The blockchain landscape has witnessed rapid innovation and new product offerings in a short time.
New features, applications, and platforms using blockchain technology and cryptocurrency have made news over the past few years, and all of them promise to reimagine how things are done.
In this article, we take a closer look at one such platform – Rarible, and why it has been getting all the attention lately.
What is Rarible?
Rarible is a creator-centric NFT (non-fungible token) platform and marketplace that facilitates the creation, sale, and purchase of digital collectibles using blockchain technology.
The focus is on trading art assets and users of the platform to trade digital collectibles and “mint” (or create) content and sell them as NFTs. Rarible uses Ethereum, the second-most popular cryptocurrency in use, for transactions.
Rarible: A Quick History
Founded by Alex Salnikov and Alexei Falin, Rarible is based in Moscow and started functioning sometime in early 2020.
This young platform has made a mark in the NFT landscape owing to its rising popularity and introduction of RARI governance tokens earlier this year (more on this later).
Platforms like Rarible have the potential to attract users in large numbers because, at its core, the concept is similar to game enthusiasts collecting their favorite cards, stickers, and tazos.
The only difference is that these favorite assets are digital in nature and are managed in a decentralized fashion. And what works in Rarible’s favor is the additional support and features, a smooth UI/UX design, and its continuously improving platform.
The platform initially attracted users from the digital art community but was propelled to one of the leaders when sales spiked multifold after introducing RARI governance tokens in July.
As per a report, the platform recently crossed $5 million in total monthly sales, which is higher than the numbers of OpenSea, the market’s most significant player. Of this, sales worth $1.5 million was done in one day, and a single item was sold for $100,000 on 21 September 2020.
It’s not just the users that the platform is attracting. In September, Rarible secured an undisclosed amount of funding from CoinFund, the NY-based company that invests in blockchain.
RARI: Rarible’s Governance Tokens
After a few months in operation, Rarible introduced $RARI, the platform’s governance tokens. This focus on creating an autonomous and community-based model makes Rarible the first in the NFT space to offer the first governance tokens and sets it apart from its peers.
The decentralization of otherwise strictly controlled processes is already popular in other domains (like DeFi, or Decentralized Finance) and will help Rarible become a decentralized autonomous organization (DAO).
In other words, the platform users will decide how it works, what features to add, and how to manage it. This community governance is achieved by using Rarible’s RARI governance tokens.
How can you get RARI?
RARI tokens are not like other “investments” and cannot be purchased but need to be earned by using the platform. 75, 000 tokens are made available for ownership each week on Sunday, with half of them for sellers and the other half for buyers.
Primarily, there are two ways of earning RARI tokens: using the platform and marketplace mining and participating in airdrops. Before we discuss these two methods in detail, it is important to note that there are a total of 25,000,000 RARI tokens available on the platform for ownership.
10% of these can be earned using airdrops, 30% are set reserved for investors, and the Rarible team and the remaining 60% can be acquired using marketplace mining.
1. Earn it by using the Rarible Marketplace
To have a shot at earning the tokens, you must actively use the Rarible platform and maintain the marketplace liquidity mining. Sellers and buyers who used the platform to make a sale or purchase get these tokens. Don’t be fooled by the term “mining,” which holds a different meaning when it comes to mining bitcoins.
On Rarible, mining simply means encouraging platforms users to participate actively and frequently through either buying or selling in the marketplace.
Thus, users can “mine” RARI tokens by selling their digital collectibles or buying digital assets from others. However, note that Rarible reserves the right to regulate the mining process to prevent fraud and attempts to cheat the system.
2. Participate in Airdrop
All NFT holders, even those who do not use Rarible, can participate in airdrops. 10% of all RARI tokens are set aside for airdrops (2% for Rarible members and 8% for all NFT holders).
However, you must meet certain requirements to participate in the airdrop.
3. Who can participate in Airdrop?
As of 20 July 2020, active users of Rarible will receive 2% of the total RARI supply as per the Liquidity Mining formula, and another 4% of the RARI tokens will be distributed to Ethereum addresses of NFTs with registered sales on Dune Analytics.
