The Value Proposition of Genesis Shards
Genesis Shards built on NFT swaps offers a one-stop environment for great projects to meet great partners, and a secure NFT backed exchange interface for pre-IDO liquidity and community participation.
With the use of Gen swaps, NFT shards, community governance, and a multi-functional NFT exchange, the Gen ecosystem creates opportunities for partner organizations and communities to build a symbiotic environment of pre-IDO liquidity.
Let’s look at where and how in the DeFi ecosystem GenShards is looking to add value — and what problems it is aiming to tackle, in greater detail.
1 — Pioneering the marketplace for DeFi options on NFTs
Genesis Shards is pioneering the DeFi options space
Genesis Shards aims to pioneer the Defi NFT space reimagining NFTs as Defi options, from being mere collectibles. By wrapping time-locked fungible tokens into NFTs, they can be reimagined to serve as DeFi options.
Options are derivative instruments that derive their value from an underlying asset and also have a time value. By wrapping time-locked fungible tokens into NFTs, the NFTs start behaving like a DeFi option.
Estimated marketplace value for DeFi derivatives
Did you know that in the Traditional Finance (hereon called TradFi) area, the derivatives market is at least ten times the size of the asset market? The BIS (Bank of International Settlements) puts an estimate of the derivative market notional size at ~$640 trillion. However — even this is a low-end number and only covers OTC (over the counter) products including options, interest rate swaps etc, which are easily measured and quantified.
The Traditional Finance market has a size of roughly $48 trillion. Now DeFi is a completely fledgling market in comparison, with a TVL (total value locked) of around $41 billion (ref. — Defi Pulse). Every asset market eventually develops a derivative market on top, as will DeFi — except the derivatives, again, would be decentralized. This stands true to the essence of crypto — which is disintermediation.
Some preliminary analysis suggests that — the DeFi derivative marketplace could be worth $540 billion — and this is super conservative. We are just using the DeFi TVL in the current state of crypto for our extrapolation. We are not considering the potential growth in cryptomarketcap size and the potential growth in DeFi dominance within it.
Marketplace value for DeFi derivatives — visualized
What is the potential market size for DeFi options on NFTs ?
Genesis Shards is a pioneer in the area of DeFi options. Solving pre-IDO liquidity is only the first application of DeFi options, we’re barely scratching the surface here.
Even if we assume that DeFi options on NFTs should capture 5% of the value of the larger DeFi derivatives sector — this alone gives the DeFi options marketplace a $25 billion value — and this is using the conservative number for the market size.
2 — Solving Pre-IDO market issues in DeFi
The DeFi space today is faced with an acute shortage of options to safely trade pre-IDO tokens. Most trades in the pre-IDO phase are via the ‘OTC’ (over the counter’) mode. This brings two key challenges for both projects and their community :
- The practices followed on these OTC platforms are highly inconsistent — trades are conducted between two parties in an uncertain environment, where the default risk is very high.
- Not only this — there is also the added challenge of a platform with reliable liquidity to conduct the trades.
Genesis is ushering in an era in the DeFi market where the investor will not have to worry about how to execute pre-IDO trades anymore — Genesis through its Gen Ticket NFTs and the NFTX exchange is aiming to tackle these very issues !
No more worrying about shady OTC deals with high default risk : investors can simply utilize the safe, trustless pre-IDO liquidity provided by Genesis NFTs.
The PreIDO liquidity solution would also be a game changer for the DeFi projects adopting it. The projects can leverage the early liquidity of their tokens offered by the platform and build a strong community support early on in their journey. They can also get a sense of early price discovery helping with quicker course corrections.
Read more about how Genesis Tickets work here
https://medium.com/genesis-shard/introducing-gen-tickets-50e0b0a060ec
3 — Cross-blockchain liquidity for early-stage projects
The vast liquidity gap between blockchains
We talked about our vision to solve the pre-IDO liquidity issues above. We are also looking to tackle the issue of cross-chain liquidity in the early stages. If a DeFi project is building on a blockchain that has relatively low liquidity and wants to do an IDO — this is a big problem. There are huge gaps in liquidity among blockchains today.
As an example, the Tezos ecosystem is relatively new compared to Ethereum but has several interesting projects being built on it. However, because of its younger age, liquidity within the Tezos ecosystem is much lower than what you may find for Ethereum.
If we use the leading DEX volumes on both ecosystems as rough proxies for liquidity [4] — the monthly volume on Dexter for the month of March was $4.3M [5] , compared to $27B for Uniswap [6].
As you can see, this is a gargantuan difference (~6000x). This difference in liquidity in the early stages can pose pretty big problems to projects and communities in newer, less liquid blockchain ecosystems. By using Gen Tickets they will be able to access the liquidity provided by Genesis-enabled liquidity pools, which can be a gamechanger.
But how is all this going to be implemented?
Cross-chain liquidity powered by Polkadot
In order to implement this, we will be partnering with Polkadot and Moonbeam.
