Meng Yan: Building the Internet of Value with NFT

Recently, the digital asset market as a whole is in a bear market state, and some bright spots have appeared, and some very good signs of growth have appeared. Many high-growth products are related to NFT and gamifi (gamified finance). What exactly is NFT? We combine our own research to do some theoretical discussions for everyone.

In 2017, my teacher Yuan Dao and I translated the English word Token into a pass, which was recognized and accepted in the industry. Looking back in 2017, industry participants had a lot of respect for the Internet of Value, blockchain, and the future of open finance. The outlook at that time was the right direction. For example, we felt that the future Internet of Value would have a protocol layer specifically to express value; tokens and digital currencies would be used to express value. At that time, the value we admired in the Internet was mainly expressed by homogeneous tokens. When we wrote that article (“Tokens are the key to the next generation of Internet digital economy-One of Yuandao Blockchain Dialogues”), it was at the time when the crypto cat became popular. We found that in addition to homogeneous tokens, there are also non-homogeneous tokens. We think that it is a necessary supplement to the Internet of Value, but it is by no means mainstream. Today, four years later, I have a completely different view on this issue. .

Meng Yan: Building the Internet of Value with NFT

I think that in the future value Internet, most of the tokens and the main value are non-homogeneous, and homogeneous tokens are only a small part. In other words, the future Internet of Value is mainly based on non-homogeneous tokens-NFT.

Before starting the argument, let’s talk about a piece of the past. Regarding the development process of network communication, in fact, the first high-speed communication network of mankind is the telephone network, not the Internet. The telephone network mainly uses exchange protocols, called circuit switching. Zhang San wants to call Li Si. He sends the signal to the operator. The operator takes out a cord with plugs at both ends, connects them to the phone line, and the two can talk. The voice signal can be like water, from Zhang Sanliu to Li Si, very simple, clear, low-latency, and high-quality. But there is a problem. Once the channel between these two people is established, the channel can only be monopolized between Zhang San and Li Si at this time, and other people are not allowed to plug in, which is the so-called “busy”.

Meng Yan: Building the Internet of Value with NFT

By 1962, the entire network communication technology had made great progress. If we continue to use the circuit-switched network of the past, the entire network cannot be enlarged, and it is absolutely impossible for us to listen to music, watch the news, and play games like today, because as long as one application takes up the communication, other applications It can’t be used. How to make network communication more flexible and diversified? In 1962, a Ph.D. from MIT proposed a new network exchange protocol in his doctoral dissertation, which is the packet-switched network applicable to the Internet today. The most important advancement of the packet switching network is to cut the data that used to be like flowing water into pieces and put them in one bottle after another, which is equivalent to cutting the entire water flow into one bottle and one bottle, and write clearly on each bottle. Who sent this to whom, this is the first few bottles of water, and then let it have the ability to describe itself. The entire network communication form has undergone a fundamental change. The core point is to change the simple water flow-based communication form from The self-descriptive data package is understood as a bottle of water, and each bottle of water has a label. This small change caused the entire network communication to move from circuit switching to packet switching.

When we have this concept, we should think about it carefully. The essence of NFT is not art and collectibles. The essence of NFT is the bottle of water in the above scene. Two labels are written on the bottle. One is for the issue of this NFT. Contract, the other is TokenID. The bottle is empty, allowing us to do anything in it.

Meng Yan: Building the Internet of Value with NFT

Express the above metaphor in this table. There are two fields in the table that are fixed and necessary: ​​contract address and TokenID. The following content is a blank sheet of paper, let you play freely in it.

“A piece of white paper is good for drawing the most beautiful pattern”, you can do whatever you want on it. The artists first came out and said, let me draw on it, so we see that a large number of NFTs are now described as artwork. The content field is not limited to art, you can put other things, you can also put a bottle in it.

So we see an interesting historical rhyme. Among the communication protocols, we move from circuit switching to packet switching, and the key is to turn data into self-describing data packets. However, the development of the Internet of Value is still in the era of ERC20 homogeneous data. This era has many advantages: good liquidity, good calculation, simple agreement, but only acquaintances can be socialized between smart contracts, and it can only complete a few simplest and most basic actions. If this form continues, no matter at the application level, or at the network communication level, the intercommunication level of the Internet of Value, the network will not grow.

