Building Tradeable, Interoperable Non-Fungible Tokens (NFTs) on Ethereum – Devin Finzer

welcome welcome all right is Alex coming all right I'll kick things off how's everyone doing have a good eat Denver hello so my name is Devon Finn sir I am one of the founders of open sea so I wanted to ask a few quick questions to kind of get a read on what people already know about NF T's who here owns an NF T okay so majority of people who here has built has deployed an NF t contract okay good number of people okay awesome so this talk will hopefully be just kind of hopefully be interesting well I'll talk about kind of what has happened in that ft space over the last couple years since crypto Kitty's launched so kind of a little bit of a history maybe some things will be if you've already deployed an NFC contract you might be familiar with this stuff already but maybe it'll I'll talk a little bit about some of the intricacies of NF T's and what makes them a little trickier than just regular tokens but also what makes them interesting and I think pretty exciting I think we're kind of just in the very early stages of exploring the design space for non fungible tokens whereas we're in sort of I mean still early but slightly later stages of display exploring the design space of fungible tokens so the overview I'm not sure like how far we'll get into the workshop since there's not that many people here with computers but if we do get into that we'll sort of learn how to build a tradable collectible conference ticket using an NF T that's kind of one of one of the goals of the workshop yeah but first I just wanted to talk about what is an NF T for folks who aren't familiar with it so fungible tokens are currencies or things that are interchangeable so you can think of Bitcoin as an example of this lumber is sort of another example of this credit card points airline points whereas on the other side of the spectrum are things that are not interchangeable with each other this is most things in our day-to-day lives are not fungible they're typically relatively unique and there's not sort of a order book based exchange for them there are however there's fungibility is relative so there are things that are fungible within a class of things right so event tickets for the same event are kind of fungible with one another or a shirt of the same type is relatively fungible with another so we'll talk about the implications for that for writing non fungible token smart contracts a little history of ERC 7:21 so year C 721 is the standard that is used to represent most non fungible tokens on aetherium today who here has heard of crypto punks okay so a good number of people crypto punks was actually the first non fungible token on the etherium network I think technically it was and basically what crypto Punk's was was you owned this collectible item and they didn't build a standard around it so it was you could think of it as just a smart contract that said this user owns the thing which is called a crypto Punk and then some metadata about that crypto Punk that was actually stored on chain crypto kiddies of course took this to the next level and they created this game where the cats inside of the game were non fungible tokens and there was actually some sophisticated logic around how these things got created it was through a breeding mechanic and of course we had this kind of explosion and excitement in late 2017 we witnessed the crypto kiddies bubble where these cats were selling for hundreds of thousands of dollars and then everything kind of came to a crash and people realized that there wasn't a really good reason to buy cats for that amount of money that being said crypto kitties inspired for a lot of people inspired a sort of excitement around what other sorts of assets could be built on using non fungible tokens so there were sort of the crypto kitties clones people who looked at cryptic kitties and said let's build another game another breeding game and maybe people will buy these things because they're on block chains that you know some people were interested in that but it was a much smaller group of people than the people who played cryptic kitties but in mid 2018 there started to be real companies sort of within crypto and outside of crypto that got interested in like these types of assets so the MLB actually partnered with the gaming company that launched a game around the MLB IP and then above MLB is a game called God's Unchained which is a trading card game that's built on top of NFT technology I mean it's 2019 actually the slide isn't fully updated but we're seeing a lot of growth of the space formula1 came on recently and launched a trading card or sorry a card game car game and just a lot of a lot of really exciting things happening in the empty space this is a graph of the number of NFT contracts deployed on the etherium network it is cumulative so it's definitely an it's gonna go up but you can see that there's there's a lot of this a lot of early activity right so this only goes up to December of 2019 but um you know people are iterating on this and deploying lots of new experiments and ideas here's another chart so this shows the overlap between owners of different entities so for one this chart kind of demonstrates that there's now a broad set of asset classes that are represented as NF T's you can see things like digital art domain names obviously games collectibles sort of miscellaneous things that it's unclear whether they're a game or just kind of a experience of some sort but you can see that crypto Kitty's kind of had this has the broadest ownership distribution and you know a lot of people played crypto kitties and then never came back but there are these sort of pockets developing between especially in the art community in these sort of virtual worlds with NFT based land that is sort of attracting a new set of enthusiasts in this early technology so a little bit about our company open sea so we're a marketplace for who here has heard of n of open sea before ok so a good chunk of you have heard of it and so we're a marketplace for all these types of items we allow games to instantly spin up a marketplace where users can buy and sell and then if T as long as it conforms to either the ERC 7:21 or ER c 11:55 standard the NFT market has grown significantly so we do around a million dollars per month of volume and we also provide an API that makes it easy to grab collectables from the network and display them to users so if you've ever used coin based wallet trust wallet opera wallet and you can you can kind of go in the wall and see your collectibles that's using the open C API our trades our wallet - wallet meaning that you can sell items directly from your account instead of having to escrow them either in a smart contract or in a centralized exchange what's interesting about the non fungible token