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NFTs & the Digital Art Movement

NFTs (non-fungible tokens) are one of the most rapidly developing areas in the crypto space. NFTs were first popularized by the success of Rare Pepes, and later Crypto Kitties, a Pokémon-esque collectables trading game centered on unique, digital cats represented by ERC-721 tokens, the standard Ethereum protocol for issuing non-fungible tokens. Unlike the more common and well-known ERC-20 standard which is used to issue fungible tokens, i.e., tokens that are indistinct from one another in terms of value and characteristics, ERC-721 is a standard code template used to issue tokens that are unique in their individual characteristics and market value.

Just as how a blockchain ledger system records token ownership on a cryptocurrency network like Bitcoin or Ethereum, ERC-721s/non-fungible tokens use a blockchain to record and transfer unique tokens representing claims of ownership to a given work of art or collectible. While this article focuses specifically on non-fungible tokens that represent ownership claims to a given work of art, it is well worth noting that NFTs can and are being used to represent theoretically anything, including title deeds to land or property and many other such claims of ownership.

Traditionally, the barrier of entry to the art marketplace, for both artists who wish to sell their works and buyers who wish to collect and/or invest in those works, has been extremely high. Artists face a catch-22 situation where they have to achieve a certain level of fame and renown before their pieces can reach high-profile marketplaces, but talented artists without connections may lack the exposure to ascend. Buyers, likewise, must have a certain high level of wealth to purchase works from such marketplaces. This has the effect of excluding a vast majority of the art creating and purchasing population from the very marketplaces that are supposed to serve them.

What is needed is an open, decentralized marketplace with no such barriers to entry where buyers and artists from around the world can trade freely without relying on an auction house as a middleman — enter Portion. Portion is the premier blockchain platform upon which artists of all levels of fame can advertise and sell their work and collectors/investors of all means can appreciate. In other words, Portion is to the auction house to what Bitcoin is to the bank.

What makes Portion unique is not simply that it is a blockchain-based digital auction house with no middlemen, there are other such platforms that serve this need. Rarible, for instance, is a simple platform for the creation and sale of digital art and collectables. OpenSea operates as a sort of decentralized eBay for digital collectables and items. Portion, however, is unique in the sophisticated trading tools it offers artists and speculators. For instance in V2, comes a royalty mechanism and decentralized curation for artwork, the likes of which does not exist in any capacity for either the traditional physical or the evolving digital art world.

A brief snapshot of the broader DeFi market

Let’s zoom out and examine the broader DeFi (decentralized finance) market in terms of liquidity and volume. For instance, Uniswap is an exchange that is worth mentioning, as it is comprises a whopping 97% of all DEX volume:

(https://etherscan.io/stat/dextracker)

Uniswap is a permissionless decentralized exchange that allows users to trade any Ethereum tokens directly through a web3 wallet such as MetaMask without having to deposit and withdraw from an exchange wallet. This eliminates the need for KYC or concerns about an exchange’s security and vulnerability to hacking. Through the use of smart contracts, Uniswap is able to offer traders pseudonymous on-chain transactions for negligible fees.

Uniswap utilizes liquidity providers to supply capital to a given asset pool by putting up collateral for both sides of a given market. Once liquidity is supplied, Uniswap rewards users with so-called “Liquidity Tokens” which serve as a record for what percentage of a given liquidity pool a certain user is responsible for. These liquidity tokens can be redeemed by the user for the underlying collateral at any given time.

In the interest of incentivizing liquidity, Uniswap charges a 0.25% fee on each transaction. These fees are then automatically added back into the pool at the time of the transaction, which results in deeper spreads across the entire market. Thus, liquidity providers are granted a stake in an even larger pool of capital, meaning the more fees collected, the greater income a market maker earns at the time of liquidity token redemption. Uniswap also has no listing fees, requires no native tokens for trading, and has extremely cheap gas costs for a DEX. The project is open source and the code is available on GitHub for public audit. The inherent permissionless nature of the project allows any project to offer their ERC token on Uniswap and provide their own liquidity for it.

The Art space continues to grow within DeFi

With $11,500,000,000+ locked in DeFi (Decentralized Finance), it seems only natural that NFT’s will get their time in the sun. With over $140,000,000+ in transaction volume thus far and nearly 5,000,000 pieces sold, the opportunity could not be any more abundant for Portion.io to launch its next iteration and second platform which first went live in 2018. For Portion, the increase in momentum within the DeFi space is a signal of optimism. The native PRT token allows holders to receive royalties from sales of art & collectibles. Additionally, PRT can be earned through use of the platform, similar to a rewards program. Ultimately the PRT token is able to serve its role as a governance Token and facilitate a greater ecosystem on the Portion platform, and beyond. The NFT market has exploded over the last few months, and Portion allows for a greater degree of participation in this ecosystem.

A match made in heaven

While the contemporary art market had roughly $6B in sales in 2019, the digital art market has long been encumbered by the issues that Napster and other file torrenting services had highlighted in the early 2000’s with creating digital scarcity. While physical art has myriad redeemable qualities, perhaps its most endearing quality is the physical scarcity of it existing in the 3D realm, also conferring properties of unique ownership. The digital NFT world enabled part of what’s compelling about the intersection of Art and Blockchain: the resilience to censorship that blockchain offers artists. The ability to create and transact on a global scale without barriers and bureaucratic hindrance breathes newfound life into the digital arts space.

The question many people new to the concept of digital art often ask is “Why should I buy a digital object when I can just download it instead”. The beauty of digital scarcity comes from the fact that all of our NFT’s are cryptographically linked on the Ethereum Blockchain, and are completely immutable, and irreplaceable. Unlike a conventional image, where millions of owners can store a copy on their hard drive, a Portion.io NFT has data hardcoded inside a cryptographic token that represents a certificate of ownership and interacts with IPFS (Inter planetary file service). The result is a sophisticated method to transact digital non-fungible creations that ensure digital scarcity.

Ultimately, with the launch of V2 coming soon, the Portion team is proud to be able to help elevate the digital arts scene to new heights, while simultaneously enabling countless people around the world to create and inspire.

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