An adoption of Polkadot’s DPOS for a substrate based NFT APP-Chain
In the Polkadot network, Nominators stake their token to vote for validators, and when receiving block rewards, validators allocate these rewards between themselves and their nominators. During staking, nominators need to choose a node or nodes that they believe can provide the most security (function well and not be slashed) for the network, hence the consensus mechanism of Polkadot is built on the interaction and interest distribution among these different roles (includes fisherman) of the network.
From a global perspective, Polkadot DPOS is a partial (or abstract) simulation of the real world political-economic system. Think of Polkadot as a country, validators are the companies responsible for production (generating blocks) to keep the country alive, nominators are the shareholders, providing funds (staking dot) for them and collecting rewards in return (staking reward). Obviously fishermen are police, and anyone with the requisite funds could be voted as a council member in order to adjust the law (the source code of the network)
This system works well for its purpose: keep the network alive and secure. In terms of blockchain, a network is only dead when no one is willing to run a node. From this we may discover the following:
1) Being a trust machine, it is a good idea that the economic and consensus model of a blockchain network simulates real world human activities that have proven effective.
2) The fundamental goal of the economic model is to keep the network alive, as well as to stimulate its basic business.
UniArts is an application-specific parachain that focuses on NFTs and their value discovery. This goal can be broken into 3 progressive segments: 1) People create NFTs 2) People collect and exchange NFTs, and 3) People utilize the application to perform value discovery for NFTs. UniArts is dead when no one is willing to create NFTs with its services. This is different from infrastructure-level networks such as Polkadot due to its parachain nature, and detailed explanation for this should be a topic for another day.
Now we need an economy and consensus model (To be precise, the economic model is part of the consensus mechanism) that may best serve its goal. Considering what we learn from Polkadot, what do people do in the real world in creating & collecting artworks (and collections thereof)? How is the value of artwork decided?
First, artists create art, then their broker (gallery, curator) finds potential collectors by making them visible to as many people as possible (PR, marketing, exhibits), finally business agents gather as many potential collectors as possible to perform an auction, where the price of the works is decided. Curators benefit from artwork sold.
For UniArts, “artists” are those who mint NFTs with the metadata they created; “curators” are the nodes bound to the NFTs, which may be “voted” on by nominating the node. to be voted on, as validators to receive the block rewards. They need to choose quality artworks to show in order to be chosen as vaildator. Curators may either persuade artists to bond NFTs with their nodes (list artworks in the gallery), or purchase their NFTs, much the same way brokers do in the real world. Though the majority of their profit is generated through artwork sales, curators in the real world also benefit from larger audience traffic and attention to their artworks, which at least increases the possibility of artworks being sold at a higher price. Last but not least, nominators both generate traffic and favour the artwork directly by staking
UniArts simulates the real world relationship between artist, curator (broker) and collector, as well as the fan not yet capable of purchasing the art, and quantifies their favour as a significant weight for NFT value discovery
There are 2 reasons for it:
1) NFTs are crypto-native, the value for early cryptos forms bottom-up little by little, and a fair assessment of value through the staked position for an NFT is also acceptably a bottom-up approach.
2) NFTs are content managed by smart contracts. For any content publisher, monetization is the process of converting into revenue, the traffic generated by its content. Under the UniArts architecture, the value of any particular piece of content is its traffic, proportional to the total traffic on the system.
Before we go deeper into the economic model, we need to understand UART, the native token for the UniArts Network. Its very nature is an abstractive unit of human favour for artwork NFTs in the network. (Just recall when an app or a song asks you to rate it between 1 to 5 stars, that 1 star is an abstractive unit of your favour in that system) Its value, however, is different for every single person.
The process of voting by staking UART for a particular NFT for a particular NFT generates not only gallery traffic for that NFT, but also asset transfer from the UART owner’s wallet to the staking pool. Since the costs of UARTs are none-zero, and the process of staking/voting is recorded in the blockchain and trustless, referring to reason 2 from above, UniArts recognizes the proven traffic-add value for the NFT vote. With the repeat of the staking-and-vote process from different people, the value of voted NFTs increases. UniArts’ consensus mint part of block reward UARTs into the NFTs to indicate such value increase.
Academically assume this is a world where:
1) All NFTs created need to be voted upon before they may be sold or auctioned;
2) Everyone in the world uses UART to vote for NFTs;
Then after each voting round, the amount of UART minted into the NFT is a precise and objective indicator of the degree of preference of that world to the NFT. However this is not the fair value of that NFT. Fair value is the price agreed upon between a buyer and a seller, yet much of that value may be entirely subjective, owing to the arbitrary personal preferences of the buyer. What UniArts can do is provide potential investors with a powerful metric, indicating community interest in a particular work, that can lead to greater appetite, to greater certainty about the underlying value. With the continued operation of UniArts, more NFTs will be sold this way, and their deal price will be recorded in blockchain network, and with enough data, UniArts may offer a correlation coefficient between the amount of UARTs minted and deal price.
