Please describe your proposed solution.
<u>1) Introduction</u>
Digital transformation is a must-have battle for auction houses, it helps them keep up with emerging customer demands and therefore survive in the face of the future.
One of the main goals of digital transformation is to transform products/services to create value and benefits for the community, reducing costs & time for society and risks for investors by integrating technologies like blockchain and metaverse into the current centralized systems. This is also the direction of the Cardano Foundation, Lac Viet Online Auction - the no.1 Vietnam Auction House and our technical team - the owner of the first patented and government-authorized SaaS auction platform in Vietnam.
In recent years, blockchain has gained widespread attention as an emerging technology for decentralization, transparency, and immutability in advancing online activities over public networks. A recent scientific study has shown that when the blockchain meets the auction industry has some challenges that need to be solved as <u>1) Cryptocurrency payment 2) Auction fraud</u>
<u>2) Auction industry market status and Problems</u>
According to recent reports and academic research shows that:
- The Cardano ecosystem has few dApp in terms of both volume and quality, lacks active users, does not keep up the trend, and may lose its competitiveness with the other crypto ecosystems such as Ethereum, Solana, BSC, Polygon, EOS, and WAX.
- The online auction market value is set to grow by USD 1.90 billion, progressing at a CAGR of 9.7% from 2021 to 2026.
- The worldwide market value of around USD 300 billion in 2021.
- The ease of bidding is notably driving the market growth and the emergence of new technology as blockchain and AI-based online auctions will be a key trend in the market
- The concerns related to fraudulent activities impede the market growth
- 70% of bidders often worry that they aren’t paying a fair price and the result was cheated.
- Two main obstacles are blocking the mass adoption of cryptocurrencies. 1) there is no enabling environment for cryptocurrencies to use in real life and 2) complexity of using cryptocurrency.
- 40% of 18 to 35-year-old people in 11 countries want to use crypto for payments.
These problems show the huge need for a next-generation of auction platform in real life. This is why the Decentralized Metaverse Auction House( dMAH*) is proposed.*
<u>3) Proposed Solution</u>
To solve the above problems, we proposed to integrate Cardano blockchain into our current centralized online auction platform. It is a functioning connection platform called Decentralized Metaverse Auction House( dMAH) that sits in between licensed auction houses and auction participants ( Users, Bidders, Sellers) for auctioning rare, extraordinary tangible items and assets belonging to the government.
dMAH is a place to attract more users to Cardano by focusing on converting non-crypto users to crypto users. Non-crypto users will be given incentives in both ADA and B2E tokens. We encourage them to use/hold tokens to earn more incentives on the next bidding.
To retain crypto users, we are partnering with a licensed auction house to accept deposit payments in cryptocurrency (ADA and stablecoin) and help them to earn more by proposing a Bid-to-Earn business model.
<u>System architecture and main modules</u>
<u>a. The architecture of the current (legacy) centralized platform</u>
The existing auction service is deployed based on the Client-Server model. It is network centralized and poses many weaknesses as fully controlled by an auction house and requires auctioneers to operate the auction,…
<u>b. The architecture of the proposed decentralized platform</u>
The proposed dMAH contains off-chain code that runs on Microsoft Azure infrastructure and on-chain code runs on the Cardano blockchain network.
The architecture includes:
Backend REST APIs and 03 web frontend apps, 04 mobile apps ( 02 on iOS and 02 on Android), and the deployed smart contract on Cardano. Detail as below:
- Backend REST APIs & smart contract off-chain code.
- The deployed smart contracts on the Cardano blockchain network.
- Frontend web on PC for:
- Partners ( Auction houses)
- Bidders
- Sellers
- Mobile apps on Android for:
- Bidders
- Sellers.
- Mobile apps on iOS for:
- Bidders
- Sellers.
<u>4) How does dMAH work?</u>
<u>The world's first Bid to Earn model ( B2E)</u>
dMAH operates as a generated sales of rare & extraordinary assets platform that stays in between auction participants ( users, bidders, sellers) and auction houses ( ex: Sotheby's and Christie's Auction houses).
When dMAH drives users to bid and completed an auction on the platform, the auction house will pay a sales commission. dMAH takes a part of this money to share with the bid winner ( buyer) as a reward. The rewards will be converted into ADA or B2E tokens (a utility token released by dMAH ), and added to the consumer's wallet as an incentive, encouraging users to discover the crypto space. It can be transferred to any crypto wallets on CEX and DEX exchange for trading & earning.
Currently, we have been partnering with Lac Viet Auction House - the largest government-licensed auction house in Vietnam to get a great percentage of sales commissions. dMAH will accept ADA and Stablecoins as Coti payments for deposits. We also built a staking pool for Cardano, the deposited tokens ( ADA, Coti) will be staked in the pool to earn interest as income. The earning interest will be converted to a B2E token and shared with the bidders as rewards. The shared percentage for bidders from earning interest will depend on the amount of B2E token holding, amount of ADA, and period in staking.
