Ethereum's NFT ecosystem is struggling from a lack of trust, but Cardano lacks a scalable way to earn the trust of NFT market participants.
Build an AI/ML-driven protocol to protect Cardano NFTs from plagiarism, and offer it as part of a marketing campaign to migrate Eth artists.
This is the total amount allocated to Scaling CNFTs, minus the ETH mess
Plagiarism, Scams and Fraud: The Ugly Side of NFT Markets
With respect to trust and security, Ethereum’s NFT ecosystem is increasingly becoming a mess. But unless the Cardano NFT (CNFT) ecosystem introduces some key innovations to its NFT infrastructure, there will be no shortage of bad actors and bad press about the CNFT ecosystem as more NFT trading migrates to Cardano.
Last month, a phishing exploit took advantage of a poorly planned smart contract upgrade by Opensea.io, Ethereum’s leading NFT marketplace where the vast majority of Ethereum NFTs are traded. The hackers stole around $4 million worth of NFTs from collectors’ wallets. (1)
And back in January, Opensea had to admit that over 80% of the NFTs being minted using their free minting service “were plagiarised works, fake collections, and spam.” (2)
What’s worse, it doesn’t seem like Opensea is going to remedy these problems in any meaningful way. And the security vulnerabilities of Opensea are common among Ethereum NFT marketplaces. When asked how likely it is that Opensea’s vulnerabilities will be fixed soon, an expert told Cointelegraph, “the main problem — which lies at the heart of this whole issue — is the basic architecture of most [Ethereum] NFT marketplaces, enabling users to simply sign a carte blanche approval for a third-party contract to use their private wallet without setting a spending limit.”
And after initially trying to address the problem of “plagiarised works, fake collections, and spam” on Ethereum marketplaces by limiting the use of their free – and widely abused – minting tool, Opensea reversed course: Under pressure from users who depend on this tool to sell NFTs on Opensea (by allowing them to avoid paying Ethereum’s sky-high gas fees prior to minting), the marketplace decided against new restrictions that would reduce the minting service’s use (and abuse). This decision to back off in their supposed battle against plagiarism and fraud has left Opensea (and the entire Ethereum NFT ecosystem) open to more of the same – eroding users trust, and eroding the patience of artists whose work is being plagiarised.
Thankfully, both the design of Cardano native assets, and the design architecture implemented by the leading CNFT marketplaces, creates a much safer, more secure trading environment on Cardano than Ethereum offers. This is something leaders in the CNFT space should be more vocal about – marketing this clear advantage over other NFT ecosystems.
However, currently the Cardano ecosystem affords no reliable, scalable protections from the production and sale of plagiarised NFTs and fake collections. And even though Cardano currently facilitates a tiny fraction of the NFT trading volume Ethereum does, there are already bad actors producing and selling fake CNFTs: Based on our team’s investigations, we believe this is resulting in well over $100k in fake NFTs currently slipping through the cracks in CNFT marketplace verification protocols – allowing these fakes to be listed on CNFT marketplaces, often as part of verified collections. This is bad for artists, collectors and marketplaces. And while a few hundred thousand dollars in losses may not seem like a huge issue, with wider adoption of both Cardano and NFTs on the horizon, this problem will get much worse unless something is done to stop it – especially because the manual verifications CNFT marketplaces currently use to protect users from fakes are not scalable.
VeraNFT: Scalable Trust for Cardano NFT Markets
Given these current circumstances – in both the Ethereum and Cardano NFT ecosystems – our team has been working hard on an industry-first solution that will differentiate the Cardano NFT ecosystem as the clear leader – across all permissionless blockchains – in NFT trust and safe trading.
