ShardingDAO is a NFT fragmentation solution that splits NFT and unlocks liquidity based on the AMM mechanism trading platform.
Written by: Dongchang
If 2020 is the “first year of DeFi”, then 2021 is the well-deserved “first year of NFT”. According to data from Coingecko, the total market value of NFT broke through $30 billion on April 16, setting a record high.
NFT, that is, non-homogeneous token, is essentially a digital token with a unique and unique identity, which is non-interchangeable and indivisible, but it is precisely because of this “special” attribute that it also gives the market a further step. Development has brought some limitations. Due to indivisibility, NFT will be affected in trading and liquidity to a certain extent. This may be one of the reasons why we see that NFT can only be applied to low-frequency and high-value trading scenarios such as art collections.
On April 23, according to Coingecko data, the 24-hour trading volume of the NFT market was US$4,592,146,914, while the 24-hour trading volume of the entire cryptocurrency market was US$341,017,001,809, which means that NFT liquidity only accounts for 1.3% of the entire cryptocurrency market. For investors, a direct problem caused by liquidity is that it is difficult to capture value-and this is precisely the pain point of the industry that ShardingDAO hopes to solve.
The ShardingDAO “fragmentation” solution is definitely a major innovation in the NFT field. After the NFT is fragmented, the collection threshold of digital collections will be greatly reduced. NFTs that can only be owned by one person can be jointly owned by multiple small collectors. At the same time, ordinary users can also obtain the ownership of digital collections. Combined with AMM + Yield Farming, the public will be more willing to provide liquidity and further solve the problem of insufficient liquidity on the existing platform.
Good solutions will always be supported by the encryption community, and data will not lie——
- On March 23, less than 24 hours after ShardingDAO started the first-stage mining activity, it obtained more than 200 million U.S. dollars of lock-up;
- On March 25, ShardingDAO’s first NFT work “The Birth of NFT Democracy” (The Birth of NFT Democracy) was uploaded after all the fragmentation features of ShardingDAO went live, attracting more than 80 users to snap up NFT fragments. In the end, the number of NFT fragments exceeded 12 days later. The price of ten thousand U.S. dollars was subscribed, which exceeded the minimum subscription amount by 22 times. On April 1, the transaction price of the NFT fragmentation token in the secondary market rose to 34.1 US dollars, which was a nearly 170% increase from the issue price.
- On April 22, the anonymous encrypted art collector NFTCCaesar made a high-profile appearance and announced that it will fragment the NFT of Uehara Ayi Photo on ShardingDAO on April 25, and said that if the subscription is successful, he will distribute 1/5 of the fragments. To Twitter fans. Uehara Yai released the “Ai HODL Bitcoin” series of NFT works on the Rarible platform on March 22, including three pieces. NFTCaesar took two of them. Among them, “Ai HODL Bitcoin-Splash” was sold for 9 ETH. , “Ai HODL Bitcoin-Love” was sold at a price of 20 ETH. This time, NFTCaesar will upload “Splash” to the ShardingDAO platform for fragmentation, and users can subscribe to obtain fragments of Uehara Ayi’s portrait.
What is ShardingDAO
ShardingDAO is an NFT splitting solution. Users can fragment NFT so that the public can jointly own NFT assets. Each NFT shard (Shard) represents a part of the ownership of NFT assets, which can be circulated in the market and mined, so that more holders can enjoy the value appreciation brought by NFT. On the ShardingDAO platform, anyone can purchase NFT fragments, and the AMM mechanism-based trading platform unlocks the liquidity of the NFT, which means that the value discovery, development direction and benefit distribution of the NFT are all determined by the public.
Not only that, ShardingDAO is also an open ecosystem that supports the combination with other DeFi protocols and forms a benign interaction with DeFi Lego.
The ShardingDAO project has passed the Knownsec audit.
ShardingDAO operating mechanism
ShardingDAO’s NFT splitting solution allows users to package and decompose any NFT assets in the ERC721/ERC1155 format into ERC20 Tokens. These Tokens can be traded and exchanged in DEX or CEX like homogenized tokens, thereby unlocking the open market. Release the liquidity of the secondary market. This also means that anyone can subscribe for any number of shards with any ERC20 token on the platform to help establish the overall valuation of a certain NFT while reducing the cost of individual users. In other words, ordinary users can own part of the rare collections with a small amount of money.
