Accelerator Appchain Showcase Series #1 — Frac
Octopus Network hosted an AMA session with Frac, one of Octopus Network Accelerator Program Star Prize Winner for 2022 winter batch and here’s the summary from the knowledgeable discussion. It’s indeed an insightful discussion on the introduction, value proposition, pain points, challenges, successes and the future of Frac. It has been our pleasure to have Japhet Lim (Chief Operating Office), Melvin Tan (Chief Executive Office) and Ryan Lim (Chief Growth Officer) to join our first accelerator appchain showcase series on Twitter Space hosted by Octopus Network Social Media Coordinator, Nasrullah Annuar.
Frac has submitted its proposal on Octopus Forum to become an appchain in the Octopus ecosystem. Once it is live, one can be a delegator/ validator/ a holder of their tokens or even a community member. Octopus DAO has just been formed and Frac will be the first appchain to be approved by the DAO.
What is Frac all about?
“Frac is a Web3 platform, which uses crypto and NFT’s to perform fractionalization of physical and digital assets. I think fractionalization as a whole is not an entirely new concept. Perhaps you may have seen a few projects that are doing fractionalization of land, of property. For us, we are not doing that. For us, we are focusing primarily on high value assets. High value assets, physical assets, like gemstones, whiskies, art. So this is the specific area that we’re focusing on.” — JAPHET LIM
Through the use of fractionalization technology, we allow the common man on the street to gain access to high-margin investment opportunities through participation in the upstream portions of selected supply chains. In addition to high-margin investment opportunities, Frac will bring unprecedented levels of liquidity to high-value assets in selected industries, in particular, the luxury industry. Our first product is the Asset-backed Yield Program of Diamond Alpha. Our 2nd product is the F-NFT Decentralized Exchange (F-NFT DEX) — (https://frac.gitbook.io/litepaper/4.-what-is-frac)
What is the problem or pain points that Frac are trying to solve?
1. Accessibility
“A lot of people want to invest in the Rolex, gemstones, wines, whiskies paintings or that blue chip NFT that they always wanted. But they lack cash, so what we do is quite simple. We basically, if it’s a physical asset, we mint the NFT, that represents the asset. We use IoT technology to track the asset, we have documents that are uploaded to the platform for everybody to see, to prove that the asset owner is legitimate. All of that will be on the platform, so that you guys will feel safe to buy into the pieces of the physical asset. So with those pieces, you guys can actually trade it like how you would trade Bitcoin, Binance. You have TradingView you have the chart is a full fledged order book system. The only difference is that we are DEX. So we don’t collect anyone’s funds, you can have your own wallet to do your own trading. So the biggest problem you solve is basically, for people who are interested to invest and trade pieces or trade, physical high value physical assets, we allow that to happen. And of course, for Diamond alpha, like I said, already, everybody wants to enjoy the profit margins from growing diamonds. But not everyone has the money to open a diamond growing factory. Not everybody has the money to hire people to grow diamonds for them. So we fractionalize that supply chain into bite pieces for people to fund every batch of diamond seeds. So whether it’s the trading side, or just investing into the yield program, the biggest problem we solve is to allow people to enjoy these high margin opportunities.” — JAPHET LIM
2. Intermediary
“A lot of creators, asset owners, have a lot of intermediaries, such as brokers or auction houses, when it comes to releasing or selling their assets. And often not, I’m not going to name any names here, but some auction houses, they take up to even a 30% hammer fee. What is a hammer fee? A hammer fee is basically if that thing was auctioned off for $1 million, the Auction House will take 300,000. So that’s what we mean by a hammer fee. So a lot of these auction houses or brokers charge a very high intermediary fee. On our platform, we sort of change all that because now there’s no more intermediary, it’s direct from the asset owner to the traders, direct from the supply chain to the participants, so we take away that middle layer and we ourselves are decentralized. So in other words, the fees can come down to even 2% or 1% just for our own survival for the projects of our prosperity, which is 15 times lower than a traditional hammer fee.” — JAPHET LIM
3. Metaverse
“What is the metaverse? What are we really doing with the metaverse? A lot of times, people say, it’s about bringing physical elements into a virtual space. And bringing virtual elements into the physical space. Yes, current technologies like AR or VR, they can do that. But there’s not any real financial interaction in terms of virtual and physical space. So the third problem that I want to highlight here, which is one of the things that Frac can do is that we can bring batter trading to the next frontier. What do we mean by that? On Frac, you can actually trade pieces of a physical asset for pieces of a digital asset. Yep, you heard me correctly. So an example could be you trade a fractional piece of a metaverse land for a fractional piece of real world land. So in other words, on Frac, we are also sort of a metaverse facilitator because we facilitate interactions between the physical realm and the digital realm, but on the financial front, providing the financial infrastructure for such interactions.” — JAPHET LIM
What is the unique value proposition that Frac provides in Web3 environment?
