Coinsilium #COIN $CINGF + Nifty Labs Q&A – Investor Q&A June 2021 June 14, 2021 – Posted in: Blog, Coinsilium (COIN) – Tags: cingf, coin, coinsilium, Coinsilium Group Limited, decentralised finance, defi, ERC20 token bridge, indorse, IOV Labs, nft royalty codes, nifty labs, Nifty Labs Minter, nifty scanner, non fungible tokens, open finance, rsk network, RSK token, smart contracts
Coinsilium (AQSE:COIN OTCQB:CINGF) + Nifty Labs Q&A Investor Q&A – June 2021.
Q: Coinsilium is positioned as a developer in the Open Finance space, how does that differ from Defi, or Decentralised Finance? Also as the Company’s focus shifts towards NFT’s will it be moving away from the DeFi model?
A: Coinsilium’s overall venture builder strategy has not changed since our 13th July 2020 announcement following the strategic review carried out by the business as announced 8th July 2020. However the language and terminology you are starting to see in Coinsilium’s announcements and media coverage is evolving in line with the market and we now refer to the strategy as ‘Open Finance’ which is broader, more inclusive and more ‘regulator friendly’ than the previously used term ‘DeFi’. Coinsilium’s exposure to Open Finance/DeFi includes ‘IOV Labs Asia’, our 50/50 joint venture with Coinsilium’s largest shareholder, IOV Labs (parent company to RSK). Coinsilium currently holds approximately 2m fully vested and vesting RIF (RSK Infrastructure) tokens.
We also announced in August 2020 that we act as advisors to Indorse on their new 2.0 token model, an ongoing DeFi project that is now evolving to include elements of NFT technology as well.
Remember that Indorse is a company where Coinsilium holds a 10% equity interest and approximately 15% of the outstanding IND token supply. The key to NFT technology is the ‘smart contract’ which is also prevalent in DeFi models. The development of Smart Contracts either for NFTs or DeFi applications is expected to be a significant focus going forward for our Nifty Labs development studio partnership with Indorse in Gibraltar.
One other point to clarify in the context of Coinsilium’s business strategy, is that the opportunities we are now pursuing in both the DeFi/Open Finance arena and NFTs are not to be considered as separate or exclusive channels. There are in fact many areas in DeFi/Open Finance which incorporate elements of NFT technology (Smart Contract development and asset tokenization for example). From Nifty Labs’ perspective, we therefore see NFTs and Open Finance as complementary opportunities rather than being mutually exclusive. We also fully expect that, as Nifty Labs continues to grow and build innovative decentralised products and solutions, its development capabilities and expertise will rapidly come to the fore across the full spectrum of this rapidly expanding global industry.
Right now however it is clear that NFT collectibles, particularly in arts, sports and music are creating an unprecedented amount of excitement globally and we believe it is right for the Company to prioritise the opportunities we are seeing in the NFT technology space (the NFT marketplace that Nifty Labs is currently working on being the most prominent) for the benefit of the Company and shareholders.
Whilst we also believe that the broader DeFi/Open Finance space holds great promise in the long term, the near to medium term visibility is somewhat less clear, as the sector still needs to find its way through some of the prevailing regulatory hurdles, particularly in the European, UK and US markets. Coinsilium will always ensure that it complies with all regulatory requirements and one of the advantages for the Company being based in Gibraltar is that the regulators here understand the challenges and are continuously working on developing effective regulatory models.
https://cointelegraph.com/news/world-economic-forum-releases-policy-toolkit-for-defi-regulations
Q: When you announced that Nifty Labs had started developing RSK-powered Non-Fungible Tokens (NFTs) on Bitcoin, you also said RSK were developing a bridge. Firstly how does the bridge work, and secondly can that bridge be used for other tokens or coins?
A: RSK already has an existing ERC20 token bridge, which can port over tokens from Ethereum to RSK and vice versa. ERC20 is the technical standard for fungible tokens and is used for smart contracts on the Ethereum blockchain for token implementation.
Now RSK has confirmed that it is extending this functionality to NFT tokens as well (ERC721 and ERC1155). For example, if you wanted to port a TEST token (ERC20) from Ethereum to RSK, first you would need to lock it in a Smart Contract on Ethereum. Thereafter, the bridge would automatically mint a similar token on the RSK network, thus creating a ‘rTEST’ token on the RSK blockchain which is the RSK version of the ERC20 token.
