Please describe your proposed solution.
The Problem: Cross-Chain NFT Copies
Counterfeit and otherwise plagiarized NFTs are a big problem for Ethereum’s NFT ecosystem (1). And as NFT collectors become more savvy, and NFT trading volume moves out from Ethereum to other blockchains, we expect the majority of unauthorized copies of NFT collections to be cross-chain copies**.** In other words, bad actors will increasingly exploit market inefficiencies to re-mint copies of NFT collections on different blockchains - marketing these copies as original.
Because information about a given NFT project is mostly siloed within the ecosystem where it launches, the door is wide open for bad actors to create unauthorized copies of NFT art across different blockchains without buyers or marketplaces knowing they’re dealing with copies.
And whereas NFT collectors can protect themselves from intrachain counterfeits on Cardano by verifying a legitimate collection’s policy ID (and Ethereum NFT collectors can do the same by referencing a verified contract address), the only way to verify a collection isn’t a cross-chain copy is to be familiar with all the collections minted on other blockchains - which is impossible given that there are currently roughly 10 million art and collectible NFTs on just the Ethereum and Flow blockchains alone (2) - not to speak of the many millions more NFTs on blockchains including Cardano, Solana, Tezos and others.
Moreover, even the DID-based solutions being developed to prevent NFT scams (like the one we’re working on with the team at proofspace.id) will fall short of stopping scams using cross-chain copies unless they’re combined with an additional solution. Because while DIDs can be helpful in mitigating frauds and scams, resources like the Twitter account, @NFT_Theft have documented countless cases where scammers have fabricated convincing, yet fraudulent identities to sell stolen digital art.
Bad actors have already been discovered by the Cardano community trying to launch NFT collections with art stolen from collections on other blockchains, and because there’s no way to effectively monitor this problem, nobody knows how big the problem is.
ArgusNFT: Building Trust in NFT Markets
At ArgusNFT, we’re building AI-powered, industry-first solutions on Cardano to improve trust in NFT markets.
To this end, we’ve built and launched Version 1 of Argus, a copy/counterfeit NFT detection protocol that currently supports all Cardano NFTs (You can learn more about Argus and try it out at argusnft.com.).
After months of research into potential remedies for NFT plagiarism and scams, we’re confident Argus related services we’re developing will provide a 360o solution to these problems. And just days ago we finalized a partnership with JPG Store, the leading NFT Marketplace on Cardano. With this partnership, Argus will go a long way to deter NFT counterfeiters and reduce the number of counterfeit/fake NFTs being sold to unwitting buyers on Cardano. And the partnership will also provide the perfect environment to further train Argus' machine learning model and increase its accuracy over time.
However, Argus can only provide high assurance findings if it surveys the vast majority of NFTs across major NFT ecosystems, and not just the small fraction of NFTs minted on Cardano.
For these reasons, we realized early on that Argus would need to be a cross-chain protocol. And Ethereum is naturally the second blockchain ecosystem we’d like to integrate - for a number of reasons:
- Because the largest pool of NFTs is currently on Ethereum, many (if not most) cross-chain copies of NFTs listed on Cardano will come from Ethereum NFT collections.
- Cardano’s main competitor is Ethereum - both in terms of Layer One, smart contract blockchains, and in terms of NFT ecosystems.
- Because the vast majority of pain from NFT scams and plagiarism is currently suffered by Ethereum users, these users are most likely to utilize NFT Asset protection services on Cardano, especially if the solutions we’re offering also protect the assets they’ve created or collected on Ethereum. And given current market conditions, Cardano’s cheaper minting and transaction costs will provide additional incentive for Ethereum users to use ArgustNFT services and launch NFT projects on Cardano.
- The majority of the addressable problem of NFT plagiarism is on Ethereum, and just one to two SaaS agreements with Ethereum NFT marketplaces (which would likely result from Argus integration of Ethereum NFTs) could put our project on a sustainable path, allowing us to build out the suite of Cardano based services we’re planning.
- Developing a schema to integrate Ethereum NFTs should yield a template that’s useful in future integrations of NFTs from EVM-compatible blockchains like Avalanche, Fantom and Polygon.
Our team has already invested weeks researching technical approaches to the challenges of Argus’ Ethereum integration, and if this proposal is funded, we’ll be in a position to build upon this work in the following ways:
- Test what we believe to be the fastest way to access Ethereum NFT metadata from existing and newly minted collections.
- Modify Argus’ Cardano protocol to parse, ingest and index relevant Ethereum NFT metadata.
- Implement a proof of concept, developing a way to ingest and index all new Ethereum NFTs shortly after they’re minted, and beginning the process of integrating all existing Ethereum NFTs.
- Market our early findings of fake/counterfeit, Ethereum NFTs to the Ethereum NFT community - advertising the protection services for NFT market participants we’re building on Cardano.
