Non-Fungible Contract is the latest expansion of Dego.finance to its NFT Protocol and infrastructure.
A Non-Fungible Contract is a Decentralised Contract Issuance Protocol that executes a complex structure of spot and future investment contracts.
Through the issuance and offering of Non-Fungible Contracts, blockchain entrepreneurs will have flexible access to funding while investors and all stakeholders enjoy better liquidity in an optimized mezzanine market for Blockchain. Every participant’s rights and interests are guaranteed, protected and governed by the Law of Codes.
Since 2020, a black swan event in the global economy has become less of an anomaly. While the venture capital space stands a viable pool to digest oversupplied sovereign money, the liquidity drought remains rather hazardous for IPO or strategic acquisition exit routes for venture capitalists. This risk of liquidity shortage is likely to disrupt the venture capital space and hinder fundraising for start-ups.
The middle market bridging between the primary market and the secondary market for private equity is referred to as the mezzanine market. Just like equity space, the blockchain capital market constitutes a similar infrastructure. One wonders about the current state of such a mezzanine market for Blockchain.
For example, Coinlist is a regulated fundraising platform where investors snap up allocations for investing in blockchain projects. These allocations come in various sizes and maturity periods, like buying spots or futures with physical delivery (of a token). If an investor purchased futures of a certain token, and he or she resells these futures before maturity, it could cause loss when the ownership of a Coinlist account is transferred from the previous owner to a new one; r the KYC information provided is from a third-party and the third party would attempt to retrieve the account. A typical KYC information provided by a third party originates from regions like Southeast Asia, Africa and etc. In some cases, the investor experienced a loss of tens of millions in dollars. Investors’ rights and interests cannot be assured in these circumstances.
Established financial markets are regulated hence relatively sound. A mezzanine market for Blockchain is problematic since the purchaser is buying the actual tokens, but futures delivers the tokens after the lockup period, where three core issues arise.
When investing in the primary market, a large number of tokens in the hands of investors are locked up. Faced with the rapidly changing climate, they cannot respond in time, and it is easy to miss a trading signal since investors cannot transfer and circulate their stakes. When they finally receive these tokens, they often rush to dump and break the market liquidity, causing No-win situation for every stakeholder.
In 2017 and 2018, we witnessed numerous cases of agent deception, where an agent who claims to have an allocation of a certain token and collect the investment from investors, then do a runner and keeps the raise for himself. When an investor tries to transfer locked-up stakes, it is generally hard to find a credible counterparty. Even if a counterparty is found, the transfer process is also full of surprises. These complicated procedures make it difficult for a mezzanine market to develop.
Investors and projects both suffer high frictional costs facing doggy middlemen. For investors, many project manages lockup stake is in a centralized way, even manually, which causes a delay in token release, also trust issue between investors and the project.
In best attempts to solve the problems above, our thesis is to establish a mezzanine market with liquidity and trust built-in, harnessing the contractual utility of NFT.
In the past, the price of an NFT is often determined by the individual perception of beauty or value. Beeple’s masterpiece, auctioned for $60 million, “EVERYDAYS: The First 5000 Days” was well-recognized by a close circle of NFT connoisseurs, in a lack of consensus among the mass(crypto fundamentalists or in the established art space). These NFTs mostly fall in the category of Collectibles and Arts.
Dego pioneered the concept of “Synthetic NFT asset”, which merged Fungible Tokens into Non-Fungible Tokens, stacking more attributes on the underlying value of digital ownership, such as “grade”, “mining power” and etc. Pick NFTs and Drill NFTs that Dego team and community created for NFT Mining serve as perfect examples here.
Hence, Dego created a new type of NFT asset, “Non-Fungible Contract”, which upholds not only the Proof of Assets but also the Proof of Rights.
Dego team has been focusing on exploring the combination of NFT + DeFi, so that NFT could unleash more possibilities. We believe that the financial and practical nature of NFT will be the future of blockchain. The shaping of Non-Fungible Contracts is another vital step we have taken. At present, almost everyone’s mind is imprisoned by “Intellectual Property” and “Arts”, which we fully respect, but we beg to differ with more innovation in the infrastructure and protocol layer.
An NFT should not only represent a scarce item, but rather a “complex structure of value”.
The future of NFT is getting rather crowded and exciting. In reality, transactions of Alternative Assets like properties carry more value exchanged than standard assets like stocks. We recognize the beauty of sprouting new things, but we also expect something sexier to happen, and if no one else is creating such beauty, then we’re willing to start the work first. We hope that the thesis of Non-Fungible Contracts will refresh people’s minds and make them rethink on NFT’s utility.
The very first use case of Non-Fungible Contracts will be applied in the Initial Offering Treasureland.market’s native token TRSR(Treasure), which we anticipate to be an adventurous yet successful social experiment.