[Grant Proposal] Crowd-investing protocol (Crowd protocol)

TLDR
We propose to fund the development of the NFT Crowd-Investing protocol (Crowd), which includes internal DEX for NFT fractions trading and its integration with apps built on the Rarible Protocol.

Crowd protocol allows:

  1. to divide an NFT into pieces (ERC-20 tokens) representing ownership;
  2. to trade these pieces (ERC-20 tokens);
  3. to earn trading fees (commission);
  4. to split fees between Rarible and the Crowd protocol (in order to receive fee income Rarible will get 5% of tokens of Crowd protocol’s initial token offering);
  5. to make a decision regarding NFT buyout.

The Protocol aims to earn trading fees for Crowd token holders (including Rarible) and, therefore, add value to the RARI token and the Rarible DAO.

We have already developed a working prototype during June Definition Hackathon and took a prize in the Rarible track.

The Idea
The protocol allows investors to crowd-invest an NFT by purchasing a part of it. When the funds are collected, new special ERC-20 tokens are emitted and distributed between the investors proportionally to their investments in the NFT. These tokens may be traded in a protocols’ internal DEX, and commissions from these trades are distributed between Crowd DAO (including Rarible). After a certain predetermined period or by emission holders proposal voting, the NFT is returned to the marketplace with the price equals ERC-20 emission market cap + N%, where N might be set by token holders as well. While the NFT is on sale, ERC-20 tokens trading does not stop, and the live market cap of emission continues to affect the price of the NFT in the marketplace (once a week / several days). If the NFT sells, the profit from the deal is distributed pro-rata between all the emission tokens holders.

The Implementation

  1. Investors lock their funds in the Crowd on-chain investment pools.
  2. Crowd protocol buys an NFT on Rarible.
  3. Crowd smart-contract locks the NFT in a vault.
  4. Crowd smart-contract issues ERC-20 tokens that represent the ownership of the underlying NFT and distributes the tokens to investors proportionally to their investments in the pool.
  5. Investors trade their fractions (ERC-20 tokens) on Crowd protocol’s internal DEX with commission distributed between Crowd token holders (including Rarible).
  6. With the decision of fractions’ holders or some other predetermined conditions, Crowd protocol puts the NFT for sale on Rarible at the price of its Market Capitalization.

Vision
We believe that the Crowd protocol will become a solution for anyone interested in investing in Mythical NFTs. The solution will suit everyone: minor investors with small budgets, huge investors who would like to diversify, and traders searching for new markets for trading.
Also, the protocol will be deeply integrated into the Rarible ecosystem, which will add new functions and capabilities to a large number of Rarible protocol users. It will be a “win-win” solution for every involved actor.

Competitive Analysis
For the time being, there is only one working protocol, which implements this idea: https://fractional.art. However, it does not have an ERC-20 DEX under the hood. Thus, it is not able to generate trading commissions. Moreover, the protocol does not have integrations with marketplaces, and thus, cannot be profitable for Rarible DAO.

Detailed Roadmap
Link: https://obsidian-tapir-baa.notion.site/178428c180de4aaa96d84573f6fe441f?v=10b5bb7fe7a940b797d702503e64d0c0

Funding Milestones and Payments

  1. Milestone 1 (Sep 13, 2021 → Oct 10, 2021):
    Crowd protocol V1 (fractionalization and crowd-investing), the start of integration
    We already have a working prototype of Crowd protocol V1 developed during the summer Definition hackathon.
    Contracts: GitHub - FarFlare/satellites: Prize-winner of Definition summer hackathon 2021. Onchain solution for NFT croudinvesting. Coded by @k0rean-rand0m.
    Frontend (Rinkeby): React App
  2. Milestone 2 (Oct 11, 2021 → Nov 7, 2021):
    Landing page with description, whitepaper, and first integration
  3. Milestone 3 (Nov 8, 2021 → Dec 26, 2021):
    Crowd protocol V2 (internal DEX for NFTs’ fractions trading)

We consider ourselves independent contractors of the Rarible DAO and will report taxes accordingly. Forms W8-BEN and W9 will be filled out accordingly before funds get distributed to our team.

Dates may be subject to change, but the team will do its utmost to meet the deadlines.

Total Payments
The total amount that would be needed for the implementation of the proposed idea equals $50,000. This amount will be divided between the milestones as follows:

  1. Milestone 1: $8,000 upfront to pay for hiring, $2,000 upon completion of the Milestone 1;
  2. Milestone 2: $10,000 upfront, $10,000 upon completion of the Milestone 2;
  3. Milestone 3: $10,000 upfront, $10,000 upon completion of the Milestone 3.

Payments will be made to the following Ethereum address:
0x52B23D26058c166b363aa96B1C3C7FC4DCD7AaF0

Use of Funds
The funds will be used to cover the payments to the team members and the expenses for tools and services that the team would need during the implementation. We will provide a detailed report on the use of funds upon request.

Business Model
Crowd protocol will earn commission income on NFTs’ fractions (ERC-20) trading. The income will be distributed to Crowd protocol token holders (including Rarible). The protocol will be free to integrate and use, so Rarible DAO and its ecosystem will earn extra profit from it.

Team Members
We have built a team that worked on Crowd protocol during the Definition Hackathon in Rarible track and keep working on the:

Telegram: vosdux
Discord: vosdux#4833
GitHub: vosdux (Artem) · GitHub

In addition to the presented members, we are also planning on hiring a designer and another back-end developer for some parts of work.

Accountability

Why should Rarible DAO fund this?
Using the Crowd protocol will allow:

  1. to solve all the problems listed above;
  2. to increase Rarible audience among investors and artists;
  3. to earn profit for Rarible DAO;
  4. to increase the value of the RARI token.
2 Likes

Hey, it’s me, Ian from the core dev team. Feel free to ask any questions about the protocol, and see you at the Rarible DAO weekly meeting this Thursday!

1 Like

This is a great idea! I support it and will vote FOR it once it is up for voting!

1 Like

Thanks a lot for your feedback)
It’s really nice to hear it!

Looks great! Crowd investing is becoming very popular!

1 Like

Thank you)

Yeah, that’s true that NFT crowd investing is becoming popular.

So, we will have to compete with other crowd investing protocols. But as we see it, we have two strong competitive advantages:

  1. Internal DEX under the hood. It will allow investors easily resell their fractions and will allow Crowd token holders (including Rarible) to earn trading fees.

  2. Our focus on Crowd protocol integrations. It will allow us and others to implement a huge number of crowd investing use cases and attract more users.

1 Like