Other NFT users can participate in the second airdrop wave, which is expected to be announced soon. Users can simply connect their cryptocurrency wallets with RARI to check their eligibility as well and subsequently claim the tokens.
What can you do with RARI?
As stated earlier, RARI token holders get certain rights and privileges while using the platform.
The tokens will allow active users of the platform to participate in the voting process of platform upgrades, core features, curate and moderate the platform, and be responsible for decision-making related to the platform’s operations, management, and economics.
The goal is to eventually let the community fully control and manage the platform and make Rarible a DAO.
The ownership of these tokens is a lucrative offer to many at the moment because this model of governance will help leverage the platform’s community to expedite new features like the NFT market index, which will allow users to invest in the market itself, as opposed to individual digital assets.
Furthermore, other features like the price discovery mechanism, social features, and more types of content (like AR, VR, and 3D) along with a mobile app are some updates in progress that will benefit from the decentralized decision-making governance model.
In other words, owning RARI tokens will make you a partial owner of the platform and give you a say in deciding its future. Eventually, the community of NFT holders on Rarible will be able to make their own decisions and govern themselves without external intervention.
Rarible is working to provide the right technical and policy-related framework to execute this ambitious vision to genuinely empower RARI token holders.
Why has Rarible become so popular in no time?
Considering the relatively young age of the platform (it isn’t even one year old), Rarible has shown impressive trading numbers. Their operations got a massive boost after introducing RARI tokens, and as NFT holders got incentivized to use Rarible more, its popularity has been steadily rising.
Naturally, funding from CoinFund has further improved the confidence of the market and the users in the platform, and expectations of further platform developments are already prevalent.
In addition to being easy-to-use and supporting a host of useful features, Rarible has shown a willingness to update and expand its own horizon continually.
The NFT market index is a step in this direction, and if implemented smoothly, has the potential to really differentiate itself from other NFT platforms by becoming an aggregator of different content and products that go well beyond art.
Thus, in addition to impressing investors and NFT holders, Rarible has shown immense promise to make digital assets and collectibles a mainstay, and that’s what has attracted users to the platform.
If you’re still struggling to wrap your head around Rarible or RARI tokens, we have answered a few basic questions and explained some concepts that will help you understand them better.
What are NFTs?
NFTs, or non-fungible tokens, are unique digital assets or collectibles that exist in limited quantities.
Unlike cryptocurrencies like Bitcoin, which are mutually interchangeable, NFTs are used to establish digital assets ownership, specifically in unique items like rare digital art, crypto-gaming, and other crypto-collectibles, which may include content in different formats.
NFTs came into existence somewhere in early 2016, and they have been used in several prominent blockchain projects.
What is Community Governance?
As the name suggests, community governance is a form of community-led management and governance model that empowers members for decision-making.
While it has mostly been used in political or governmental context (democracy can be considered a form of top-down indirect community governance), lately, its application is also being used in the tech world to build truly autonomous platforms.
Blockchain technology laid the foundation for a type of community-owned governance structure in the tech industry, and newer platforms like Rarible are building on these foundations to create more decentralized and democratic models.
This direct community governance model uses blockchain’s inherent voting feature, and all the node operators in the chain become participants in the decision-making process, and the most voted-for option becomes a part of the chain. In this model, the users have higher (and eventually absolute) decision-making power.
While the new community governance structures have been received enthusiastically in some parts of the blockchain landscape, others have pointed out several fundamental problems with it. For instance, most experts point out the challenge of scaling such models to include a large number of participants.
Furthermore, the entire model works effectively only when all the members make decisions that are beneficial for the group as a whole, and once the votes are cast, it cannot be undone.
Thus, while community governance in blockchain has many excited, the truth is that it is in an experimental stage at the moment, and there is a lot of scope for improvement, both technical and otherwise, to be the norm.
What is Marketplace Liquidity Mining?
At Rarible, Marketplace Liquidity Mining is simply the process of using the platform to earn RARI governance tokens.
Of a total of 25, 000, 000 tokens, 60% are up for grabs through marketplace mining, and unlike mining of cryptocurrencies like Bitcoin, which requires scanning the marketplace by running codes on higher computing power, Marketplace Liquidity Mining merely encourages active participation on Rarible.