Q:How does the NFT minting process work, and how does Nifty Labs earn from it?
A: To mint an NFT you need to follow one of the NFT standards introduced in the Ethereum EIPs – either the ERC721 or ERC1155. The Nifty Labs Minter will support both these standards and will allow users to mint new NFT tokens using a standardized, audited Smart Contract template.
This template will be common for each of the NFTs minted and will also follow certain best practices in the industry around the storage of the metadata and the media assets.
The definitive commercial use terms for the Nifty Labs Minter have yet to be determined, though it is likely that they will involve a platform fee which would be applied for the minting of new NFT tokens.
Q: How much of a guarantee does Nifty Scanner provide for the provenance of a given NFT?
A: Nifty Scanner is a browser extension tool developed by Nifty Labs which allows users to check the attributes of an NFT and to see where the NFT asset is actually stored. It does this by analysing the available data including the media and metadata and then provides an on-chain spectrum report with a decentralisation score allowing users to determine whether an NFT is truly “decentralised” or not. The reason why this is important is because, more often than not, projects will store NFT media and metadata on centralised servers, which are ultimately controlled by the project team. In such cases the media associated with the NFT can easily be manipulated or changed without the knowledge of the beneficial owner of the NFT.
Nifty Scanner does not look at the provenance of the data, but rather at the current state of the data, essentially creating a snapshot of the state of the NFT token when the scanner is deployed. Whilst it is usually easy to obtain the data for most tokens, a large number of NFTs don’t currently follow the standard interfaces and guidelines, thus rendering it difficult in such cases to gather the data in an automated manner.
As the NFT market continues to mature, we expect that people will learn to discern between the good, the bad and the ugly NFTs, so to speak, and will learn to avoid projects where transparency is lacking. We expect tools such as Nifty Scanner to play an intrinsic role in this education process going forward.
https://blog.indorse.io/what-makes-a-bad-nft-avoiding-costly-mistakes-e48ab32b27c1
Q: What happens if the server hosting the NFT goes offline or is taken offline?
A: If the server goes offline or is taken offline, more often than not, the metadata and the media associated with the NFT token will simply vanish. Whilst the NFT (i.e the Token) is what the user is paying for, it is the media file that contains the actual content and no one would want to pay significant sums of money for what could end up to be a random token ID. In some cases, platforms like OpenSea do make backups of the data, but in many cases, should the server go offline, the NFT image URL would disappear as well and the screen would simply show a “404 – page not found” message.
Q: From a functional standpoint, the NFT space in regard to purchasing, wallets, provenance etc seems very fragmented and inefficient. How do you see this evolving?
A: The space is certainly fragmented and inefficient and Nifty Labs will be looking to bring more awareness to some of these issues. However there are still some strong stand out projects out there such as Avastars, for example, where the digital collectibles are entirely stored on the blockchain.
We are also now producing regular technical literature designed to make more people aware of some of these issues; if people lose their money through buying “bad” NFTs then the reputation of the entire industry suffers. With our own forthcoming marketplace we will certainly be striving for the highest industry standards and we would hope that other new upcoming projects will also seek to follow these guidelines for the NFTs they produce.
https://blog.indorse.io/top-nft-projects-rediscovered-5ec0e117b53d
Q: There is a lot of talk about the use of ‘royalty’ codes within smart contracts. Do you see this as an important component of the developing NFT Marketplace?
A: We believe that the “royalty” component will prove to be one of the great innovations to come out of the NFT space and holds the potential for reshaping revenue models across a wide spectrum of industries, for the benefit of artists, creators and significantly, brand owners. Simply put, this technology enables the terms of any royalty type agreement to be coded directly into the Smart Contract, rendering the agreement completely transparent and irrefutable, thereby avoiding issues or disputes with counterparties which can often occur years down the line.
The Nifty Minter, currently in development by Nifty Labs (alongside the marketplace), will also include an option for the original creator to include a provision for a “royalty” payment in their tokens and the contracts. The creator can thereby ensure that they will continue to receive perpetual royalty payments on all secondary market sales for as long as the NFT continues to trade. This royalty payment could range from anywhere between 1% to 30%, depending on the requirements of the creator.