For the past several months, our team has been hard at work building VeraNFT, an Artificial Intelligence (AI) and Machine Learning (ML) driven platform for verifying the authenticity of NFTs based on blockchain analytics, image recognition and NFT metadata. Thus far, our progress has been very promising: By mid-December, we were able to develop a proof-of-concept that was already able to accurately verify the authenticity of the limited number of fake and authentic CNFTs we tested it against. And since then, we’ve made huge progress in building out a system that can 1) verify all image-based CNFTs currently in existence, and 2) ingest all newly minted CNFTs into the system quickly, so that all new CNFTs can be verified by VeraNFT within minutes of being minted.
Still, the AI and ML currently running on VeraNFT is just a relatively “coarse” filter that weeds out a large percentage of fake NFTs, but fails to weed out certain types of fakes and results in a number of “false positive” findings – occasionally labelling authentic NFTs “fake.” From the beginning, our team has known more sophisticated Artificial Intelligence will be needed for VeraNFT to become a high assurance product: We are currently building two more, successively “finer-grain” AI filters to work in combination with the first filter already in place. And once this “triple filter” is subjected to extensive training from the custom, machine learning model we’re building, we’re highly confident VeraNFT will be exceptional at spotting fake NFTs (and correctly identifying authentic NFTs as authentic). The approaches we’re taking have been proven to work with image and data recognition products in other sectors, and our team has the experience and skills needed to replicate those successes with image-based NFTs.
Furthermore, VeraNFT will be able to scale far beyond current, manual verification methods employed by CNFT marketplaces, supporting the levels of market growth seen on Ethereum over the past couple years while minimising the scams and exploitation of artists that has become entrenched in Ethereum’s NFT ecosystem.
VeraNFT for Artists: Deploying VeraNFT to help Drive the Great Migration
Once VeraNFT’s AI and ML models are fully developed, we’ll leverage VeraNFT to drive the migration of Ethereum NFT artists, collection owners and collectors to Cardano.
There are a number of valuable, business-to-business and business-to-consumer use cases for VeraNFT. Marketplaces can certainly benefit from access to its verification findings. And collectors will doubtless want to know if CNFTs are authentic or fake. However, we feel the best way to quickly migrate NFT activity from Ethereum to Cardano is to leverage Cardano’s superior security, it’s cheaper, more energy-efficient minting process, and VeraNFT’s protection against plagiarism to onboard prominent digital artists onto Cardano – starting with artists whose work has been plagiarised by opportunists on Ethereum marketplaces.
VeraNFT was born out of our team-lead’s friendship with a CNFT artist, and the problems she was facing with current market infrastructure. That said, the VeraNFT use case we’re most excited about from a social impact perspective is a service for NFT artists and project owners called Profolio Protection. This service will protect artists from plagiarised copies of their artwork being minted as NFTs – both from copies that have already been made, and from any copies that might be made in the future.
Profolio Protection, which will be available to artists and NFT collection owners via our B2C website, niftytools.io, will enable artists to register their artwork on VeraNFT. And once their art is registered, artists will be notified (via preferred social network(s) and/or email) if any work of theirs is ever minted as an NFT. And in case the minting was unauthorized, the notification will contain information on how they can take action to protect their intellectual property.
That being said, the third key component of our proposal is to connect with as many artists as possible in the following categories:
1) Ethereum-based NFT artists who have had their work exploited and copyrights infringed upon on Ethereum marketplaces;
2) Digital (non-NFT) artists who have had their work exploited and copyrights infringed upon on Ethereum marketplaces;
3) Ethereum-based NFT artists frustrated by the general level of fraud and plagiarism taking place on Ethereum NFT marketplaces like Opensea.
Our team will assist these artists with onboarding onto the CNFT ecosystem, providing them with our CNFT contacts, including founders of leading CNFT marketplaces and minting platforms. And we’ll provide these artists our lifetime Profolio Protection service for free – on the condition that their move to mint on Cardano and use VeraNFT’s Profolio Protection is marketed publicly on social media.
