[Grant Proposal] Crowd-investing & management protocol (Crowd protocol) (v2)

Proposal to fund development of “Crowd protocol”

TLDR
We propose to fund the development of the NFT Crowd-Investing protocol (Crowd), which includes internal DEX for NFT fractions trading and DAO mechanics which allow users to manage NFTs in which they have stakes.

SInce NFT can represent almost any asset (artwork, digital asset, real estate, car, private business, …) it is essential to have a tool that allows to own a fraction of a NFT and properly manage underlying asset. Crowd protocol is such a tool!

The adaptation of the protocol will take place through integrations with third-party services (including those built on the Rarible protocol), games (meta universes), artists and bloggers.

Crowd protocol allows:

  1. to divide an NFT into fractions (ERC-20 tokens) representing ownership;
  2. to trade these fractions (ERC-20 tokens);
  3. to earn trading fees (commission);
  4. to split fees between Rarible and the Crowd protocol (in order to receive fee income Rarible will get 5% of tokens of Crowd protocol’s initial token offering);
  5. manage NFTs in which users have stakes (DAO mechanics for NFTs)…

The Protocol aims to earn trading fees for Crowd token holders (including Rarible) and, therefore, add value to the RARI token and the Rarible DAO.

We have already developed a working prototype during June Definition Hackathon and took a prize in the Rarible track. And for the last month we have been actively developing the protocol.

The Idea
The protocol allows investors to crowd-invest in NFT by purchasing a part of it. When the funds are collected, new special ERC-20 tokens are emitted and distributed between the investors pro rata their investments in the NFT. These tokens may be traded in a protocols’ internal DEX, and commissions from these trades are distributed between Crowd DAO (including Rarible). There is automatically forms DAO of investors who have fractions of the Crowd-invested NFT. Within this DAO, investors decide the future of their Crowd-owned NFT. It could be anything.

For example:

  • resale decision;
  • decision on participation of NFT in the art exhibition
  • the decision on the distribution of the NFT income
  • decision on choosing a manager to manage the NFT

The Implementation

1 . Investors lock their funds in the Crowd on-chain investment pools.
2. Crowd protocol buys an NFT on Rarible
3.1. Crowd smart-contract issues ERC-20 tokens that represent the ownership of the underlying NFT
3.2. Crowd smart-contract creates multisig wallet in Gnosis Safe with DAO mechanics
4. Protocol distributes the tokens to investors in proportions of their investments in the pool
5.1. Investors trade their fractions (ERC-20 tokens) on Crowd protocol’s internal DEX
5.2. Investors manage their NFT using DAO mechanics (most likely using SafeSnap DAO)
5.3. Trading commissions distributed between Crowd token holders (including Rarible)

Competitive Analysis
For the time being, there is only one working protocol, which partially implements our idea: https://fractional.art. However, it does not have an ERC-20 DEX under the hood. Thus, it is not able to generate trading commissions. Moreover, their protocol does not provide any variability in the management of the NFT.

Detailed Roadmap
Link: https://obsidian-tapir-baa.notion.site/178428c180de4aaa96d84573f6fe441f?v=10b5bb7fe7a940b797d702503e64d0c0

Funding Milestones and Payments

  1. Milestone 1 (Sep 13, 2021 → Oct 10, 2021):
    Crowd protocol V1 (fractionalization, crowd-investing and DAO mechanics), the start of integration
    We already have a working prototype of Crowd protocol V1.
    Contracts: GitHub - FarFlare/satellites: Prize-winner of Definition summer hackathon 2021. Onchain solution for NFT croudinvesting. Coded by @k0rean-rand0m.
    Frontend (Rinkeby): React App

  2. Milestone 2 (Oct 11, 2021 → Nov 7, 2021):
    Landing page with description, whitepaper, and first integration

  3. Milestone 3 (Nov 8, 2021 → Dec 26, 2021):
    Crowd protocol V2 (internal DEX for NFTs’ fractions trading)
    We consider ourselves independent contractors of the Rarible DAO and will report taxes accordingly. Forms W8-BEN and W9 will be filled out accordingly before funds get distributed to our team.

Dates may be subject to change, but the team will do its utmost to meet the deadlines.

Total Payments

The total amount that would be needed for the implementation of the proposed idea equals $50,000. This amount will be divided between the milestones as follows:

  1. Milestone 1: $8,000 upfront to pay for hiring, $2,000 upon completion of the Milestone 1;
  2. Milestone 2: $10,000 upfront, $10,000 upon completion of the Milestone 2;
  3. Milestone 3: $10,000 upfront, $10,000 upon completion of the Milestone 3.

Payments will be made to the following Ethereum address:

0x52B23D26058c166b363aa96B1C3C7FC4DCD7AaF0

Use of Funds

The funds will be used to cover the payments to the team members and the expenses for tools and services that the team would need during the implementation. We will provide a detailed report on the use of funds upon request.

Business Model

Crowd protocol will earn commission income on NFTs’ fractions (ERC-20) trading. The income will be distributed to Crowd protocol token holders (including Rarible). The protocol will be free to integrate and use, so Rarible DAO and its ecosystem will earn extra profit from it.

Team Members

We have built a team that worked on Crowd protocol during the Definition Hackathon in Rarible track and keep working on the:

Twitter: https://twitter.com/IvanStarinin

Telegram: @vosdux
Discord: vosdux#4833
GitHub: vosdux (Artem) · GitHub

In addition to the presented members, we are also planning on hiring a designer and another back-end developer for some parts of work.

Accountability

Why should Rarible DAO fund this?

Using the Crowd protocol will allow:

  1. to solve all the problems listed above;
  2. to increase Rarible audience among investors and artists;
  3. to earn profit for Rarible DAO;
  4. to increase the value of the RARI token.
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