Let’s see how we will be able to accomplish this — while Genesis as a platform will have its own liquidity engine, we see huge value in partnering with the existing cross-chain architecture of Polkadot for inter-chain communication. By utilizing our Polkadot bridge in conjunction with our NFT swap architecture, the pre-IDO tokens can now get much better liquidity.
The solidity compatible Polkadot parachains will enable Genesis Shards ecosystem to take pre-IDO tokens from various low liquidity blockchains, wrap them into Gen NFTs and be traded on Genesis enabled liquidity pools. This will also allow the projects to take full advantage of the liquidity internal and external to their native chains.
We would also be utilizing Moonbeam for our relays. Moonbeam is a smart contract ‘parachain’ on Polkadot, for ERC-1155 tokens which enables compatibility with Ethereum smart contracts.
4 — Creating a whole new marketplace for NFTs
The state of the NFT market today
NFTs are completely shaking up a lot of traditional industries including, notably, art.
The highlight for NFTs so far has been the Beeple artwork selling for more than $60 million!
We like to look at NFTs as building a new liquid IP ( intellectual property ) marketplace for any form of digital content. This is a market with innumerable number of units that can be tokenized — the potential is truly limitless. We really are just seeing the tip of the iceberg here.
Let’s look at a few numbers showing the progress of the NFT space so far [7]
The numbers clearly show an upward trajectory — and the NFT space has never come into the public spotlight like we are seeing currently. We believe NFTs are where DeFi was a few years ago — and the exponential growth phase is yet to come.
With continued growth of the NFT space — the market will find newer and more exciting uses for these instruments. We believe with our DeFi options on NFTs, we are playing a key role in expanding the lens for how people view NFTs.
NFTs 2.0 — NFTs powering DeFi products
The Genesis pre-IDO liquidity solution and the DeFi option products have at their core NFTs or non-fungible tokens. One of the core Genesis Shards products is a brand new NFT marketplace for DeFi options. The Gen NFTX exchange is an AMM DEX for providing interchain liquidity on various NFT products and Defi option baskets.
Genesis Shards has a vision of transforming NFTs into a liquidity vehicle for Pre-IDO tokens and a whole new suite of DeFi products across multiple blockchains.
In this perspective, Genesis Shards is a first mover in redefining NFTs as the powering force behind this entirely new suite of DeFi products. The NFT space has been growing by leaps and bounds and is unlikely to slow down anytime soon — and in the process, it only expands the marketplace potential for GenShards!
5 — Early-stage launchpad for DeFi projects
The liquidity marketplace of Genesis Shards by its very nature also opens up a launchpad-like environment for its partner projects offering a one-stop environment for great projects to meet great partners, providing DeFi projects with the best support possible early on in their lifecycle.
Genesis Shards aims to provide DeFi projects with the highest potential — with the best support possible early on. To achieve the vision, we have decided to bring on a group of strategic partners who will help the Genesis ecosystem function effectively and sustainably at scale.
To this effect; the Genesis ecosystem will have a coterie of partners in one of the 3 segments:
- Genesis Access shards
- Genesis Ecosystem shards
- Genesis Mentor shards
In order to scout for the most promising projects out there, we will need to scale our ecosystem and get as many eyes as possible on the lookout. Here is where the Access Partners come in and help us expand our ‘field of vision’.
Once a project is in the ecosystem, it will require the best possible support in terms of community engagement, social media reach out, mentorship, etc. This is where the Ecosystem Partners and Mentor Partners would play a crucial role.
There are some existing launchpad platforms at the IDO stage such as Polkastarter, DaoMaker, Duckdao, Poolz, etc. Genesis Shards function downstream in the preIDO world. It aims to be an early stage enabler for DeFi projects — and hence intends to have a strategic tie-up with all, wherein projects launching on Genesis Pre-IDO platform would have access to these ecosystems further upstream for an IDO.
Read more about Genesis strategic partners here :
https://medium.com/genesis-shard/introducing-genesis-shards-deal-flow-partners-322b346a64f5
https://medium.com/genesis-shard/introducing-genesis-shards-ecosystem-partners-178e57728862
https://medium.com/genesis-shard/introducing-genesis-shards-ecosystem-partners-178e57728862
References
1 — https://www.iif.com/Portals/0/Files/content/Research/Global%20Debt%20Monitor_April2020.pdf
2 — https://www.bis.org/statistics/derstats.htm
4 — https://www.sciencedirect.com/science/article/pii/S1566014119302080
5 — https://stats.dexter.exchange/?timeframe=1M&tab=volume&interval=w
6 — https://duneanalytics.com/projects/uniswap
7 — https://nonfungible.com/nft-report-2020
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About Genesis Shards
Genesis Shards is a decentralized ecosystem powered by Polkadot redefining NFTs as DeFi options, creating a permissionless environment of interchain liquidity for pre-IDO tokens.
The next major steps in Genesis’s journey will be announced soon! Keep an eye on this space for updates.
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