In order to maximize the composability of the sharding protocol, ShardingDAO also cooperates with multiple DEXs to provide more liquidity for NFT transactions, allowing the split shard tokens to be mined for liquidity on the platform to earn platform tokens. Give users more motivation to provide liquidity. In addition, users who hold the same NFT shards can spontaneously form a DAO community. ShardingDAO will also help users build a DAO community of a single NFT shard, providing users with an environment for discovering and developing the future value of NFTs, and allowing shard holders to participate in the governance of NFTs. .
Any NFT owner can submit the NFT to the ShardingDAO protocol, which divides the NFT into fragments. After the NFT is split, the original NFT owner can set the following fragmentation transaction elements:
- Fragment name (Name) and symbol (Symbol): follow the ERC20 standard, the length does not exceed 30 characters, only uppercase and lowercase letters, numbers and symbols are supported;
- Subscribe to tokens, such as: WBTC, ETH/WETH, USDT, USDC, BTCB, ETH, BNB/WBNB, BUSD-T, BUSD;
- Set the minimum subscription amount: the minimum subscription amount is measured by the selected subscription token;
- Other fragment related information: The total supply of fragments, distribution methods, listing rules and estimated time to market are displayed by default.
During the agreed subscription period, users can use stablecoins (such as USDT) or other cryptocurrencies (such as ETH, DOT) to subscribe for shards on ShardingDAO. At the end of the subscription period, if the final subscription amount exceeds the minimum subscription amount, the NFT will be “divided” into fragments. ShardingDAO will distribute 90% of the fragments to subscribers, the original NFT owner retains 5%, and the ShardingDAO agreement retains the rest Of 5%. Next, these shards can be listed for trading, and users can price the shards during the transaction (for example, set the price of a certain NFT shard to 0.01 ETH). Once the pricing is completed, the status of the shards will become “Listed” , Which means that these fragments can be traded in the secondary market.
If the final subscription amount does not exceed the minimum subscription amount, or two days after the 7-day subscription period, the subscriber can redeem the fragments (Redeem).
Native token SHD
As the native governance ecological token of ShardingDAO, SHD holders have the right to govern the community. The expansion and growth of ShardingDAO’s huge system will be decided by SHD holders, such as voting to determine contract parameters, product iterations, behavioral incentive parameters, etc. SHD has issued a total of 30 million pieces, and the specific distribution plan is as follows:
- Liquidity mining (56%): 16,800,000 pieces are distributed to the public through liquidity mining.
- Marketing and airdrop (13.33%): reserved for marketing and airdrop to motivate users, 4,000,000 pieces.
- Investors (13.33%): Only for future investors, 4,000,000 pieces.
- Developer DAO (17.34%): reserved for developers, released together with protocol liquidity mining, 5,200,000 pieces.
What can be done with ShardingDAO “shards”?
Shard owners can trade shards directly in the ShardingDAO market, or they can hold them for dividends and price appreciation (if applicable). In addition, shard owners can also choose to add liquidity to any AMM-enabled DEX to obtain LP tokens, and then mortgage these LP tokens in ShardingDAO Farms to obtain SHD liquidity mining rewards.
to sum up
There is no doubt that ShardingDAO has attracted the attention of NFT and the broader encryption community in the short term. We know that the so-called “things gather people to divide into groups”-art NFT (such as the NFT digital work “Every Day: First 5000 Days” sold by Beeple for nearly 70 million US dollars), sports NFT (such as NBA Top Shot), games NFTs (such as crypto cats) are easy to attract a group of like-minded people. When people find that all these NFTs can be fragmented and get more common benefits from them, the size of the community will naturally expand and buyers will also be encouraged to sell for NFTs. Making more contributions (such as promoting secondary market transactions and mining activities) will ultimately promote the further optimization of NFT trading flexibility and liquidity.
For now, NFT fragmentation is still in the early stage of development, and there is not much competition in this vertical field. From this perspective, ShardingDAO has grasped the first-mover advantage.
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