<u>dMAH </u><u>business model</u>: <https://bit.ly/3ysDG9T>
<u>5) Impacts</u>
<u>Impact on the auction industry</u>
Accelerating the digital transformation in the auction industry
- Eliminate auction frauds: Auctions without auctioneers, automated find the exact bid winner and guarantee the transparency and honesty of auction results. It helps market growth.
- Automated care of auction participants until the auction is finished. Example: The bidders are automatically refunded the deposit. The auction house is automatically informed who is the auction winner to directly transfer the rare & extraordinary assets. It creates values and benefits for the industry, reducing costs & time for auction participants and risks for investors.
- With the power of smart contract, it ultimately solves problems in which legacy auction platform as Sotheby's, Christie's, and our existing auction platform are impossible to do.
- Decrease the auction fee.
<u>Impact on users</u>
- dMAH will simplify and automate the auction process, eliminating auctioneers and the concerns related to fraudulent activities.
- Users can easily access the auction services from anywhere, at any time, on any device. It is notably driving the market growth.
- dMAH creates values and benefits for the auction participants by reducing costs & time for auction participants and risks for investors.
- The auction results are transparent and honest.
- Users are encouraged to hold tokens ( ADA and B2E) to earn more.
Impact on Catalyst project and Cardano community
Drive adoption of Cardano
- Enabling environment for cryptocurrencies
- We are bringing existing tens of thousands of non-crypto users to Cardano and keeping them in the ecosystem via a strategic partnership with Lac Viet Auction House - the largest government-licensed auction house in Vietnam.
- Encourage users to hold ADA and B2E tokens, and stay longer with Cardano via the proposed world-first Bid to Earn business model.
Impact on the Vietnam government
- Eliminate auction frauds:
- Typically, an auction involves three parties: the bidder, the seller, and the auctioneer. Each party can collude with anyone on the opposite side or on its own side in a variety of manners. The most common auction fraud activities include collusive bidding and shill bidding. The proposed Auction platform has no auctioneer, it automated finds the exact bid winner and guarantees the transparency and honesty of auction results.
- It helps the government develop a public and transparent auction market.
Direct or indirect bMAH's success will benefit ADA holders, the Cardano ecosystem, the Vietnam government and the Auction industry.
<u>6) Source code</u>
The source code of the system will be available at a given Github account - which will be announced on the Pitching desk ( <https://bit.ly/3OHzuIq>) after the project is funded, any user with technical knowledge can audit it themselves to ensure that the system is built completely transparent, bug-free, and there is no backdoor.
<u>7) Reference URLs</u>
- Law on asset auction: https://www.economica.vn/Content/files/LAW%20%26%20REG/01_2016_QH14%20Law%20on%20Asset%20Auction.pdf
- Pitching desk: <https://bit.ly/3OHzuIq>
- Bid-to-earn business model: <https://bit.ly/3ysDG9T>
- Our existing auction platform: <https://lacvietauction.vn/>
- Demo:
<https://www.youtube.com/embed/gw2LLUKw1Fo>-
- Project homepage: <https://lacvietauction.vn/dMAH>
- Patent: <https://bit.ly/3HVEMhs>
- Auction house license: <https://bit.ly/39W51rk>
- Business registration: <https://bit.ly/3OuFaps>
- No. of registered users on the existing auction platform: <https://bit.ly/3bvFRAk>
- International scientific publications on 3D and Metaverse: <https://bit.ly/39Xs31b>
- Our auction platform on newspaper:
- <https://bit.ly/3A9oFed>
- <https://bit.ly/3a25VT9>
- <https://bit.ly/3xSmhG0>
<u>8) Connect to the project team</u>
- Tuan Le., PhD, [email protected] / CTO & Co-Founder / Novatic JSC
- Hung Nguyen, [email protected] / CEO / Lac Viet Online JSC
- Do Thi Hong Hanh, [email protected] / CEO / Lac Viet Auction House
- Anh Phung, [email protected] / Head of Business Development & Partnership
Please describe how your proposed solution will address the Challenge that you have submitted it in.
In this proposal, we are focusing on solving the following challenges in the Cardano ecosystem:
<u>1) Differentiate from the other blockchain competitors</u>
According to DappRadar, there is no dApp for auctioning rare & extraordinary tangible items and assets belonging to the government. Well-known auction houses such as Sotheby's and Christie's are focusing on NFT & Ethereum-based digital-only artwork. The online auction platforms belong and are still fully controlled by the auction houses.
We build dMAH platform on Cardano, it is a fully decentralized auction platform for auctioning rare, extraordinary tangible items and government assets. It belongs to the community. The licensed auction houses such as Lac Viet Auction (<https://lacvietauction.vn >) and Vereb.vn are just dropshipping partners and pay us the sales commission to return to the bid winner as an incentive.
