21 Jul Crypto Founders: Hugo McDonaugh, Cryptograph
Last week a digital image called ‘Quadratic Funding’ by Vitalik Buterin raised $20,000 at auction. The sale was one of eight such images created by crypto heavyweigths to celebrate the launch of new NFT platform Cryptograph.
With this calibre of support, it’s not surprising to find that Cryptograph is no ordinary NFT marketplace. The team have forged their own extension (ERC-2665) to the Ethereum standard ERC-721. In doing so they have created a new auction and trading system that makes Cryptograph truly unique. We chatted with co-founder Hugo McDonaugh to learn more.
The Trading Mechanics
The principle behind the design is that a digital artefact or ‘Cryptograph’ should always sell for its truest market value. Whenever a Cryptograph is sold at auction a proportion of the winning bid is re-distributed to all who took part in the bidding process, as a reward for their part in the price discovery. A further portion goes to the artefact’s creator, some to charity and some to the auction platform itself. Hugo explained,
‘Our bidding system is designed to reward people who help to discover the value of an item. When an auction is over rewards are given at a variable rate of return, based on how much each bidders increment is. This creates a new bidding strategy that favours larger leaps rather than the small increments typically seen in English auctions.’
In practice, all bids are filled and bidder incentives are distributed in real time whilst the auction is ongoing. From a system perspective, the smart contract settles the debt it carries forward with all participants at the end of the auction using a portion of the final bid.
The rewards system is embedded into the NFT smart contract so it applies to the secondary market too. Every time Cryptographs are traded onwards a fee is generated that is split between the original creator, the chosen charity and the service provider. The model is designed to deliver long term value to all parties, not forgetting the end collector! Charities that have already benefitted from Cryptograph include Gitcoin Grants and Common Stack as well as more mainstream organisations such as Rescue.org and Save the Children.
Digital artefacts in the Cryptograph ecosystem are open to perpetual bidding. Anyone can send offers at any time and if the owner is tempted to put the item up for auction they can start a new 36 hour auction based on the last highest bid.
Over the next few months Cryptograph will feature artwork from Tom Morello, lead singer of Rage Against the Machine and Hollywood actors Seth Green, Kristen Wiig & Adrien Brody and many more. Beneficiaries of the sale will include Global Wildlife Conservation and Oxygen7 amongst others.
For more information see Cryptograph.co