that you know you leverage some of these fundamental qualities of nfts once the scalability problem is solved for good when we have this ability to reach current internet level speed uh and once jesse walden once said that nft is the file that you can't copy so basically uh you can it makes the the internet ownable and when you find the picture on the social network whose picture is that there is a lot of copyright infringement out there right now

and nfts would just be a better database for all of that where you would understand who is the owner you know there is this case and we have a really a really famous creator that creates the 3d sculptures that a lot of people just copied and put on their avatars because they're usually animal faces where really stylish animal faces and this this item was minted on wearable and somebody bought it for ten thousand dollars just to place on his wearable avatar uh by like properly without without copying the stuff

oh he is the real owner of his social network avatar now of his social network picture i think that that can hint of how this all can be used you can use only those images that you have rights to isn't this beautiful at some point uh this account on the twitter board elon musk that is like a parody account he sold the right to tweet the next tweet on his account for for for five thousand dollars so that's literally just making every piece of of of the internet ownable and tradable

and liquid i know right now if you want to buy some ip rights you're literally just going somewhere uh in the room and and writing a contract on the paper it isn't traded like wall street an efficient market and and all that stuff that that's nft is the is the way to bring this liquid market ideas to the ip rights market yeah and what's fascinating this example right like elon musk selling the right to the next tweet for some amount the you know the kind of idea it brings up for me is also when you have different people work together there's like different modes of doing that

you know there's like for example a stock corporation where you say like oh we are all kind of organized underneath this thing and you know we own shares in it or then you have like you know some of these or maybe a contract relationship right where you have like specific deliverables and you pay for that and in a way it feels like oh maybe with an nft you can have much more also like fine grain and granular markets and maybe new ways of you know sort of splicing and selling products and investing in things as well yes what if you would be able to buy the right to place an advertisement on the account of an uprising blogger

star and a couple years from now they would got some some pre-order for the ad services this is actually something that was done by uh let's talk bitcoin uh they did that many years ago where they had they had a token it was maybe on counterparty or something you know like a long time ago they sold this ltb ad token if i remember correctly and so you could buy for bitcoin and then you could kind of go and redeem it for like an ad on lesser bitcoin and then i think you also had you know in principle this possibility or someone could buy some of the ads and maybe made the later point they raised the prices and then of course that was pre

nfts right it didn't use nfts but i think yeah it's sort of an early idea in this direction the nfc spaces earlier is it's just shown up itself to the public the public really met it well and now there will be a massive wave of experimentation what is really possible with this nft is we will see a lot of projects emerge in just a half of the year because right now they're all building somewhere behind the scenes they're building nft projects and use cases so what do you see as the roadmap for variable as a marketplace do you intend it to focus like you know currently it seems

to be mostly focused on the like digital art marketplace but do you also is idea for wearable to like specialize and become like the platform for digital art or is it also to like go into these other types of nfts like you know eventually even like d5 will have to like you know issue nfts you know insurance products or ens names and stuff thank you for for asking that so i think one one of the really great points in wearable history was launching the liquidity mining program when we basically kick-started the marketplace business by rewarding people with the rights to control the platform that's a really powerful idea that

creates a positive feedback loop people came for the token and state for the product we are basically expanding in that direction we are doing the the progressive decentralization we're launching the dial with with an actual budget that would be controlling the wearable protocol and and moving towards the protocol business that would be a horizontal protocol with all the liquidity of the nft captured in one place imagine you can think about it as nft unit swap so all the businesses that would be using nft's nft issue nft issuers nft insurance as you said that

the nft lending services they all need the single place to make sure that this nft isn't exchangeable to understand the price of the nft to understand that you can sell that nft in the protocol without touching the wearable website this is the future this is the future uh goals for wearable now right now we see this by market diverge uh back then a half of the year ago every every issuance platform that allow you to issue crypto art had its own marketplace right now we see that it's really hard to grow a marketplace because there is this chicken and egg problem people go

buyers go where the sellers are sellers go where the buyers are so this liquidity problem for the upcoming nft projects is a really a large pain and we intend to solve this with a protocol that would allow them to to interact with the marketplaces just only on the protocol level protocol to protocol interaction imagine that you issued an nft in the same transaction it was automatically placed on on the auction somewhere on wearable and wearable is the largest frontend that has now over the 500 000 eyes looking at it over the last month it would be serving as a large distribution channel for all the stuff

created and pushed to the protocol or you can go the other way around and you have a mobile wallet you have a mobile app that can serve as a storefront for the protocol the the same way like metamosque is doing now it's serving the erc20 trading to all its clients while interacting with on-chain protocols and this protocols idea that basically emerged in the ethereum ecosystem is extremely powerful there has never been as such a resilient api on the internet as the current protocols living on ethereum ecosystem that's the higher vision for the wearable next steps and of course for it to be community owned