space is there aren't actually really any centralized exchanges or centralized marketplaces in cryptocurrencies of course we have a plethora of very lucrative crypto exchanges obviously coinbase finance cracking all of these in the NFT world it seems that we're taking a slightly more decentralized for first approach and building decentralized exchanges from the get-go we support eBay style bidding so this is a car that was sold for 415 eath and it was done through what's called an English auction which is the kind of auction you see on eBay where you have bidders and then the item is sold automatically to the highest bidder so I think the most relevant piece of this talk for all of you is sort of what can you do with open sea the open sea is really a tool for you to build marketplace functionality for all of your many NFT ideas so instead of having to sort of build everything from the grounds up you get an instant marketplace for all of your items you get all these kind of interesting features for auctioning things off you can customize it and then interestingly enough you can actually set your fees for when things sell so if an item sells on open sea you can take a cut of that secondary sale so this is something that is allowing a lot of game developers to monetize the secondary market but I guess why would you want to build a non fungible asset on the blockchain we've had digital assets for a really long time so why was that something that I did oh sorry okay so why why use a blockchain to build these things we've had game items we've had event tickets domain names all of these digital assets since the dawn of the Internet but what does blockchain sort of bring to these things I would argue that it's essentially that you know it's a lot of what we've talked about the difference between closed economies and open economies so with centralized digital assets of course we do have really big gaming companies Fortnight makes a billions of dollars selling skins we are familiar with how they you how they work the UX is smooth users are familiar with these like login based systems so they work decently well but we also know that closed economies are inefficient and sort of locking your economy preventing they're preventing exports preventing imports sort of having to manage all of the supply of resources can be very difficult and ultimately results in a smaller economy than what could be had with an open economy so blockchain based digital assets allow us to transition to an open economy where you know you don't necessarily need to control everything and you can rely on these open markets for a lot of the economic efficiency and and essentially that that leads to really interesting experiences of course the problem is that this markets really small right now has you know the UX is lacking but gradually improving and you do lose a lot of control right your assets can kind of move across different types of ecosystems and for some folks that that could be worrisome so how can you use open sea for your debt well we talked a little bit about this but here's a slide on our tools this is the formula one Delta time marketplace it's essentially a sort of white labeled marketplace experience that allows that has powered the initial sales of this particular game I think I talked about this already and a little bit yeah so to kind of demonstrate why this stuff is interesting has anyone here heard of crypto voxels okay so a few fewer hands and other projects crypto voxels is a virtual world where you can own land in this world and build experiences on top of it it started in I think early 2018 it was a single developer at the time and he basically came on to the etherium Network and said I'm gonna tokenize this virtual land and I'll just go and sell it on open sea and if anyone buys it you know they can build stuff on top of it so this is the world right now actually this might be an outdated screenshot but as you can see it's grown significantly so there's a lot of really interesting areas of this and the market for land has actually approached actually I think it's over 4,000 eath of volume today this is from a single developer and he's actually been able to build a business just by selling this virtual land and also taking a commission from secondary trades on the market and then the things you can do inside of this virtual world are actually pretty interesting so you can build museums of your crypto kitties or any really any NFT so this is a crypto kitties museum that someone has built inside of crypto voxels and those are actual crypto kiddies that that particular user owns this is a recent project called meta factory not fully I don't fully understand all of the things they're doing it's part of the meta cartel project but they are believer tokenizing physical assets as NF TS and they have a but I think they come along with wearables inside of the crypto voxels universe oh yeah yeah yeah so it's and so what's cool is that you know you can imagine and say these folks are you know maybe even a bigger brand tokenize --is their physical asset you could show off your physical asset inside of a virtual world and you'd have as long as you there there's definitely some trust involved in the custody of that physical asset and all that but you could imagine showing off physical assets inside of virtual worlds which is pretty interesting then there's the etherium name service so this is I think one of the most exciting non game assets the etherium name service for folks who aren't familiar are essentially domain names that are decentralized native so at a basic level aetherium name service names provide a mapping or a way to send to a human readable address such as such as alice eath without having to use a hexadecimal address and of course these are tradable NF TS so we partnered with the etherium name service and sold around a million dollars worth of short names so these are the three to six character ENS names and the the secondary market is also starting to become pretty interesting for these names as a special announcement we're partnering with a company called dot cred to issue domain names that are both ENS and DNS compatible so what this means is that if you own a dot cred domain name you can send ether to a list cred if you own a list cred but you can also host a website on Alice Duck red and you could go and sell your domain name on open C courses having to go through GoDaddy or whatever other auction sites and I don't know if any of you have done that but it's not always the easiest process it's not kind of interoperable native so that's coming up on March 20th and should be a pretty exciting sale as another example of where y NS T's are interesting so this is a project called the central land and they decided to issue wearables crypto voxels has this as well but decentral ins are in my opinion a little