We believe that NFT is the value data package in the Internet of Value. It is a bottle of water. After the label is marked, the user decides what to put in it. In this case, it can have huge scalability advantages and can easily cross-chain. The smart contract does not need to know which smart contract issued the NFT to be processed. This is a very important ideological change.

So we wondered whether we can upgrade the Internet of Value and construct the Internet of Value with NFT (Non-Homogeneous Token). In the process of upgrading, it may be necessary to make basic requirements for the NFT protocol. In addition to the ID of the contract and Token, there must also be a chain identity of the blockchain (Ethereum, Polkadot, BSC, etc.), with a chain identity After that, we can transfer the NFT across the chain. The content placed in the NFT must be linked to business and application logic. From this we will get an important ability: the mutual combination and calculation of cross-chain NFT.

This ability is just sprouting in the field of blockchain today, and I believe it will become an important direction for the development of NFT in the future. Advantages of this:

First, the cross-chain trade of assets is using NFT as the carrier. Cross-chain trade of assets can be much easier than it is today.

Second, NFT can be used as game equipment. NFT can embed a large amount of business logic, and the business logic of equipment upgrade can be directly written in the content layer of NFT.

Third, a better, more direct, and easier-to-think application is to use NFT to make financial documents. For example, checks, invoices, bills of exchange, financial derivatives (options, futures), etc. can all be expressed as NFT bills. Can create some so-called exotic financial derivatives.

Fourth, regulatory traceability, a series of regulations and requirements, restrictions and restrictions on the use of tickets can bring endless imagination to future open financial applications, and at the same time facilitate supervision. If the future Internet of Value is based on NFT, it will become a major upgrade of the entire Internet of Value.
What we have done is the third point above, financial tickets. We made a DeFi protocol called SOLV, using the content part of the NFT to create a standard specification to express financial documents, or a ticket similar to a bill of lading. In fact, we have constructed a set of standards to implement table calculations. For example, on the left is a bill of lading about books, which contains a table, and the second table is a bill of lading with different quantities of the same book. In our The agreement can realize the combined calculation of these two forms, which is equivalent to integrating two bills. One bill can carry one hundred books, and the other one can carry two hundred books. Together, it is OK. Mention a note for three hundred books.

Meng Yan: Building the Internet of Value with NFT

In the same financial agreement, for example, bonds of the same specification involved, a bond of 1,000 yuan and a bond of 2,000 yuan can be combined into a bond of 3,000 yuan. This basic calculation logic has been implemented in our protocol, which can not only achieve merging, but also split, and various calculations can be expressed.

Everything is difficult at the beginning, and you need to lay the foundation seriously at the beginning. We first choose to use NFT to express Vesting Token, which is the well-known investor lock-up share (not only investors, but also all tokens currently locked and released in the future). For example, we can lock one hundred bitcoins in a bill, and then set the release time and release mode (in accordance with the linear release of each block or periodic release, write the release rules in advance), stipulate Good movement rules, the bill may be moved, it may be restricted to not be moved, and it may be restricted to move only once. We can even transfer Token to a specific bill, that is, holding a bill, no matter who the bill is transferred to, a payment will be directly transferred to this bill in the next three months, and the asset will eventually be transferred to On the bill, a movable account is realized. NFT makes digital assets more versatile, so we have chosen this direction. So far, this idea has been recognized by professional investment institutions around the world.

Finally, we believe that NFT is a better digital value carrier than FT, and it is also an inevitable trend of the Internet of Value. The advantages and transcendence mainly come from the self-description ability of NFT, and this self-description ability can be customized. In this view, the ERC721 we are most familiar with is just the most common and common NFT. Everyone puts pictures, collectibles, and works of art in ERC721. If we open our brains and put other things in it, in fact, its application space can be extremely broad, which will cause a large-scale innovation wave in our industry, including meta-universe, art, financial tickets, games and other fields. . The NFT-based Internet of Value still requires a lot of infrastructure innovation, and we also hope that as a Chinese team, we can play a role in it. Thanks!

 

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