Ask anyone what NFT is, and they will instinctively think of digital art – CryptoPunks, Bored Apes and Ether Rocks that have sold for eye-catching amounts.
In some circles, inflexible symbols have been dismissed as a vehicle for speculation, with critics lamenting that the demand for such assets is driven by greed.
But these arguments do not give us the big picture. We’re hardly scratching the surface of what these unique symbols can accomplish – and new uses are constantly emerging.
The music industry is tentatively exploring what the NFTs have to offer. Live Nation, one of the world’s largest entertainment companies, has started offering digital versions of ticket stubs – giving fans virtual memories of the concerts they’ve attended. Other forums allow consumers to invest in new music and share in the commissions. TV shows and movies are also funded through NFTs – and despite backlash from gamers, gaming brands are also tinkering with this technology.
NFTs also have the potential to improve existing cryptocurrencies, as DeFi is one of them. What if this technology could be used to gain access to certain authorized services … and we could see popular cryptocurrencies being widely used as collateral?
While the “NFTification” of the distributed sector is seen as inevitable in some cryptocurrencies, there are some obstacles that need to be overcome. Let’s explain why.
NFTs cost a fortune
Inevitably, any discussion of what keeps NFTs from playing a larger role in the DeFi ecosystem needs to start with the cost of typing such tokens.
Even on a powerful Layer 2 network, transaction fees mean that it is often inefficient to create, distribute and trade NFT. This explains in particular why these cryptocurrencies are so outrageously priced – not to mention why new use cases for immutable symbols are only explored at glacial speeds.
As merchants wait impatiently for Ethereum’s Proof-of-Stake network to launch, this blockchain has become unmanageable for many everyday users. Although faster, cheaper and more advanced competitors have emerged in recent years, some have suffered repeated failures – which calls into question their reliability.
But what if users could be offered a completely gas-free experience while doing business? Could this be the silver ball that attracts tens or hundreds of millions of users to the space – people who would be attracted to the development that this would encourage?
Such an approach would be beneficial for NFTs and the DeFi sector, giving cryptocurrency enthusiasts the freedom to do business as they wish without having to worry about costs. But from an infrastructure point of view, there are other things that need to be taken into account.
Innovation in DeFi
Currently, high gas charges mean that business and farming are financially inefficient for smaller users – while slow-moving bridges connecting the Ethereum mainframe to Layer 2s are causing frustration. Lack of sensitivity has also been observed in the DeFi space – where users often go from platform to platform in search of the best short-term opportunities.
Of course, there is an even bigger barrier to getting people to see what decentralized protocols and automated marketers (AMMs) have to offer. Poor user experience – and more sophisticated features of centralized systems – often give investors little incentive to jump into DeFi. The downside here is that consumers end up relinquishing control of their own cryptocurrency as a result.
But it does not have to be this way – and one team says it built the first NFT-powered AMM designed “from scratch to solve a series of critical problems for DeFi.”
Pearl of the product
Ruby.Exchange is building its infrastructure on SKALE, which is described as a powerful, multi-chain solution for Ethereum. SKALE chains have zero gas costs – and boast a fast, distributed and secure bridge over the network where transports in either direction can take minutes, rather than hours or even days.
And while the value of NFTs may be uncertain, with limited means at which they can be used, Ruby offers gems – “beautiful, creative works of art that evoke fidelity by incorporating real utility as well as artistic value.” These assets play a major role within its AMM.
This exchange states that it offers a feature-rich and theatrical user experience where NFTs are printed for user profiles, as vouchers for discounts on transaction fees, and to ensure that customers can access the high-quality features they have come to expect – native maps and sophisticated analytics including their. Increased agricultural yield is another use case.
What’s more, the gamified business and farming experience delivers the inappropriate “stickiness” that DeFi protocols currently lack – rewards long-term participation and benefits all users by preventing other capital movements from affecting liquidity.
Looking ahead, new classes of NFT gems will be created – and with the establishment of Ruby’s analytics and liquidity control panel, ownership of unchangeable tokens will be key to opening up access.
NFTs and DeFi have shown so much promise in their early days, transforming the world of art and finance. Ruby.Exchange is now committed to demonstrating how powerful NFTification of distributed finance can be.
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