Exploring the Four Pieces of NIFTSY — Part 1

The NIFTSY Protocol can be divided into 4 pieces, each of which can be quickly summed as follows. Protocol, the first of the four DAO elements, is designed to protect users from losing a certain amount of their asset(s), up to a maximum threshold. Oracle assists users with project selection and security at the selection stage. Index/linking element is designed to protect users in the case of a possible market drop. Token primarily acts as a linking element to the other micro DAOs of NIFTSY, and provides nice perks like being a utilitarian tool for wrapping/unwrapping NFTs.

Exploring Protocol

Aside from its primary purpose (mentioned above), Protocol can be used for several applications:

  • Simple wrap and unwrap transactions which provide collateral in the form of cryptocurrencies or tokens via the newly received NFT.
  • Means of security to pay out royalties and other rewards to creators.
  • On-chain (inter-blockchain) solution provider
  • Example: Issuing clones of frozen assets in one blockchain solution into another
  • Acting as a decentralized transaction guarantor (escrow). This feature is intrinsic to the protocol but can also be customized for specific instances or tasks.

Protocol does however have two main directions of application and development. The first, is at the external level of development. The second is its vital relationship within the super-DAO NIFTSY at the level of internal development.

But in addition to the various ways Protocol can be utilized, it’s also crucial for linking with the Oracle, and building connections to the Token.

Protocol + Oracle

Understanding Oracle and Protocol together is simple. Together they reveal an asset, demonstrate its path through time, including its subjects, the transactions it’s been a part of respectively, and its valuation as well. The less obvious points where these two work appear when talking about coins in HODL, or evaluating coins that went from HYIP into irrelevance. In such cases just onchain data of the Protocol can act as a primary source of data instead of the offchain data of Oracle.

Thus, when operating with Oracle, Protocol can be considered as:

  1. Primary data store for Oracle.
  2. Primary micro-Oracle within the unified system NIFTSY.
  3. Security system for automatically blocking scam assets.

What is Token’s role?

Token can be used under several applications, perhaps as many as Protocol. Token, however, is unique because of the way it interacts with and around the other pieces of the NIFTSY Protocol.

Aspects of Token:

  1. The Token allows for the creation of an internal drive within the NIFTSY Protocol.
  2. The Token also helps to define various additional features of the Protocol. It plays a purely utilitarian function in allowing users to create, wrap and unwrap NFTs. In essence users can better use NFTs as they see fit thanks to Token.
  3. The Token also allows us to find gaps in the Protocol much faster than other tools through the use of bounty-programs. Token programs such as this further encourage active users to participate in the development of NIFTSY.

Forming super-DAO NIFTSY

Protocol, Oracle and Token play their own role as a base layer, but as discussed in this paper, they can also be bundled into the following primitive bundles:

  • Protocol + Token (see above),
  • Protocol + Oracle (see above),
  • Oracle + Token (discussed in upcoming publications).

Thus the three integrated together (Protocol + Oracle + Token) create an invaluable combination. The sort of approach NIFTSY decided to implement with these three structures is commonly referred to as the “hologram effect”, where the part includes the whole. We chose this approach for three reasons:

  1. The hologram effect makes for a less demanding design to a protection system (scoring/anti-fraud)
  2. Each part of the system can be scaled individually, eliminating the need for full system upgrades at any given time
  3. The evolution of bundles reaches its apogee in quadrology: Protocol + Oracle + Index + Token. Because of this NIFTSY operates as a DAO but consists of these four micro-DAOs. Each piece offers a separate protection mechanism as well as security for the whole system, making NIFTSY a super-DAO.

Participate with NIFTSY

If you want to participate in the development of NIFTSY as of August 2021, you can:

  1. Join the bounty group: https://t.me/joinchat/LBaSLkIa81A4NThi
  2. And start testing the app: app.niftsy.io

Working within the realm of NIFTSY, you will be able to relate practically from Token to Protocol, and to Oracle.

Till next time NIFTSY family, stay in touch!

The first cross-chain protocol to tokenise payment channels and determine an objective asset price by