ERC721 Integration on Poolz — Decentralized Auctions for Non-Fungible Tokens (NFT)

Since 2017, the ERC721 token standard — which facilitates Non-Fungible Tokens or NFTs — has become increasingly popular. According to certain estimates, NFT’s overall market capitalization could move beyond $300 million in 2020.

Among other things, this points to the growing popularity of NFTs, driven by a wide range of innovative projects that are leveraging non-fungible assets for several purposes. As such, NFTs can be transacted over OTC deals or even traded on exchanges.

Alongside the increasing adoption of NFTs, there is a growing demand for fully-decentralized protocols for launching and managing non-fungible token auctions. In this regard, most of the existing platforms are either fully centralized or have some core function that is centrally governed. Moreover, there are concerns regarding custodial protocols that require NFT owners to hand over their private keys, which essentially means giving up the asset.

As a fully-decentralized, swapping protocol, Poolz enables project owners to auction their Non-Fungible Tokens, within a secure, non-custodial, and cross-chain ecosystem. In terms of coding, the integration is rather simple, but in terms of end-user gains, its impact could be huge.

Technical Highlights of ERC721

ERC721 allows developers to codify attributes such as owner’s identity and address into the NFT, which is why each token is unique. This also ensures that each NFT has only one owner and transferring NFTs involves a transfer of ownership.

Despite this fundamental difference, however, ERC721 retains some basic functions of ERC20. These include name, symbol, total supply, balance, owner, approve, takeOwnership, transfer, approval, and certain other optional functions.

Poolz Ecosystem for NFT

The NFT ecosystem on Poolz is similar to that with ERC20 tokens. In this regard, the platform has three main pillars:

• Poolz: the company responsible for building and maintaining smart contracts and other decentralized solutions on the network. In the longer run, Poolz aims to transform itself into a fully-functional DAO.
• Project Owner: the individual or company willing to auction their NFT on the Poolz platform.
• Investors or Buyers: bidders participating in the auction, with the aim to buy auctioning NFTs. In turn, buyers are of two types —
• POOLZ holders: privileged users, so to say, who get “Last Access” for NFT pools, as well as certain price benefits. This serves as an incentive for owning POOLZ tokens, and in the future, the governance may include other benefits.
• The other category involves standard users (non-POOLZ holders), who do not have price or exclusive access benefits.

Seller & Buyer Flows for NFT Pools

As such, the process of launching and participating in NFT auctions is similar to ERC20 pools on the Poolz platform. Basically, this functionality is an extension of the platform — a new “tab” on the UI, so to say. Moreover, just like in the case of ERC20 pools, Poolz (POOLZ) token holders enjoy exclusive benefits for NFT auctions as well.

During the MVP phase of the Poolz platform, project owners can accept payments for their NFTs in ETH and DAI. In the future, the platform’s cross-chain integrations will enable the compatibility for other blockchain ecosystems and their native cryptocurrencies or stablecoins.

Pool States

Depending on the availability, among other factors, NFT pools on the platform can have the following states:

• Open: during this phase, the auction is open for anyone to place their bids.
• LastCall: after the “Open” phase, the NFT pool is exclusively available for POOLZ token holders, giving them a better chance of becoming the final bidder.
• Finished: the stipulated time for the sale is over, but the NFT has not been transferred to the new owner.
• Sold: the NFT is transferred to the new owner’s wallet and is considered as “Sold”.

Project Owner’s (Seller) Flow

To auction their NFT, project owners need to connect their wallet to the platform — during the MVP phase, Poolz supports only MetaMask, but in the future, other wallet options will be available. Then, the project owner (PO) needs to grant the permissions, so that the platform’s smart contract can transfer the NFT after the auction is complete.

After that, the process is as follows:

• First, the PO has to specify the token’s address, that is, the NFT’s contract and ID.
• Second, they need to mention the price, although one of the following options can be turned off by putting the value as 0.
• Start Bid Price: this is the minimum bidding price for the given NFT.
• Buy-Out Price: this is the maximum price that a bidder can buy-out (bid), upon which the token shall be considered as ‘Sold’ to this bidder.
• Third, the PO mentions the duration of the pool, that is, the date of its completion. On this date, the pool achieves the ‘Finished’ status.

Fund Transfer: Whenever a transaction happens, the PO will automatically receive the funds in their connected wallet. In case the start-bid price is specified, the owner will immediately get this amount when anyone bids at this price. Later, when the buy-out bid is placed and the token is sold, they will again receive the remaining amount. However, if the NFT remains unsold even when the pool is ‘Finished’, the PO can either take back their tokens or create a new pool.

Since the entire process is automated using smart contracts, sellers can rest assured that there is no possibility for chargebacks or loss of tokens.

Buyer’s Flow

Similar to the PO, buyers also need to connect their wallets and have the same options as the former. However, from the buyer’s perspective, the rest of the process is even simpler.

While browsing the ongoing pools using the platform’s unified interface, buyers can view two prices for each pool.

• Next Bid Price: by bidding at this price, the buyer can join the auction. Whether they will get the NFT, depends on other bidders and can’t be decided until the pool is ‘Finished’ or ‘Sold’.
• Buy-Out Price: by bidding at this price, the buyer can immediately claim the ownership of the NFT, and the pool’s status becomes ‘Sold’.

When the next bidder joins the pool, the previous one automatically gets a refund of their paid amount, minus the gas fee incurred for their transaction. However, in this regard, Poolz’s code architecture ensures minimal gas fees for transactions on the platform.

If the buyer doesn’t get a refund when the pool is ‘Finished’, it means that they have successfully purchased the NFT and can claim the same from the contract.

Conclusion

Non-Fungible Tokens or NFTs are becoming increasingly popular, primarily because of their diverse range of possibilities. However, most of the existing platforms for NFT auctions are either fully or partially centralized. As a solution, Poolz has integrated ERC721 functionality on the platform, thus enabling a decentralized and secured means of auctioning non-fungible assets.

About Poolz

Poolz is a decentralized, swapping protocol for cross-chain auctions of Fungible and Non-Fungible (NFT) tokens, as well as OTC deals. The core code is optimized for DAO ecosystems, enabling startups and project owners to bootstrap liquidity for their crypto-assets, prior to listing. The Poolz platform has already integrated with multiple blockchains and is planning to add support for the 10 largest blockchain networks.

Website: https://www.poolz.finance

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Github: https://github.com/The-Poolz

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