“The unique value proposition is we are going where no other crypto project has gone to, which is to the realm of physical assets, and specifically to the realm of IOT, So we will be the first DeFi/NFT project to have an IOT element. So for those of you who don’t know, what is IOT stands for Internet of Things. IOT is one of the major technological team stays in play for the last three years or so. So for us, we have a very active IOT element in our project. And we need the IOT element because we need to track the physical asset on the blockchain. So we may be working with MXC Helium, for those of you who are familiar with them. To track the asset location in real time, on the blockchain, we will also be using IOT devices. And then we also might be using YouTube Live to stream 24/7 footage of the assets location to people. So it’s a very interesting user experience because when people come onto a crypto platform online, they don’t expect to see physical assets. They expect to see graphics, virtual elements and words and fonts. But for the first time ever, in the history of crypto, when people come on to Frac or when people come to our Diamond Alpha platform or our fractional NFT DEX, they are going to see footage of physical assets, they are going to see GPS data. I think that’s really something that’s refreshing for the crypto crowd. When you come onto a platform like any of our products within the Frac ecosystem, you are going to see footage of physical assets, you will see map data and this is the first time ever you will actually use crypto and NFT as a mechanism to buy into real world physical assets. I think that’s something that’s going to be very refreshing, very unique for the Web3 community.” — JAPHET LIM
What is your biggest challenge that you face in the program and how did you overcome them?
1. Not knowing what to expect
“I think the biggest challenge is really not knowing what to expect. Because although we did our research and our homework, I think we still don’t really know exactly what to expect. But of course, for us, we sort of overcame that by really looking at the past videos of the previous winners. And then we look at the end result that they have when they come out of the accelerator program. Using the end result, we reverse engineer the process. And we know, okay, this should be approximately what to expect.” — JAPHET LIM
2. Keeping up with the program schedule
“While we were in the accelerator program, we were actually building our product we’ve been building for the past one year. So in terms of time management, because there are so many sessions, in terms of the training, and they are also sort of so educational and enriching. The challenge was to really find time to attend every single one of them. We managed to overcome it because thankfully, I think the Octopus team did a very good job. You guys gave us the schedule way in advance. And with that schedule, we were able to really schedule our timetable around all the different slots at night where we had the training. And most of it, I think out of 100%, we attended at least 90% of the programs that will offer the Octopus Network Accelerator.” — JAPHET LIM
What is the list of success that Frac achieved after going through the Accelerator Program?
1. Secure more investors & accelerators
“After we entered the program, we met some individuals, some of these investors, private investors who decided to invest in us. We also managed to secure more accelerators, like for example, some of them based in Singapore, Aurelia Ventures, TribeX, Brinc which was sponsored partly by Animoca brands, they all came on board and they decided to give us a chance so I’m very grateful for that.” — MELVIN TAN
2. Approached by more community leaders
3. Increased social media following
4. Easier acquisition of partners
“Additionally, I think there were more and more leaders from other countries, especially in Southeast Asia, Malaysia, Japan and all that. They started to come in to join us and this actually helped to increase our social media following by quite a bit. And we also realized that with the help of the Octopus Network team, we find that we were able to acquire users faster. I think we will be able to build our partnership base. And as you can see right now, if you’re following the Franc, social media following, you’ll see that we have been onboarding more and more partners and more and more users. So I’m really thankful for that.” — MELVIN TAN
How has the Accelerator Program helped Frac to grow its business?
The three biggest gains that we had from the Accelerator Program was really;
1. Help to better understand Frac target audiences
“There were some methodologies that were taught to decipher the right target audience for our product. And we managed to find and really understand our target audience much better after the program.” — JAPHET LIM
2. Help to better understand Frac partners
“Through the Octopus Network Accelerator Program, we were really able to understand the kinds of partners that would help our project. And also we were able to sort of prioritize the correct chronology of partners that we should work with. Who are the partners which will we first? Or who are the partners that might be a bit more later on our roadmap, then we can work with them? Who are the partners that we will need right now, who are the partners that we need later? Different cycles of the project require different levels of partners. So if you either go for an early cycle and you try to go for a late cycle partner, there might be a mismatch, and both parties end up wasting their time. So through the Octopus Network program, we were also able to better understand our target partners as well.” — JAPHET LIM
3. Build more credibility
“Especially within the NEAR ecosystem as NEAR is one of the major layer one projects in the larger blockchain ecosystem. We will also indirectly be able to build credibility throughout the blockchain ecosystem.” — JAPHET LIM
What is the current target audience that Frac will be relying upon?