and governed by by the by the tao and its members we're going to see actually uh more nftization of a lot of things in defy for example like cdp positions right like currently those are linked to your address but like do you see that we're gonna like people are gonna start building wrappers and stuff around these that turn all of these into nfts and like do you see variable becoming a platform for defy trading as well of nfts yes please we so won this so we already launched nfts for urine insurance with the partnership with them and i think hadjik explored some nfts options actually wrapping a ctp

inside nft was already done by the project one hub on on the ethereum east london hackathon they haven't decided to move forward with it but the the idea is so right a lot of projects that are out there in the defy world right now they are so difficult to understand this ycrv btc pool right when you have only this small place in the ticker for the token to explain the person what this actually is you can wrap that into an nft with an image with the name with a description the same exact product would be much more understandable and

it would la it would lie in your wallet in a collectible tab it will be always there showing you what is your position status that that's super important for this space uh and i think the lowest hanging fruit is nfts that has other erc20 tokens inside it so you can literally create this otc market based on nfts if you have a hundred thousand tokens that aren't yet as liquid to be traded on uniswap you can wrap them and sell and sell them and batch on on some nft marketplace i think charged particles is the project that that started doing something like that

already so is is that actually a feature that's supported today like can you have nfc's own ethereum or erc20 so a wii as wearable support any erc721 and 1155 tokens to be traded and if you created the token that has uh that that complies with the nft standard but has an extension that allow it to hold other tokens or have other capabilities then it would be tradable and wearable and there are several projects that are doing various stuff with extending nft contracts to be able to hold

erc20 tokens or other nfts or cdps or the rights to to do something in the game uh the the ability to build something on the land that nft represents and that kind of stuff you can you tell us a bit about this uh erc 1155 because you know i think everyone's probably heard of erc 721s because that's like you know the nft standard that's existed for three four years now crypto credits i think they helped like zappo labs helped create it and stuff but this 1155 one is newer so can you tell us a bit about it yeah let's start with erc721 so the way it works underneath

is basically a contract that has these records that nft number five belongs to the wallet 0x123 xyz and it has this talking uri with metadata so it's it's a token id it's a owner wallet and it's a metadata that's your c721 what erc 1155 brings is semi-fungibility it adds the number of tokens that this uh particular address holds to to the equation it it can work like like a gold bronze and a silver and a game you have five of gold and ten of bronze and one of the silver

so it's basically an nft token with a balance we we utilized that standard to create nft with editions the author can mint a hundred of the same nfts and sell only 50 of them on on one marketplace and 50 of them in another marketplace for example that's arguably makes nfts 1155 nfts on the same level as your c20 nfts because you can actually do everything with 1155 nfts that you could do with air situation so when i when i was buying uh the r this art right they there's like different yeah editions where i saw one two three

so an artist could say oh i make this artwork and i you know i did they sell it just to one person or they could say oh i'm creating three of it and five of it and then those tokens yeah they are then fungible underneath there's no for example like ordering of them yes exactly right there is no ordering of them all of them are the same and that's actually funny that no not all blockchains have this ability to create uh semi-fungible nfts for example on the flow blockchain when you have a hundred of nfts devoted to specific player they are all different they have ordering and they have unique ids and numbers

and that resulted in the funny cases when the nft number seven for the player number seven costs much more than the other uh than the same other nfts with other ideas you know you talked before about uniswap and then the idea of wearable being something like unisrop where you have this kind of you know way widely integrated token exchange standard can you talk a little bit about like what are the challenges around you know liquidity and trading and markets with nfts right because there's something very different with like you know bitcoin and ethereum and you have this like huge supply

and you know order book exchanges i guess that kind of stuff doesn't doesn't work for nfts you know yeah so the biggest invention of the default world and and guinea swap and other trading uh trading venues is is the notion of amm automated market making when you can supply some some parts of the product supply supply uh tokens in the pool this supply would be used as an extra liquidity for everybody who who comes to trade that single invention allows exchanges to get rid of the order book

unisop doesn't have an order book underneath all the previous exchanges all the previous daxes like either delta or something like this that were order book based basically were deemed obsolete on this event the biggest because this this massive liquidity on union swap allow you to to swap a million dollars with the minimum slippage right now that was the biggest invention for for the d fire world for fungible tokens and the same and the same invention isn't really working for nfts and if these are singular by nature they they all are different and you need to have

an actual uh an actual separate order book for each nft out there if this is a one of one nft you can only have bids for five ten and hundred and thousand dollars for that nft and that would be all of it so we are dealing with a massive number of different order books and each each order creation or deletion would cost you gas prices and this is a challenging world so i think these are the first the first challenges that we will encounter and and i believe this uh this adds another level of fractionalization when nfc