What is a Decentralized Autonomous Organisation (DAO)?
Decentralized autonomous organizations, or DAO, use blockchain-based programs and codes to implement transparent rules and give the members of the organization absolute right of control without external influences (like the government, for instance).
The financial and other records are managed using blockchain technology to increase security and trust in the system. When launched, some expected DAOs to eventually be able to run automatically without human intervention.
It is important to note that the legal status of such entities is not exactly clear at the moment. Furthermore, problems in giving members absolute autonomy and security issues arising due to an open code leave massive room for improvement in the system as well.
Although DOAs are expected to gain prominence in the future, they are yet to demonstrate the benefits they claim many years after coming into existence.
What are Cryptokitties?
Cryptokitties is a popular Ethereum-based blockchain game that allows players to buy, sell, and breed virtual “cats,” and each cat on the platform is unique, and its ownership is secured using blockchain technology, which means it cannot be replicated, stolen, or deleted.
As a NFT, each digital cat can have its value increase or decrease as per the market. Many times, cats valued over $100,000 have been sold on the platform.
Launched in 2017, the game has set records in popularity and is held responsible for clogging up the Ethereum network as well, with estimates suggesting that at one point, nearly 10% of the total traffic on the system was due to the game.
Cryptokitties has not only raised millions of dollars in funding over the years but is also credited with the birth of several popular NFT and digital collectibles trading platforms.
What are Crypto-collectibles?
Crypto-collectibles are the modern-day equivalent of unique paintings, coins, artifacts, and memorabilia that people have been collecting for centuries.
The only difference is that they are digital in nature, and their ownership is verified using blockchain technology. Thus, crypto-collectibles are a unique NFT (non-fungible token) digital asset.
Unlike cryptocurrencies like Bitcoin and Ethereum, where two tokens (or units) of the same currency are identical, crypto-currencies are unique in nature and are not exchangeable.
Advocates of crypto-collectibles envision a future where valuable real-world assets are also traded using NFTs, which not only makes the transactions secure but also ensures authenticity.
Visually, crypto-collectibles can take any form you wish; virtual pets, avatars, digital art, and many platforms (like Rarible) that allow trading and minting (creating) such assets are already popular, clocking in transactions worth millions of dollars.
What are the risks of Rarible?
Like any new technology, NFT trading platforms like Raribles have certain drawbacks as well.
For starters, the current model that incentivizes higher activity on the platform to collect tokens has resulted in more volumes but has led to other issues related to wash trading, where users might exchange these tokens on other exchange platforms.
Furthermore, despite the increasing numbers, the platform still only has a few thousand active members, and it is not equipped to overcome the technical and policy challenges that will come with community governance of potentially hundreds of thousands of users.
Many tech leaders have pointed out that the proponents of NFT trading platforms are driving the narrative, and there is a lack of interest even from the core blockchain community.
And then there’s the biggest question of them all; what purpose do these collectibles serve? Unlike physical collectibles, they cannot be put up for viewing or exhibition.
So, most people currently trading in them are being driven by the financial incentive of selling it for a higher price than they purchased it for, signifying a lack of genuine interest in the entire ecosystem.
Add to that the issue of uniqueness; although each NFT digital asset will be unique in terms of code, there is nothing stopping two of them from being a visual match. Users might create NFTs of the same content on Rarible, which makes the issue of authenticity a challenge.
Before You Go…
Being the first NFT trading platform to issue governance tokens, it is abundantly clear that Rarible offers a unique proposition to its members.
There is immense potential for Rarible to become a leader in the expanding NFT market, which is pegged to grow over $300 million by the end of 2020.
If successful, Rarible can also pave the way for other organizations to implement community governance models in the NFT world effectively.
The increasing activity on the platform and recent round of funding indeed indicate that it is gaining traction, and combined with the new features it is working, Rarible inspires confidence in users and investors alike.
Thus, Rarible is definitely one of the more interesting platforms to track in the future, and it might as well set the precedence on the future of blockchain trade and businesses.