With this design, in the UniArts main net:
- Nominators stake their tokens to vote for the NFTs bonded with validator candidates;
- These votes are counted and decide which candidate nodes can become validators;
- Once selected, validators are able to receive block rewards, and 25% of which will be minted into NFTs bonded with validators;
- Validators are able to decide the allocation of remaining 75% between them and nominators who vote for the NFTs;
In order to launch the network appropriately, UniArts needs to:
- Find enough curators who either have good connections with artists or collected some quality NFTs themselves, at the same time they also need to understand how to run a node or at least run it via third-party services;
- Have a community that understands how the system works, and is willing to purchase UART in order to vote;
- Launch a testnet, not only to test the technical aspects of the solution, but also the feasibility of the economic model and community mindset
However, at the current stage, the UniArts team does not have the sufficient resources to do so, hence:
- We have launched our mainnet without the designed feature, only as a basic substrate based blockchain network with EVM support.
- Launched a NFT gallery on an established network and using smart contracts to simulate the operation of one validator to achieve the designed feature and economy model.
The NFT gallery is named “The Impossible Art Formula”, and is operated by the UniArts team. As a start, we use smart contracts to act as the first and only curator (validator) in the UniArts’ system. Since the gallery is deployed on Polygon, we don’t need to worry about the consensus, the UART staking reward is allocated by contracts with a staking-and-vote process performed by UART holders, who act as nominators here.
The economic model start as follow:
Total supply: 100 M
Team: 20M, unlock 3 years later
Early Investors & IDO: 26M, up to 5 quarterly vesting since TGE
Total Mining (staking reward) supply: 54M
Daily mining supply: 5714.28~28571.42 (Min weekly supply 40K, Max weekly supply 200K)
The actual mining supply is calculated as follows:
Mining supply = Max supply * Inflation adjustment ratio
Table of inflation adjustment ratio:
Initial vote target line is 1,000,000 and can be adjusted for every vote round which lasts for 2 weeks. Hence:
1) Number of weeks: the number of weeks the mining may last with given 54M total supply
2) Annual inflation is calculated with 26M UARTs as circulation base
The operation of the gallery needs to follow the rules of the economic model, and the gallery (validator node) may decide how to allocate the staking reward between itself and nominators who vote for the NFTs, hence we designed the following voting rules:
- UART & wETH holders can stake their token to vote for the NFTs that they think are most in-demand to earn UART reward.
- There are 6 NFTs candidates for each voting round, the period of which lasts 14 days.
- All NFTs will be transferred to an auction round after the voting round finishes, and the period of auction around is 5 days
- According to the number of votes obtained by each NFT, UART rewards will be cast into NFTs, which can be retrieved by the owner.
- Vote for NFT won’t cost any token, the voted token can be retrieved at UTC 00:00 the next day.
- Vote reward will be distributed at UTC 00:00 everyday during the voting period.
- Auction reward will be distributed after the auction round. The higher the deal price, the more benefit will be available for the voters of the NFT.
- If NOT retrieved, the voted token will be counted as another vote for the same NFT.
- 1 wETH vote = 100 UART vote
- Both vote rewards and auction rewards are bonded at first, you need to unbond your UARTs in order to withdraw them into your wallet. Bonded UARTs can be used to vote for NFTs to earn more reward. Unbonding UARTs can NOT be used to vote.
- Unbonding UARTs takes 60 days to complete, and releases 1/60 of the total amount each day during the process.
In this case, the gallery that acts as a validator takes 0% of staking reward, yet decides to relate staking rewards with NFT sales, offering a greater reward for those who voted for the most in-demand NFTs. Therefore, the mining supply will be allocated into 3 parts:
Vote reward: 25% of actual total daily mining supply, the reward for voting for NFTs with UARTs; each vote receives the same amount of reward everyday.
Minted into NFT: 25% of the total daily mining supply. For each NFT, the minted amount is calculated with:
Auction reward pool: 50% of actual total daily mining supply. Auction rewards will be allocated to the voters from the reward pool with the actual auction deal price of NFTs after the voting round.
In the near future, UniArts plan to expand the function of the gallery to support other 3rd parties (NFT creators/collectors and projects) to act as curators and exhibit their NFTs in the gallery to be voted on. These third parties can be:
- Artists that have NFTs;
- - Famous NFT collectors;
- - Other NFT projects or projects with NFTs
The 3rd parties will benefit from being curators because UARTs will be minted into exhibited NFTs and make these NFTs more valuable, and the voting process is a good PR and exposure. They can still sell their NFT with Opensea, but it is good to be exhibited and voted with UniArts first.
Under the such condition, UniArts plan to launch DAO NFT exhibition, that allow any 3rd party to stake UARTs and apply for a Curator position who can exhibit NFTs to be voted. Curators may decide which token to be minted into the NFTs during their exhibition (vote round).
With all these steps, UniArts can start the curator node plan for its main net. All 3rd parties are welcomed to run nodes for UniArts main net. And they can create NFTs on the network, exhibit them to be voted and sold for better prices, or simply for marketing and PR. They can still mint NFTs on Ethereum or other networks ( eg: 10 NFT in a set, 2 on UniArts, rest on other networks), and can still sell their NFTs with market place like Opensea, Superrare …etc. but it is good to be exhibited and voted with uniarts first.
UniArts’ long term vision is to make its network to become maybe the most important NFT network for exhibition and price discovery. This will also set a very high barrier for other projects or marketplaces that trying to surpass.