An intern explains: Fair launch NFTs
There’s nothing like a wave of headlines on the blockchain to leave you feeling like, “Erm, what’s going on here?” That’s the feeling I’ve experienced while reading about Jack Dorsey, the co-founder of Twitter, putting an autographed tweet up for sale as an NFT (and eventually selling it for $2.9 million 🤑). Now, months later, the NFTs market has hit a staggering $22 billion as the hype continues — and yet my mom still doesn’t really understand what an NFT is 🤷🏻♀️
So, let’s start with the basics.
What are NFTs? Non-fungible tokens.
That doesn’t make things clearer.
Gotcha, sorry. “Non-fungible” here means each token is unique and cannot be exchanged for something else. A one-of-a-kind trading card, for instance, is non-fungible.
How do NFTs work? 🤔
Most NFTs are powered by smart contracts on the Ethereum blockchain and represent a way for us to generate and store anything unique. Every NFT comes into being with an NFT launch (read: mint, drop), where a new collection is first created, sold and distributed to buyers, who can then decide to either flex 💁🏻♀️, hold, sell or trade it in secondary markets.
When a new collection debuts, users can interact with its smart contract to mint an NFT with a random set of attributes. See: CryptoPunks, where buyers can choose from 10,000 unique punks with different attributes, from a beanie and choker to a tiara, buck teeth and more. Such customizability symbolises some combinations being rarer and more valuable than others — take for instance, Punk #5822, which was sold for a whopping $23.7 million dollars, just this February.
I know, it’s insane. 💸
What should I look out for in the NFT market? 👀
That really depends on whether you’re a buyer or seller.
I’m a buyer 🌚
Before we begin, here’s some hashtags to get us going
#darkforest #exploitation #frontrunning #wa(not)gmi #rekt
Now let’s start proper.
As we know, the Ethereum blockchain is a dark forest 🌲 (if not, please read); Through monitoring on-chain metadata, apex predators exploit NFT mints, especially rare ones where buyers expect to profit most from secondary markets post-minting. They front-run average buyers by minting the rare NFTs up in mere seconds, leaving just scraps to future minters, who are mostly oblivious that advanced users had exploited the launch.
Ok, let’s imagine this for a second.
Say, for whatever reason, you participated in a mint, the “Bloop Man” 🤠, with over 5,000 bloops of varying attributes. All attributes for each character are stored directly in the smart contract and upon receiving a pseudorandom bloop, participants can use the bloop ID as the hash.
You’re excited, unknowing of the item and rarity you will get this launch, with the baseline being that you expect to draw from a random distribution of items, and to stand an actual chance of acquiring a very rare drop, however slight. 🚨 But unbeknownst to you, the project wasn’t actually launched with true randomness, granting malicious parties the opportunity to simulate the randomization functions and swiftly scrap the metadata for all 5,000 bloops. They could then determine the highest-value NFTs of the collection from its derived rarity, and mint exactly the IDs they want, snipping up the rare ones.
And by the time you have connected your wallet, it’ll already be too late. 🤡
I’m a seller 🌝
If you’re looking to launch an NFT collection, and have made it so far into the article, the importance of unexploitable fairness should be striking — and perhaps now you’re thinking “How can I ensure participants have an equal opportunity to acquire an NFT, especially rare ones?”
This can be achieved by ensuring the integrity of the minting ordering and providing true randomness that is verifiable, which
(1) importantly, ensures that metadata is not altered before or during the minting process, and
(2) helps to prevent operators from exploiting their privileged insight into the random numbers and knowledge of orders and attributes to mint the best NFTs.
Okay, okay. We get it, NFT launches need to be fair.
But that’s not all. NFT launches also need to be safe. 🔐
All it takes is one security loophole. Users being caught off-guard. A seemingly legitimate email. Then it’s game over — at least for the dozen of users in Opensea’s phishing attack that came with a hefty price tag of $1.7 million made off by perpetrators.
Exactly. NFT in the wild are not immune to normal, everyday attacks 🥶 Ideally, you would want to have an additional layer of authentication, a second security parameter that makes it that much more difficult for hackers to wriggle into your account. And those NFTS. (*My precioussss*)
Why not do it then?
We are. 😉 Stay tuned for some very exciting updates.
Launching a fair NFT collection is no easy feat, and we don’t claim to have all the answers. But the baseline — launching on the grounds of true randomness 🤹🏻, and reducing the risks of exploitation, as much as we can — is as good a place to start as any.
Can I buy this article as an NFT?
Well, no. But with this article, we hope to underscore how launching and buying NFTs from a trusted operator makes all the difference to the fairness — of lack thereof — of these mints, and the need to bake such fairness into our system. 😊
Are we tired of typing “NFT”? 🙇🏻♀️
Automata Network is a decentralized service protocol that provides middleware-like traceless privacy services for dApps on Ethereum and Polkadot to achieve privacy, high assurance, and frictionless computation.