Non-fungible tokens (NFTs) became popular during the previous bull market when people were (and are still) throwing large sums of money at images representing monkeys, rocks and [insert anything you can think of]. This makes one wonder if this is the peak of what NFTs have to offer. We are here to tell you that this is just the tip of the iceberg. It is nice to see how this allowed many artists to get recognition for their work, but we believe that NFTs are going to change a lot more things in the near future.
Today, to show the world the real potential of NFTs, we are launching a new Scrypto competition where we ask you to come up with a Scrypto package that uses NFTs in an original way.
In previous challenges, we saw many of the submissions have already been using NFTs as a utility to their blueprint example. We saw NFTs being used to represent users, loans, contracts, and more. We’d like you to think from first principles: What are NFTs? And build something that evolves the way we’ve used and thought about NFTs. Just like previous competitions, there are prizes to be won and a lot of knowledge to be gained! Keep reading to learn more about that.
For the sixth edition of the Scrypto competitions, you will have until November 23rd to come up with a Scrypto package which utilizes non-fungible tokens to solve problems of everyday life. As always, you can decide to work on this competition by yourself or team up with others.
What is an NFT really?
Has this situation happened to you before? You tell someone about that new cool NFT you just bought and they ask you what an NFT is and you are like “uhhhhh... it’s an image… but it’s decentralized… and I can prove to you that I own it” and they are like “Can’t I just save the image and use it as my profile picture?”.
At its root, non-fungible tokens have nothing to do with images and art. NFTs are simply tokens that can be uniquely identified (with an ID) and cannot be divided into smaller parts. When you want to transfer an NFT, you have to send it whole, you cannot split it. People can also attach metadata to individual non-fungible tokens which is what made art a very good use case for NFTs.
To give you an example, let’s say I am launching a new NFT collection to give to the participants of the Scrypto competitions. I would ask the Radix network to initialize a new resource for me with certain authorization rules, so that only I can mint more of them. When a competition ends, for each participant, I would mint a new token of that particular resource address and attach individual metadata containing, for example, the github username of the participant, the link to the GitHub pull request, the name of the competition, which place they achieved, and potentially a link to an image hosted on some decentralized file hosting service. Notice that this last part is not necessary. Having an image representing the NFT is just a nice way to visualize the NFT (rather than simply looking at the on-chain metadata).
The RDX Works team loves art, but for this competition, we want to see you build something that uses NFTs for something else! Let’s look at some examples of other use cases.
Examples of NFT uses (beyond art)
We encourage you to come up with novel ideas for using NFTs but just in case you need some inspiration here are some ideas:
On-chain identity: Because NFTs may contain associated metadata and you can show ownership of them, they can be very powerful for managing on-chain identity and authentication. Using NFTs as a way to authenticate the users of your dApp is something that we highly recommend. We even wrote a whole page on that and the usage of “badges” here. For example, in the last competition (that was around building DAOs), almost every participant used this pattern to authenticate the users of their platform. Some even defined the NFT resource as non-withdrawable so that members weren’t able to sell or transfer their identity. These tokens are also known as soulbounds. Another example of on-chain identity is an off-chain KYC service that could distribute soulbound NFTs to their verified users, so that they can be identified on-chain.
Ticketing system: Non-fungible tokens are also perfect for representing any kind of ticket. If you are hosting an event, you could decide to use NFTs to represent the tickets. It makes the distribution so much easier and will make you look as if you are coming from the future. In the case of event tickets, the NFT metadata could contain information about the event like your assigned seat and the time at which it starts and ends.
Let’s say you are working in another kind of business. You are managing a bus or train system. You could also serve the tickets as NFTs. When entering the bus, customers would simply scan a QR code to create a transaction showing that they own a bus ticket and the system would burn it or mark it as used.
Tracking manufacturing processes and verifying authenticity of products: You can represent real-life items with on-chain NFTs. This allows you, and your customers, to track the item at every step of the manufacturing process in a more efficient and transparent way. This also helps the customers verify the authenticity of the products they are buying.
Real estate: We are already seeing this happening in the metaverse, where people are able to buy a parcel of land, represented as an NFT. This NFT proves that they own a specific parcel of land and thus acts as a key to allow them to manage it. The same thing could happen in real-world real estate. Imagine owning an NFT to prove the ownership of your property or land. You think this won’t happen for a long time? Someone actually bought the first blockchain-backed apartment back in 2017. Using NFTs for real estate would simplify and reduce the costs of the exchange process.
Protecting patents: Data stored on a decentralized ledger is immutable. This makes it a very powerful tool for contracts and official documents because once a tokenized version of it is pushed on the ledger, it will always be there. That’s why patents go well with decentralized ledger technologies. For example, you could have an NFT that stores a hash of an off-chain contract or patent. This way you could prove that you were the first to have a particular idea. Having a tokenized version of a contract on-ledger also makes it a breeze to get documents signed by third-parties. It is important to note that you would not want to host the whole document on the ledger as it would be too expensive and unnecessary.