start to live on on different layer ones and layer twos and they start moving across this this environment so the markings aren't moving for with them and the order books stay on on the exchange where they were created this all is this fractionalized world of a lot of people want to buy and sell different nfts and you kind of have to glue that this together to to capture this liquidity to to make sure that if you bought an nft you can sell it even with it it was a cheaper price but but you can do it that's that's the biggest challenge out there and so you know we mentioned uh bit you

mentioned briefly earlier about the liquidity or the yield farming that you guys did with wearable with the rarity token so maybe we can talk a little bit about that so you know what was the goal of the very token and how did you guys choose to distribute it and why did you choose it to do it that way the marketplace business is is a really fun and rewarding business because it's it kind of works as a self-perpetuating once you have clients uh they bring more clients and again as i was saying buyers go where the sellers are and sellers go where the buyers are that's one of the oldest you know business model aggregation places out there we had marketplaces

from from the ancient times and the all the marketplaces have this cold start problem when initially you have none of the buyers and none of the sellers and you need to grow the marketplace if the first buyers come they have no no no goods to buy and when the first sellers come they have no no buyers to buy their goods so this is what makes the marketplace business extremely hard and uh we experienced the same thing at terrible when we started uh the initial growth was was very was very slow we were growing we were growing several times

per month but it's still felt very slow we started in november and over the next seven months of building the marketplace in may we had this huge spike that resulted in 30 000 dollars uh worth of energy traded on the platform now we're doing a million dollar daily and and that was a huge spike in may so over the seven months we've been able to acquire only that amount of liquidity so we decided to add some gas to that market and and created this governance token that gives you rights to to control the platform and started rewarding people directly

for their activity on the marketplace so we are distributing 75 000 prairie tokens since the july 13 the day of the of the token launch every week proportionally to the volume of that buyers and sellers did so 37 and 5 000 tokens go to all the buyers who made the volume over a week and the same number go to all the sellers who made the volume over the week so basically that creates this extra level of of competition that if there is a low week with a low trading volume you you kind of want to be in that week because you would receive the higher portion of the weekly distribution

and and this been so so great this worked so great for the platform and last week we distributed 2.5 million dollar worth of rewards to all the buyers and sellers this this this what really adds some fuel to the marketplace and this is the liquidity mining program that that we're talking about i don't think any other marketplaces in depth 2.0 world ever ever done something like this how do you prevent like wash trading just to uh earn rarity tokens long story short it's hard and that's probably one of the successes of the platform so we analyze that activity inside the

team internally with a special with the special attitude we're looking at at a lot of parameters like where did your funds came from who have you interacted on the platform who have you interacted before the platform uh who are your buyers and sellers how many of them are verified all that stuff is extremely important and we have this multi-layer system when we can withhold uh some reward and then the person can claim that it was withhold wrongfully and they can give us the proof of the legitimacy that's been a complicated system that we developed over fighting this and uh so far that that works it is already i can say

it's not perfect there is some amount of people trying to to game the system but we're constantly fighting with them and to as we move towards the dow we will slowly decrease this liquidity mining volume program to towards more over fundamental stuff like fine financing development of the marketplace like uh financing the marketing activities such as ambassador program uh so right now we have this raris taking proposal being drafted that would give you rights uh to control the the dow treasury to fund some proposals that can improve the system

this this is the real proof civil resistance system of of controlling of the reward so once you have this uh dow that like you know is the very governance how do you see the relationship between the dao and the development team going forward so you know i i see right now that in the device space or there seems to be like two models that are emerging like and i call them the uni model versus the sushi model and the uni model is like this like cathedral model while sushi is like the bizarre while because like with uni it's like yes here's this like governance token but like

i mean i have no idea what uniswap v3 is and like governance holders have like no say in what unisoft v3 is basically meanwhile sushi is like you know they're hiring people through like governance they're like making protocol decisions through governance like everything is going through governance and so how where do you see like uh very token governance falling in this spectrum so i think we have this problem of gradual decentralization right now explored in the wild because a lot of projects started as a centralized companies and they have centralized leadership and the core team and and this structure is extremely efficient

if you want to have fast decisions i i can gather my team and ship a new feature is in just one day literally whereas when we're dealing with the doll and this governance proposal that that is working uh on on increasing the value inside the system it's almost like a private versus public sectors in the country where government is working sometimes slow but it's really resilient and it's really representative representative in terms of who which which votes are are counted

uh while there is a private market that is extremely efficient and fast and make decisions and they are balancing each other out so i i believe something like that would really really work in the long run uh although i i might be wrong about it and of course we'd love to build the dow that can manage all the protocol and hires and all of it just not sure that this dream is really possible to achieve out there how does this doll roll out look like and you know what are some of the things this doll is gonna be you know capable of doing the dao is only starting and and