1. Fractors
“Two main scopes of target audience. The first scope is Fractors, which are high value asset owners. But within this group of high value asset owners, we are looking for asset owners who have bought high value physical assets or digital assets to invest in. So what’s the difference between investing and enjoying the collection? There’s a big difference. When a watch collector, let’s say a Rolex collector, buys a Rolex, they have two kinds of buyers, the first kind they buy, and they would like to wear the watches out, they want to wear on their wrist, they want to change a different watch every day. Although this guy is also a high value asset owner, he’s not our ideal Fractors. He’s not our ideal partner, because in order for the Rolex watch to be fractionalized, it needs to stay at one place, because we need to track the asset. And we don’t want to compromise the privacy of the owner. So who would be ideal, right? Someone that has a Rolex, but he or she has put it somewhere for safe storage and really just has the Rolex watches for investment purposes. So, this is one scopes of ideal target audience.” — JAPHET LIM
2. Traders
“The other scope will be traders. We are looking for Web3 traders, or Web3 users who actually want to try out alternative investments, but through using the NFT and crypto mechanism. A lot of us are very used to buying things that we don’t really understand the value of, we just go in because of FOMO. We just go in because the guy on Reddit says it is good. And then we end up getting burned. So we are looking for people who got burned, and now they’re looking to try something new, like actually binding to an asset for ones that have real value.” — JAPHET LIM
Can you tell us about the future plans of your company?
Frac plans to gain possible user traction in the physical asset arena and acquire fractors.
“So at Frac, we believe in and are strong advocates of empowerment, and empowerment through value driven activities and hyper contextualizing the content and activity, according to the stakeholders, and this ultimately have to be aligned with the company goal. So moving from Web2 to Web3, how we plan on activity or how to engage them is very much through the decentralization of investment opportunities to the masses. So we can see in the coming months running up to our launch in March in the coming months, we will be organizing events such as like wine, whiskey tasting, at certain art gallery, all the way to alternative investments, master classes, teaching our Web3 audience what are they in how to best invests in this category. And this will be facilitated by subject matter experts from the Web2 arena. ”— RYAN LIM
“Just imagine if we can bottle or bundle of good investment wine? So as the bundle appreciating value, in this community can choose to cash out, or even vote to open a drink for celebrity purposes in any of our events. We aim to be the bridge Web2 Web3 through figitalization. There’s a word of physical digital. So let me combine it to be physical, then there’s our processing called figitalization. And well, this can only be done by upholding the true purpose and what we believe in.” — RYAN LIM
How do you see your company impacting the industry in the future?
- Frac will be the first crypto project to actively link crypto, NFTs and blockchain to actual real world assets.
- Frac will link IOT (Internet-Of-Things) technology to crypto and blockchain as well because we need to perform location tracking. Frac is the 1st DeFi / NFT project to have an IOT element.
- Frac are able to make a difference in the crypto industry by allowing Web2 investors to have confidence to come in because we are dealing with assets which they can actually analyze and not just speculate.
What advice would you give to the other startup that is just starting out?
1. To identify the importance of partnerships at the start of every crypto project
“What problem am I actually solving? Are you actually enhancing or disrupting a current existing workflow? Are you making it more efficient, more effective? If you can answer that, this will be fundamental to your project. But if you really can’t answer that, that is really back to the drawing board to solidify your company or your business with proper bricks.” — RYAN LIM
2. Ensure lower marketing costs and gain project exposure
3. Getting the right partners
“A good partnership can bring you many new doors, exposure, and even lower your marketing costs. So as the saying goes, give and you’ll be given, and one key thing about partnership is when you work on partnership, to ensure that is a win-win situation. Because after all, you are going in for the long run. And by filtering this partnership is about prioritization as well, you can’t really partner with anyone. It is about who can be your best partner.”— RYAN LIM
How to make sure that the asset owners are legitimate?
1. Legal
“All of the Fractors have to sign a custodianship agreement and the fractionalization agreement with Frac and we’ll be getting one of the top lawyers to draft this document and all enforcement legalities will apply both in the country where the asset owner is staying. in Frac headquarters country, which is Singapore, right? So that’s number one legal. We definitely have to use powerful legal mechanisms.” — JAPHET LIM
2. KYC
“We put the factor to block password checkers to make sure that he or she is not affiliated to any terrorist group, or have any suspicion of doing terrorism financing, or any criminal activity.” — JAPHET LIM
3. Protect traders by not surrendering the collected proceeds from the IAO sale over to the Fractor until authenticity of the asset is verified.
“We protect the traders and the users by making sure that even after the funds are collected for the IAO, even after we approve the asset owner to fractionalize this asset, we do not release the funds to him that were collected at IAO until the entire asset can be tracked. So to be really transparent with the public is all the asset owners, they need to sign the custodianship agreement or the fractionalization agreement under their personal name, unless the institution has a very high paid up capital with active director, we won’t be accepting any signing from any institution, everything has to be linked back to the personal name. So all these levers we pull, and we control to make sure that the asset owner is legitimate, and to make sure that the asset being offered is legitimate. And to make sure that the entire asset offering process, whether it’s pre listing to listed is safe and secure for the traders to trade. We make it very difficult or almost impossible for any asset owner to offer an illegitimate asset on the platform.” — JAPHET LIM
Final thoughts from Frac
“We are really giving a revolutionary product that I think will be next in line. And the reason why I say that is because the current cryptocurrency market infrastructure is really far more efficient than the current financial infrastructure that we have in place today. The question really is about time. So I think it’s a matter of time, we have a product that is ready to revolutionize space and we are going to tokenize assets on a standard one asset at a time.” — MELVIN TAN
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