This service will not only protect these artists from unauthorized copies of their work being listed and sold as NFTs on the Cardano blockchain. While the full build-out of VeraNFT will likely take upwards of 18 - 24 months (and we can't promise its completion within the scope of this initial proposal), once VeraNFT is fully built out to support cross-chain verifications, it will protect them from unauthorized copies being listed and sold on all VeraNFT supported blockchains. That said, the provision of this free service should provide a powerful incentive for artists to mint their works on Cardano. And publicly marketing these artist’s decisions to mint on Cardano (along with their reasons for doing so) will constitute a powerful marketing initiative for the CNFT ecosystem and Cardano in general.
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:
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:
Risk #1 - Team Cohesion:
This is a complex project involving two managing team members. Thus there's an inherent risk of us coming to differences of opinion on priorities, and questions surrounding the hiring of contractors.
Mitigation #1 - Team Cohesion:
Our two managing team members have been working closely together for several months on this and other projects. Prior to submitting this proposal, we've clearly and in writing come to an agreement on how to manage team decisions - namely, how to handle decisions that apply to each of our domains of expertise, and which of us has ultimate authority about project priorities. Furthermore, between the two of us we have decades of professional experience working successfully in tight-knit teams responsible for delivering products and services on schedule.
Risk #2 - Failing to be first-to-market:
Because we plan to deliver a highly innovative, industry-first solution to a pressing problem within the NFT space, there's a significant risk we'll fail to be first-to-market with such a solution, and the positive effects of our solution will be blunted somewhat by market competition.
Mitigation #2 - Failing to be first-to-market:
Prior to pursuing the development of Veranft, our team did extensive market research into potential competitors with our protocol. While there are two projects claiming to be working on similar solutions on other blockchains, these projects are in their very early stages, have not demonstrated a working proof-of-concept, and in one case especially, the legitimacy of their team is in question. Also, while they do plan to utilize artificial intelligence and machine learning to analyze NFTs, their approaches and priorities are different from ours - and unsurprisingly, we feel our solution takes a better, more circumspect view of the problem.
Aside from this, we're aware of one (relatively small) Ethereum marketplace that has implemented an internal, AI-driven solution to the prevalence of fake NFTs being listed on their platform. And even if a market leader like opensea.io is able to create and effectively implement a similar solution, they would have no incentive to share this technology. So while we are determined to bring an industry-first solution to the whole Cardano ecosystem, we fee this is a worthy pursuit even if we don't end up being first-to-market with our solution.
Risk #3 - Failure-to-perform on the part of contractors:
Whenever you're dealing with freelancers, or individuals providing services to a project for compensation, there's a risk they'll be receive compensation and provide either no services in return, or substandard services.
Mitigation #3 - Failure-to-perform on the part of contractors:
Aside from using industry best practices in the formation of contracts and allocation of funds, we will be partnering first with respected members of the Cardano NFT community, and secondarily through freelancing platforms like UpWork, where funds are help back pending completion of project benchmarks and our satisfaction with the work performed.
Backend Engineer 9 months Full time: $ 72k
Cloud costs $ 500 per month for 9 months: $ 4500
Frontend: $ 10k
UX/UI: $ 3000
Project Management: 3 months, ⅓ time $ 5000
Research and artist outreach: 3 months, ⅓ time $ 5000
CNFT Artist onboarding liaison: $ 2500
Social Media Marketing, 40 hrs: $ 1600
Writing and publication of 2 articles: $ 900
Giovanni - CTO
Anthony - CBDO
VeraNFT and Profolio Protection Development Benchmarks:
Leads for our Profolio Protection incentive program:
VeraNFT Website/Landing page visits:
Social Media Metrics:
Number of NFT Creators Onboarded:
This is a project that's entirely new with respect to seeking Catalyst funding. It's not a continuation of a previously funded proposal.
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Tech Lead - CTO with extensive experience in tech project management and artificial intelligence; 16 years experience in back-end web development.
Business Development Lead - 7 years experience business development; 15 years experience project management, sales and marketing.