Hydro Blocktoberfest: Hydrogen Chemistry Lab + Hydro
We continue our Hydro Blocktoberfest series with a case study on innovation.
The Hydro developer community is on fire! Not only are they innovating with the core identity, security, and payment protocols in Hydro, they have also started thinking about supplementary “ecosystem building” features that are just as disruptive.
Some examples of these features include: introducing privacy protocol features into the Hydro platform, tokenization on the Hydro platform (which has been turned into HRC-1 “Hail” by the Hydro Community), and an AR library tied to Hydro Snowflake. Many of these ideas are first born in The Hydrogen Chemistry Lab in our New York City headquarters, then expanded to the greater community for comments, input, and creation.
Today, we are going to take a look at an idea first proposed in the lab, to show the power of creating an open platform and product culture that encourages innovation. The general premise is the following:
What if the Hydro community could create a decentralized advertising marketplace on the Hydro dApp store?!
Origin of the Idea
The idea was originally to produce something similar to the “Million Dollar Homepage,” using Ethereum. This idea was then turned into a PoC using the ERC-721 standard by core developers Andy and Noah, and was absolutely awesome. Users could bid for ad space on a grid, and fill the pixels with a color, tied back to the ERC-721 for ownership and uniqueness.
This experiment got the team thinking — could this technology be used for much more than just a demonstration or marketing gimmick?!
Technical Background: ERC-721
The value of a commodity in large part is due to its absolute scarcity (there are millions of tons of gold in the ground and in the ocean that will never be mined). The value of a collectible item, such as art or a trading card, on the other hand, is based on its uniqueness or relative scarcity versus other items.
If I send someone 1 BTC, and receive 1 BTC back, there is no difference to me between the two. Each BTC looks exactly the same, nobody cares about its origin, and it can be used in the same places — thus Bitcoin is fungible. But, if I exchange a Monet painting for a painting drawn by Hydrogen founder Mike Kane, obviously this would not be the case. The Monet painting in non-fungible.
Ethereum Request for Comments 721 (ERC-721) is an Ethereum Improvement Proposal created by Dieter Shirley in late 2017. It is a proposed standard that would allow smart contracts to operate as tradeable non-fungible (individually unique) tokens.
Off-Chain Benchmark
According to reports, Apple makes at least $1 Billion on ad sales in their app store alone! This ad marketplace is non-transparent to the businesses that advertise, and to end users. Who pays, how much, what is the commission, who is viewing, and why were they selected? These are fundamental problems with the advertising marketplace model in general, and no different in the mobile app stores more specifically.
Hydro will soon have a dApp store where any developer can deploy sophisticated dApps that interact with the Hydro smart contracts, and are open to millions of end users of banks, insurers, tech companies, and governments that can use the Hydro ecosystem. Wouldn’t it be awesome if there could be a decentralized advertising model introduced, allowing a free and fair bidding process, and becoming another way to use and spread the native HYDRO token?
Economic Theory
How do we prevent “whales” from squatting on ads and making the ad ecosystem unsustainable? There is a theory called a Harberger Tax that could be used. Here is a fascinating exploration on its uses in blockchain:
This is a similar problem that Decentraland has needed to address. Their core team has needed to build disincentives into the ecosystem to make the marketplace more free and fair. For the Hydro ad marketplace to become a reality, the economic theory will need to be closely monitored.
Implications
Can Hydro save the day and create the world’s standard advertising marketplace? We certainly believe so! Imagine a more open architecture version of this model that can be applied to any marketplace on earth, with HYDRO tokens driving the economic model. Remember, the digital advertising market now produces over $88 Billion in revenue yearly!
Next Steps
Before end users see any innovation built on the Hydro platform, it goes through extensive ideation, iterations, testing, and re-testing. The feature examined in this case study is at the iteration stage — meaning there is a working prototype, but many more iterations and testing will be needed to find potential product market fit.
If you are a member of the community, you can stay updated and engaged with new projects proposed for the Hydro ecosystem through the community GitHub repository:
Hydrogen also will begin publishing Chemistry Lab initiatives that are created from the HQ on our website here:
