Versus - Flow Ecosystem Vol. 2
A novel NFT auction project on Flow
Introduction:
Since the Cambrian explosion of tokens in 2016/2017, we’ve seen considerable innovation around token sales and distribution. First were initial coin offerings (ICOs), then initial exchange offerings (IEOs), and now initial DEX offerings (IDOs). There has been considerable innovation within the latter group as well, such as Uniswap liquidity mining programs, Balancer Liquidity Bootstrap Programs (LBPs), and more.
On the auction side, we’ve seen different types administered by centralized parties (such as CoinList, e.g. via a Dutch Auction). We’ve also seen lottery style auctions play out with products like Polkastarter and Solstarter. Gnosis launched their Gnosis Auction product only a few weeks ago. The main goal of the aforementioned products is to distribute tokens to the community and build a community (less so for actually raising capital - capital has become commoditized for now). Many of these novel distribution mechanisms attempt to optimize for variables such as fairness in price & diversity of token buyers.
On the NFT side, it's industry standard for NFT drops to happen on marketplaces. Yet we haven’t seen too much innovation on how these drops are distributed - most of the drops go to the highest bidder, without consideration for any other variables. Versus is looking to disrupt this market.
Versus’ flagship product is a head-to-head auction between a unique version and an edition series. Another way of thinking about it is a (1/1) NFT or (1/X) NFTs with a serial number. The Versus product conducts the head-to-head auction by looking at the highest bid on the unique side versus the sum of the highest bids on the serial number side. Whichever amount is higher, determines the result of the auction either minting a (1/1) NFT or a (1/X) NFT series.
Executive Summary:
Team
Founded by Bjartek, Kinger, Rubend, and Irrelevant
Team met during the Open World Builders bootcamp program in 2020 and founded Versus shortly thereafter
Financials
Launched April 29, 2021
Team is self-funded
15% commission on primary sales (traditional art commission can range from 50-60%)
2.5% royalty on secondary market sales
Growth
100+ artists signed up for waiting list queue
1,100+ members on Discord
354 auction bids for a total of 5,949.4 Flow
Versus Opportunity:
Versus aims to reshape how we think about NFT drops. To date, NFT drops haven’t had much variety or creativity - Versus addresses questions such as:
How can we make drops more fair?
How can we weed out competitive bots from the NFT experience?
How can we balance scarcity with maximum distribution?
How can we test the market demand and maximize sales for our artists?
Similar to the way we saw many types of token sales and token generation events (TGEs), we imagine we’ll see similar innovation trends with NFTs. With Versus’ flagship auction product, they’re one of the first to market and they’re looking to service the market for curated art. While other platforms (such as Rarible or OpenSea) are targeting the long tail market, Versus wants to be the one-stop shop for high-end artists and collectors.
After speaking with the team, it’s clear their ambitions are large: they plan to onboard major collection houses and see how they can bridge the gap for these traditional players into the Web3 space.
Their drop schedule thus far looks like this:
Ekaitza on April 29, 2021 (Finished)
Mankind on May 5, 2021 (Finished)
Han on May 12, 2021 (Finished)
Vincent Kamp on May 19, 2021
Product Review:
To create an account, users must sign-in through Blocto. Blocto is an application serving as a user onboarding ramp for crypto (similar to a Metamask). Blocto users receive a pin to their email when signing into dApps. Account sign-up takes less than 2 minutes. Users also have the option to add 2FA with Google Authenticator (highly recommended). Since Blocto is trusting that your email is secure with the pin sign-on, we also advise users to make sure their email has 2FA enabled using Google Authenticator as well.
Versus, being a curated NFT marketplace, will only be featuring select projects at a time. Users don’t need to dig through pages of content to find a drop they’re looking for. Drops are pre-selected featuring high quality artists.
The actual auction mechanism has interesting rules.
This auction has a minimum bid of 1 Flow on the unique side and 1 Flow on each of the editions. Each bid has to be 4 Flow larger than the previous bid for the unique or 2 Flow larger than the previous bid for the editions. Bids placed in the last 10 minutes of the auction will reset the countdown to 10 minutes remaining.
You may notice that bids are currently only accepted with FLOW tokens. We imagine that as stablecoins are added to the Flow ecosystem, users may have more asset options to bid with (USDT, USDC, or Flow stablecoin: FUSD). Once a user’s wallet is connected, they can select whether they’d like to bid on the unique version, or the edition version. If their wallet has enough FLOW, the bid will be accepted and the auction will follow the rules specified above.
Another interesting feature is the artist's biography. This section allows prospective buyers the opportunity to learn more about the artist's background.
Conclusion:
The results of the first Versus auction were impressive. The edition side (15 total) out bid the unique version by an aggregate of 486 FLOW to 200 FLOW. The highest bid for a specific edition was #1 coming in at 67 FLOW, while the lowest was edition #14 at 26 FLOW. At a FLOW price of $30.96 per FLOW, the total sale raised roughly $15K for Ektaiza (with 15% going to Versus).
We’re excited to see how Versus innovates on their auction mechanism and if they’ll add in new techniques that haven’t been explored for NFT distribution. For example, maybe a token project could auction off a percentage of their native tokens in an NFT IDO. If an investor wins by buying the unique version, they may have the right to 1% of the token allocation. If a group of investors wins through purchasing 10 of the edition version, maybe each of them win 0.1% of the token allocation with their complementary NFT to signal their early participation in the community.
There’s currently no plans for the team to fundraise or add a token. Down the road, we envision that most NFT marketplaces will explore adding a token component to the network - Versus may end up doing the same. Regardless of what they decide, we’re excited to continue following future drops & innovation from Versus.