By separate auction house and auction process based on smart contract. The bid results are seamless, transparent and honestly, it does not depend on the auction house's reputation anymore.
<u>2) Providing a better alternative over the current centralized provider</u>
By utilizing the power of Cardano Escrow smart contracts, a next-generation auction platform is born. Few main advantages over the current centralized platform as below:
- Decentralization, transparency, and immutability in advancing online activities over the auction process.
- Eliminating auction fraud
- Accept cryptocurrency payment
<u>3) Drive more adoption</u>
<u>a) Bring partner's current users to the Cardano ecosystem</u>
By partnering with auction houses, we bring auction house's ten-thousands current users to the Cardano, convert them to be crypto users & keep them in the crypto space via token rewarding & incentive programs on smart contracts. Cardano users will grow day by day when we are partnering with the coming auction house as Vereb auction house and the others.
<u>b) Bring new users to the Cardano ecosystem</u>
Co-marketing campaigns with partners (Auction houses) to encourage users ( both none and crypto users) to download the dMAH mobile apps or visit the website. dMAH brings new users to the crypto space (Cardano ecosystem) by automatically creating a crypto wallet when opening an account. The rewarding crypto will be added to the created wallet when they completed a transaction as a bid deposit.
c) Enabling environment for cryptocurrencies ( ADA & COTI) to use in real life
There is no auction platform that accepts bid deposits in cryptocurrency. We partner with the licensed auction house to accept bid deposits in ADA & COTI. The bid deposits will be sent to dMAH's stake pool to earn interest.
<u>4) Keep users stay longer in the Cardano ecosystem</u>
dMAH is a metaverse auction platform that focuses on people's experiences (users, bidders, sellers, partners, and investors). We keep people at the center of business, so we can connect with them 1:1 at scale ( personalized engagement). It will improve end-user experience, and keep them staying longer with dMAH and the Cardano ecosystem To retain users, we are focusing on the following actions.
<u>a) Mobile-first design</u>
According to a report from CNBC, today, more than two billion people access the internet from their smartphones only. By 2025, that number is expected to jump to 72.5%. Therefore, if you are not designing for mobile, your users are more likely to have a less than amazing experience.
We focus to build mobile applications on both iOS & Android platforms and a mobile web that aims to create better user experiences by beginning the design process with mobile devices in mind first, often prioritizing the smallest of screens.
<u>b) Build a 360-Degree user profile & view</u>
The 360-degree user view is the idea that all user touchpoints can be aggregated inside a single profile. This allows dMAH to get a clear picture of all user interactions with the whole platform by giving them a broader context across multiple touchpoints in a single view. The 360-degree user view enables to perform deep analyses across the entire auction participant's experience or set up complex marketing automation scenarios. It helps the Cardano community have a holistic view of users in dMAH, which should lead to informed decisions spanning from improving customer experience to increasing profitability.
This is an example of a 360-degree view & profile of a user: <https://bit.ly/3QZaoXC>
We are working with Destined (a Platinum Salesforce Consulting Partner) to build the strategy for user engagement and user 360 profile ( auction participants profile) and an actionable plan.
<u>c) Bid-to-Earn business model:</u>
It encourages bidders to use cryptocurrency for bid deposits and stake ADA/B2E tokens to be shared with higher percentages of commission and earning interest. Please refer to (4) in the previous section for detail.
What are the main risks that could prevent you from delivering the project successfully and please explain how you will mitigate each risk?
Below are the main risks that prevent us from delivering the project successfully and our proposed solutions
<u>1) Legal</u>
- Risk
In general, the laws of Vietnam do not recognize cryptocurrencies as legal means of payment. So there is no official crypto payment processor. However, there are 6.1% of Vietnam’s total population currently own cryptocurrency ( 5.9 million) and they need a place to use it.
- Solution
A legal entity called Novatic Singapore Pte (NSP), which owns the Decentralized Metaverse Auction House platform will be set up in Singapore to issue utility tokens as B2E and receive the bid deposit payment. At this time, NSP has been collaborating and will be signed with limited partners ( the online auction house Lac Viet Online JSC) to accept cryptocurrency ( ADA and COTI) as a bid deposit payment.
- Risk
License for the auction service provider is mandatory in Vietnam.
- Solution
Our strategic partner ( Lac Viet auction house) has been licensed and government-certified since June 2022.
<u>2) Development phase</u>
- Risk
Lack of Cardano smart contract developers in the market
- Solution
Actively attend the Cardano Vietnam community to hire developers
Dedicate 2 senior developers in our team to learn and develop dApp on Cardano
<u>3) Marketing & Delivery phase</u>
- Risk
Lack of budget for marketing leads to a lack of users
- Solution
A co-marketing plan and shared budget with partners will be proposed to acquire new users. A reciprocal marketing strategy is applied to bring current users to the new system.