right now we have like five proposals of improving and so far they are all about the dow structure one of the proposals a metro proposal of uh how proposals should be created there is a new proposal on the new liquidity mining program tweaks so this are the first steps in in this decentralized activity what i would really love to see is for the development and marketing groups to emerge for for some teams to perform an actual job to promote the protocol and for to make the protocol better and to be funded by the core

but the core governance team that would be rewarded as well so that's what we're building now this taking process how it would work is you need to lock your tokens for a specific period of time and and the longer you log them the more voting power you've got and since since you locked your tokens that creates a trust in the system we can trust the person that has his skin in the game we are absolutely sure that this person would do whatever they can to protect their stake basically in the system that voting power would be then used to to vote on proposals on on the under

treasury distribution to fund to fund activities that perform an actual work for the protocol by by developing it or marketing that's that's the base model for the dell for example we can find another issuance protocol that is uh thinking about connecting to wearable protocol for trading and and to be a valuable member inside the wearable protocol since they are ones who use the protocol for their own product that's the dream model for us yeah i mean so this is all super exciting and you know i mentioned earlier in the episode we were trying to do the epicenter uh nft sale

and maybe this episode was a little bit uh self-serving because i you know just wanted to learn more about variable and nfts so you know we can execute on this uh sale and so do you have any advice like you know part of it was you know i mentioned that part of it was you know we didn't like the gas costs were too high for us to mint earlier but you know that that seems like a foregone problem at this point but part of it was we also just wanted to do something interesting you know we wanted to like i don't know why i had this vision in my head like let's decentralize a podcast i don't even know what that means but i want to do it you know i had some ideas of like okay maybe so i actually built a uh integration for

a snapshot so it's in the snapshot page that like all the d5 protocols use for governance i actually built an integration for that where you can like vote based off of nft ownership rather than uh fungible token ownership what is something cool that you think we could do with like uh epicenter with these like nfts or like having you know something cool pricing model or some cool usage like based off of what you've seen so far happening i've seen several great models happening so far as you speak about tokenizing some some epicenter episodes i instantly had this thought about making making a game over it when people uh when when founders can can be

assembled and teams that can play football uh are like like so rare it does with nfts or that game can play businesses searches for versus uh i don't know if you had both of them on the on the epicenter so i think not the real advice but but the best what i can say is to be innovative in terms of the use cases uh people are are quite okay on with understanding how nfts work now and nft's possibilities are literally endless you you can you can stack them one over other as they say with disassembling nft is from from football

we have this project that's called either cards that are building this gamification framework on top of the nfts so that for example if you've collected this six nfts you would receive the seventh master nft that that represents that you you've got the collection uh or or again selling them on a bonding curve as you suggested it's another great idea to understand how how dynamic demand is and what can be different pricing i think blau did nice job launching the his audio nfts there was an auction that the the top one winner received some of the perks uh

the top one bitter received some of the perks and then the next five bidders received another set of of results and the next five bidders received something else so that concentrated people across just one sale and gave them this ability to not only win the the one auction but uh but to be a participants as well and i think like every every participant eventually got something like this gratitude nfts all that mechanics are yet to be explored and and you can come up with something really cool you can create some some regular issues of nfts some uh play with royalty streams

giving to i know founders that you tokenize there is a lot to do i think you just want to hang out in some nft communities and hear the amazing thoughts i know i enjoy this clubhouse rooms with people talking about energies daily nightly proposing some some crazy stuff to do i know it's it's been exciting space and exciting times guys my mind's been just racing all week just like oh there's always like cool ideas that you could do with nfps and so i'm really excited to like see how it evolves yeah and the same thing for me i mean thanks so much alex it's really a huge pleasure to have you on and for

me it's also been like really quite mind-blowing and awesome to like dive into nfds these last like two days so super excited to see where wearable is going and i'm sure this there's going to be many more nft episodes in the future so thanks so much for coming on thank you for inviting me it it's been a real pleasure to talk to you guys the questions are awesome cool thank you thank you for joining us on this week's episode we release new episodes every week you can find and subscribe to the show on itunes spotify youtube soundcloud or wherever you listen to podcasts and if you have a google home or alexa device

you can tell it to listen to the latest episode of the episode podcast go to epicenter.tv subscribe for a full list of places where you can watch and listen and while you're there be sure to sign up for the newsletter so you get new episodes in your inbox as they're released if you want to interact with us guests or other podcast listeners you can follow us on twitter and please leave us a review on itunes it helps people find the show and we're always happy to read them so thanks so much and we look forward to being back next week you