Building an NFT Platform on Cardano — Part I
Business Needs
NFT is a ground breaking idea. In my point of view, it’s one of the best, if not the best innovation of this decade. The use cases are endless. We’ve seen a lot of ideas put into practice already (OpenSea, Mintable, Rarible, Enjin, etc). However, most of these NFT services are built on the Ethereum blockchain platform. The high transaction fees (aka GAS fees) scare people from using it. Consider the current network traffic and Eth price, the cost of minting an NFT can be as high as >US$100 (there are other transaction fees for transferring NFT as well). For most cases, it is even higher than the price of the object itself!!!
Unless the GAS fees can be reduced drastically, I see no sense to implement NFT on the Ethereum platform. There are some L2 or side-chain solutions that may solve part of the problem. But I would treat them as partial and temporary solutions only. Ultimately, the NFT need to exist on the Ethereum mainnet and high transaction fees still apply.
Our decision is to abandon Ethereum all together and choose a blockchain platform that offers transaction fees acceptable by the general public. Based on my research, besides low transaction cost, Cardano is the best candidate in terms of decentralization, scalability and security (aka DSS trilemma of blockchain). In the following paragraphs, I will describe the features of the platform that we are going to build.
Features
Minting NFT
Creating NFT is the very first step and it should be simple enough to be understood by the non tech-savvy users. It should be a one pager that allows users to upload the photo and input the metadata of the object.
Once the form is filled, the system will generate a wallet address. It requires the user to transfer certain amount of Ada to this wallet address as minting cost. If system finds enough Ada is received, it will start the minting process. And if everything goes smooth, the minted NFT will be sent to user’s wallet. Also note that the photo will be uploaded to IPFS for decentralization. Further readings on IPFS can be found here.
From user perspective, they can view the minted NFT on cardanoscan (for metadata) as well as pool.pm (for images). Example below:
Marketplace
In this phase, due to the lack of smart contract support, we can’t do sophisticated features such as allowing users to upload their NFT for sales. Instead, we can get in touch of some artists, helping them to mint their artworks as NFT and upload them on our marketplace for sales.
The artist defines a fixed price for each piece of artwork. Once user sends enough ada to the wallet address, the system will automatically transfer the NFT to the user and at the same time mark the item as sold.
Features when Smart Contract is Ready
The system we are building now is very primitive. This is due to the lack of smart contract support for Cardano. As you can see above, the system is built on “trust” between seller and buyer. The buyer sends Ada to seller first and then seller sends back the NFT to the buyer. While this process can be automated by program/script, there is no guarantee that the seller will send out the NFT after Ada was received.
That won’t be the case when smart contract is in place. Once smart contract is deployed on the Cardano blockchain, the business logics will be executed automatically without human intervention. Besides, everybody can verify the logics of the smart contract as everything on the blockchain is transparent. All the processes can be operated in a “trust-less” way.
There are plenty of services we can think of leveraging smart contract features like auction, loyalty fee and NFT as a Service,… I will describe more about them in part II of this article. Please stay tuned.
Conclusion
We are in phase I of building our NFT platform. It’s a stage for us to lay the foundations. The real business logics will come when Cardano smart contract is ready. The good news is we don’t have to wait long. The Alonzo testnet will come in May 21 that will bring in smart contract. Our team has already joined the Plutus Pioneer Program to pick up smart contract development. If everything goes as planned, it will be available on the mainnet in Aug 21. By that time, I would expect mass adoption of NFT in different areas because of its low transaction cost.