Academic records: This can be considered a subcategory of on-chain identity. You can use NFTs to store student’s data and academic records. You could, for example, use the NFT’s metadata to store the courses the student took and their grades. You could also store the schools they attended and theirteachers. You could even go a step further and give teachers their own identity NFTs.
Gaming industry: NFTs can be very useful for the gaming industry. In-game items can be represented as non-fungible tokens that you actually own in your in-game web3 wallet. This allows the game to have a natural item marketplace making use of the ledger itself. Imagine how much easier it would be to spend $780k on CS:GO item skins if those items were actual NFTs and a decentralized exchange was available for players to trade. Also, since the complete history of the NFT is stored on the ledger, some items could have more notoriety depending on if a popular player owned it in the past.
Great DeFi Dapps unleashing NFTs
Mattereum is a project focused on bringing real world assets on-chain by connecting them to NFTs. The connection between the real world asset and the NFT is backed by Mattereum Asset Passport (MAP). MAP is an integrated structure composed of software and legal elements that evolve over time as the underlying physical asset changes hands. This integrated structure bundles together the legal and smart contracts which define, store, and execute various claims, certificates of authenticity, dispute resolution agreements, insurance frameworks and other processes around the object.
Centrifuge bridges assets like invoices, real estate, and royalties on-chain. Centrifuge has a network of products and services that allows real-world assets (represented by NFTs) to be brought on-chain and used as collateral to unlock liquidity.
We also recommend having a listen to the DeFi Download episode with Metaversal: Metaversal - NFTs are much cooler than you think.
From the community
As we mentioned earlier, we’ve already seen great uses of NFTs in previous Scrypto Challenge submissions. See how these projects implement NFTs on Scrypto and take inspiration as to how you can further push the boundaries of what NFTs can be.
The Align DAO submission by Peter Kim won first place from the previous Scrypto DAO Challenge. This submission shows a great use of soulbound NFT to represent DAO members where, once registered, can begin submitting three different kinds of proposals and receive dividend reward if it’s accepted. DAO members can earn voting power through "commitment" history on the DAO by accumulating dividend reward into current commitment account for more voting power.
DemiFi is a first place submission in the Scrypto Lending Challenge by Scryptonight. It is a microfinance lending service that utilizes NFTs to authenticate users. It allows users to obtain NFTs to identify themselves and attract other users to endorse them using their own NFTs. This provides a tool that users of this system can employ to gauge how trustworthy someone else is.
For the monetary prizes, we are going to split $15 000 worth of XRD between the three best submissions. First place will receive $8500 XRD, second gets $4500 XRD and third place collects $2000 XRD. All participants will also receive a one-of-a-kind non fungible token representing their participation in this competition (sent to your wallet after Babylon) and we will randomly select 30 participants to receive Radix-themed t-shirts.
The Judging Criteria
When the challenge is closed for submissions, the RDX Works Scrypto team will review the submissions and decide on the three winners based on these criteria:
- Quality and asset-orientedness of your code. Refer to our design patterns page.
- Breadth of functionality.
- Creativity of the concept.
- Quality of the documentation and comments in the code for others who wish to use the blueprint.
How to participate
To participate in this Scrypto competition, please do the following:
- Install the Scrypto toolchain and make sure you are on version 0.6 with “scrypto --version”.
- Fork the challenges repository.
- Clone the forked repository on your local environment.
- Start a new scrypto project with the command “scrypto new-package [name]” inside the “6-nfts-for-financial-applications” directory.
- Before the deadline on November 23rd, 2022 at 11:45 pm UTC, commit and push your project folder and create a pull request here.
- Come say “Hi!” in the #scrypto channel of our Discord server. The community will give you a warm welcome and help you with whatever questions you might have.
Here are some resources to get you started with your submission:
- Get started with Scrypto by reading the documentation.
- More information about what NFTs are here.
- We suggest reading this blog post by CoinDesk and this one from Binance for more NFT use cases.
- You could look at Scrypto code examples. Especially those from the submissions of the other challenges we did.
- As always, the Radix Discord and developer Telegram are the best places to ask your questions.
Details of the Challenge
- Your entry must be built with Scrypto v0.6 or later.
- You can submit multiple entries but only one will be considered for the prizes.
- The competition starts on October 25th, 2022 at 9:00 am UTC. All entries must be submitted no later than November 23rd, 2022 at 11:45 pm UTC. The winners will be announced by December 1st, 2022.
- $15,000 value of XRD will be shared between 3 winners. 1st gets $8,500 XRD. 2nd $4,500 XRD and the 3rd $2,000 XRD. The value of XRD will be based on the spot price when we send the tokens.
- Decisions on the winners are at the sole discretion of the RDX Works team and the decisions are final.
- We will keep track of the prize NFTs and their owners internally until after Babylon release when they will be minted and sent to Radix addresses provided by each participant.
All entries are subject to the Radix competition terms and conditions. Winners will be required to disclose their name, DOB, and country of residence to receive any XRD prizes.