nicer looking and these wearables of course can be traded on open markets they are traded in the mana currency and you can customize your avatar with these wearables so this is my avatar and I bought that Pumpkinhead for 85 mana and it was worth every penny and I also bought those those strange pants social tokens are kind of a new phenomena that are intersecting with the NFT space as well who here has heard of social tokens okay yeah so I think they're becoming pretty hot in the crypto Twittersphere and so social tokens interoperate with entities so this is an artist named Connie digital who issued a work of art I guess it's a some sort of floppy disk and listed it inside in actually believe it's a he although they're anonymous in his social currency called Hugh so you can see there that it's on sale for forty thousand Q and you can imagine these currencies being things that you earn and then you can redeem different different types of entities natively on marketplaces all right so now I'll just drive into kind of the workshop I don't think we have time to actually have people necessarily write code or follow directly along but this will give you a sense of what it takes to actually build a NFT and deploy it so first things first is sort of what what is the NFT contract actually representing so if you've delved into the inner workings of ERC 20 you know that years C 20 is actually a really simple contract it just Maps these addresses to balances of how many it says how many coins does this address out now your C 721 is a little bit more sophisticated it basically has these unique token IDs in the case of crypto kiddies for example you would have you know Kitty number one or Kitty number two and it says this address owns this particular crypto kitty and so that's sort of the record of ownership that it maintains now things get pretty interesting when we talk about something like ERC 1155 which is an upcoming or it's a it's a available standard but it's a little bit newer and in my opinion actually has some really interesting benefits so 1155 who here has heard of 1155 okay so some folks so 1155 actually combines in some ways the best of both worlds it basically sort of considers that there are actually assets that are roughly the same as each other so for example imagine a fighting game where you have you know golden swords or something and really those golden swords you could identify them as golden sword number one golden sword number two golden summit or number three but they're really actually kind of interchangeable and you could save a lot of space and make things a lot simpler by just saying this user owns twenty swords this user owns thirty swords and then have a separate class for shields and say you know this user owns five shields what this allows you to do is actually kind of merge together the fungibility of something like ERC 20 with whatever kind of non fungibility you need with the rc7 21 all together in one contract so what's nice about a year c 1155 is the functionality is a superset of 721 if you want unique items just create a new class a new type of shield but if you want some degree of fungibility within classes of items you can have that too so I think it'll be interesting to see other chains how they decide to architect these smart contracts with some of the learnings from the etherium chain I know Tasos for example is considering just having the 1155 standard and not even really having a token standard just because 1155 can kind of encapsulate all these various use cases so this is what the ERC 721 contract interface actually looks like so as mentioned in the previous slide the main method is kind of looking up what user owns what token so that's the owner of function and then the other kind of important asset here oh sorry important method here is the transfer method which allows you to transfer a token from one user to another and that's like that's pretty much all this other stuff is kind of fluff in a way really the checking ownership and transferring are kind of the bread and butter of what makes a non fungible token the thing that a lot of people don't fully understand about ERC 7:21 is so you have these unique token IDs but how do you actually represent so you have kiddy number two but you know if open c is gonna go and display Kitty number two how does it actually know what stuff to show how does it know what the what the kitty actually looks like right so that's where the token metadata standard comes into play the token metadata standard is essentially a way for the token to tell someone who's reading the smart contract what data is associated with token and it does it through a URL so this URL so this method here takes in a token ID returns a URI and that URI just returns a bunch of JSON this URI can be a ipfs hash it can be a centralized server and it can yeah those are basically the only things that can be unless there's some other file storage service I guess it could be like an s3 thing but this basically allows us to map these metadata things to the actual look and feel on something like a market place right or some other application so here we have in the upper right corner the contract it's returning a URL which returns metadata and then these we ingest that metadata and display it on open C and we've actually an open C we've extended the metadata standard so um if you want cool-looking properties like Google E and jelly you can add those or if you want rankings you can add that and we have we have a bunch of kind of interesting things you can play around with like dates boost's and stuff like that and then of course this is what actually allows these assets to be available inside a virtual world so the fact that that you can look up that metadata in this case this crypto voxels developer decided to use our API to grab all the data for a particular asset but you know they didn't necessarily have to use our API they could go and get it from the chain and display it inside of a virtual world so that's kind of the underlying mechanics of how these things actually interoperate so there and there's a starter repo but we can not go through that I thought I had a slide well I guess I've forgotten this slide but I had a slide on there's a conference on February 20th in New York City for anyone who lives in New York and I wanted to give everyone here a promo code the promo code is East Denver and the conference is called NFT NYC I will feature a lot of people who are building interesting and of T projects and if you're kind of looking to get deeper into the space it's a pretty good way to do that I think I'm actually right on at the end of the time but happy to take any questions yeah all right at the end so here all weekend right yeah I'll be here all weekend so people can answer all the questions they need sounds good thanks fantastic thank you [Music] you