- Offer our Aegis asset protection protocol - which will support both their Cardano and Ethereum NFT collections - for free to prominent Ethereum artists who launch collections on Cardano.
Citations:
- https://www.vice.com/en/article/wxdzb5/more-than-80-of-nfts-created-for-free-on-opensea-are-fraud-or-spam-company-says
- Nonfungible, NFT Market Quarterly Report Q1, 2022.
Please describe how your proposed solution will address the Challenge that you have submitted it in.
Challenge KPI # 1: Number of projects that migrate
Motivating respected NFT artists to migrate from Ethereum to Cardano is an ideal way to catalyze migration of projects from Ethereum to Cardano, for a few reasons:
Prominent NFT artists can bring a comparatively large number of smaller projects to Cardano, relative to the investment needed to incentivize their migration.
Skilled and prominent artists have followers who love their work. Many of these followers will likely take the cue from artists they like to buy NFTs on Cardano - and stick around for the better security, trust, and vastly lower gas fees. Likewise, NFT artists often belong to tight-knit artist communities that follow each other’s creative choices, so any success we have in breaking through to even a moderate number of artists could start a self-reinforcing cycle.
Challenge KPI # 2:
Number of users of these smart contracts once migrated to the Cardano ecosystem
There are several downstream benefits of our proposal's approach to increasing the number of users on Cardano and usage of Cardano smart contracts:
Aegis is an image registry and notification service we’re building on top of Argus that empowers NFT creators and collectors to protect themselves from bad actors attempting to sell unauthorized copies of their assets. It notifies creators and collectors where and when copies of their registered artworks (and/or NFTs) are minted or listed on an NFT marketplace, and largely automates the IP takedown application they need to submit to a marketplace to stop bad actors from selling their assets.
Once Aegis is complete, our funded Fund8 Catalyst proposal will enable us to offer this service free to established Ethereum NFT artists and project owners who agree to launch projects on Cardano. While we expect this to be a powerful marketing opportunity for the Cardano NFT ecosystem, we also realize creators and collectors whose NFTs are mainly on Ethereum will only pay for Aegis if the service protects their Ethereum NFTs.
Once Argus supports Ethereum NFTs though, we believe it will drive a sustainable flow of adoption - and with it, numerous Cardano transactions: There’s currently no robust solution for protecting Ethereum NFT creators and collectors from intrachain counterfeits, let alone cross-chain copies. So if we can provide this service on Cardano at a reasonable price with low transaction fees, we see this as an important first step in adoption by Ethereum NFT market participants. And once we’re in a position to provide a DID-powered NFT solution alongside Argus (DID Solution Proposal), along with NFT discovery tools that act as a window into the Cardano NFT ecosystem (search engine proposal URL), we believe this will be a powerful recipe for increasing activity on Cardano.
What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?
We’re confident in our team’s ability to implement the integration of Ethereum NFTs on Argus. Below we’ve provided a summary overview of our technical approach to this problem, and we have familiarized ourselves with the issues involved enough to know there are ways to overcome the technical challenges of the problem.
However, there’s a considerably higher risk that once our technical solution is developed, it will fail to garner widespread adoption among NFT market stakeholders, and this could threaten the long term sustainability of the services we’re building.
The first factor that could jeopardize adoption is NFT market stakeholders not understanding the scope and nature of problems relevant to NFT scams and plagiarism. Thankfully, so far marketplace operators seem to understand the problem and the importance of Argus as a component of an overall solution to combat NFT market abuses. In the current market landscape, marketplaces are responsible for manually verifying projects and are answerable to customers who mistakenly buy counterfeit NFTs. That said, higher volume marketplaces have been excited about Argus, which can greatly reduce risk to their customers - especially as cross-chain copies inevitably become more pervasive and manual, project verification methods become less effective. Happily, we have partnerships in the works with NFT marketplaces on Cardano, and are excited to announce them as soon as they’re finalized.
Still, other stakeholders may not be as convinced about how essential Argus is as a tool to combat NFT plagiarism and scams. For this reason, we’re developing relationships with many key stakeholders in the Cardano NFT community, and participating in conversations facilitated by Cardano’s NFT Guild on the adoption of NFT authentication and project verification standards, and will.
The last, major risk we see is reduced demand for our services in the short term due to adverse market conditions. This risk has indeed made us prioritize Argus’ integration of Ethereum NFTs, because just one SaaS agreement with one of the leading Ethereum marketplaces could sustain our small team’s operations, even if markets continue to worsen in the short-to-mid-term. And we also consider it an advantage that our team is very small, highly skilled, trusted and well connected in the Cardano community, so we’re confident we can keep making steady progress on project goals, even in the face of adverse market conditions.