The idea of ​​DAO amazed many, including us. The pure product of direct democracy that many of us have thought about.

But there is always a downside to such large groups. People do not feel their contribution and often do not understand how to make this contribution.

If very much simplified, then this can be compared with the classic Ringelmann Effect.

Ringelmann conducted a simple experiment. He measured with what force a person pulls the rope when he is in teams with different numbers of people. An interesting dependency occurred.

As the number of members in the group increases, the average individual contribution to group work decreases.

Maybe the comparison is not very correct, but the answer is on the surface and it is logical: more participants - less contribution of each.

As a result, we identified 5 shortcomings of the current construction of the DAO:

• Loss of personal responsibility for the final result

• Loss of coordination within a large group

• Decreased personal motivation

• Anonymity of personal contribution to the result

• Deindividuation (loss of personal identification of each participant)

The logical decision was to divide our DAO into Guilds according to their desires. To do this, we formed 4 questions, with the help of which each member of the community can form their own Guild and be a happy member of the community:

• What would you like to do?

• What will be the main goal of the Guild?

• What role will you play in it?

• How can it help develop the DAO and the community around us?

We will collect all ideas together. The DAO will select the 5 most valuable and interesting Guilds to start.

In the future, the list will be expanded as the DAO desires and needs.

Don’t hesitate to participate: discord.gg/pawnshopgnomies

Gnomies are building the first NFT lending protocol to evaluate NFTs using AI and build derivatives around them.

The first version is a decentralized pawnshop for NFTs on Solana. The pawnshop should allow the user to borrow money (fungible tokens) against NFTs by estimating the value of the particular NFT. If the user is satisfied, he will be able to get a loan against the asset. After repaying the loan, the user will be able to get his NFT back and if the debt is not repaid, the protocol will sell the asset on secondary markets to gain a profit and avoid default.

At the moment we are launching MVP with a starting functionality, and with further updates, the team will increase the automation and introduce a range of services like derivative sales, NFT futures, or NFT leasing.

In this article, we would like to share the MVP protocol operations model.

Architecture

In the first version of the protocol, we are going to divide the entire work into three blocks, which must communicate with each other through secure channels using digital signatures.

Model

The first block is called a model. The main function is to accept NFTs from the user and issue loans with interest for a certain period. To do this, the model creates a vault with specified parameters e.g. counterparty wallet info, collateralized asset, loan terms, or the amount owed. This vault can only be redeemed by the user before the expiry date or can be redeemed by the protocol straight after.

The process of redeeming follows with next transactions:

• Returning the loan amount plus terms

• Return of NFT back to the user

• Vault destruction

It is worth paying attention to important differences between the first MVP and the final version of the protocol:

• Oracle - our controller

• Oracle data source - magiceden.io API

• Loan period - two weeks

• Interest rate - fixed commission, no complicated calculations

• Accepted collection - Pawnshop Gnomies

Controller

The second block is called the controller. The main task of the controller is to provide data for the model and interact with the user.

The controller must collect data and update it real-time:

• Floor prices - these are all published offers on verified collections

• Sales - transactions activity and sales volume

• The storage - we store all data in a DB on AWS

Thus, the controller must update the info about the approved NFT collections. In this version of MVP, we will be using the simplest way to determine the market price and the maximum loan amount - we find the floor price on the market, divide it by half, and put a small safety buffer.

In the full version of the protocol, the AI will determine the maximum amount of the loan. We have already researched the ability to predict prices for NFT and we are satisfied with the results, but at the beginning, the evaluation will be done simply to exclude any errors.

View

The third block is the frontend development with the UI. The main task is to show the user the data from the model through the controller, also to initiate transactions after interaction with the model.

On the main page, the user will be able to see the collections we work with and learn about the offers or available loans. To estimate the amount of loan the protocol may issue, the user must connect a Solana compatible wallet e.g. Phantom.

On the left the user will be able to check active loans and on the right observe the NFTs that are available for collateralization.

When the user clicks on the "get a loan" button, he will see:

• Pledged item

• Loan amount

• Interest rate

• Accept button

Mechanics

In the first version of the protocol the on-chain part will be significantly simplified. It will consist of the following essential blocks:

• oracle adaptor (current prices)

• vault creation (borrowing against NFT)

• vault liquidation (repaying or liquidating the loan)

Oracle adaptor

Just after the first steps in Solana dev we understood that contract (program account) cannot interact with off-chain world (actually, not all the marketplaces we get prices from are on-chain & open source), so we have to build a “work around” instead of regular calling API method to fetch any price.

This is how MVP will be founded:

• The back-end controller will fetch prices (real-time, off-chain)

• Web view will ask the controller for the price valuation to initiate borrowing

• The controller will sign the data package containing this data with its private key and send it to the View

• The view will be able to read the data (and show it to the user) and if accepted send it to the contract (so the contract knows that the evaluation’s signed by the exact key - controller’s key)

Vault creation

The web view will send a request to borrow against a specific NFT, Solana program account will check the identity of evaluation and if everything’s OK the vault will be created:

• NFT stored in the vault

• money sent to the user

• additional data stored: timestamp, IDs

Vault liquidation

There will be an option of liquidating any vault for both sides: user and protocol, hence these options will be different:

User will be able to close the vault anytime before it expires by repaying the loan:

• the user gets his NFT

• protocol gets the funds

• vault destroys

The protocol will be able to raise liquidation only after the vault expires:

• protocol gets NFT

• vault destroys

Hope you’ve enjoyed an article and can’t wait for our devnet MVP to be published! Spoiler: it will be running tmrw 😎

There are 4 of us in the core team, each has a unique personality, interests and professional background. We all have a passion and drive to create.

Today we would like to tell you a bit more about our experience with the project and share our vision on the future of Pawnshop Gnomies. This article is written by society#0003, and to say the truth I am not a good writer at all, but I will try to do my best to make it interesting and easy to read. 

Our team was always thinking about building something to change the world. But time passed, we were running our real-life businesses, trading crypto, sharing ideas and forgetting about them. It was hard to find this unique idea that will motivate us to work 24/7. And looking forward, I would say that Pawnshop Gnomies will not change the real world, instead, they will build their own and work closely with other metaverses. 

It all started around 9 months ago when we were thinking about NFTs, sitting in an office. I remember this FLOW NBA TS vibe with unreal market volume, CryptoPunks were relatively cheap and a ton of low-quality art was bursting. What could we do with all of this? Make a collection of 1000 Black Squares or another derivative on Cryptopunks, or just trade jpegs like snipers? We could see some patterns and we thought that the best thing is to somehow unlock the liquidity from all of this.

Our first idea was to fractionalise NFTs like https://fractional.art or https://www.fraktion.art and it is good tho, but the problem is you need to sell a part of the NFT to get some liquidity. It will be hard to get all the pieces back and thus return the original NFT. It may work and there is a huge market for such ideas. But we thought that it would be great to get the same NFT back anytime because some of them already have a huge value, moreover, each NFT is your key to the community. Some don’t want to lose the part of being inside the community. Some don’t want to sell their assets when the market condition is not good, but still, they need money. Even I had an experience of selling some NFTs because I was thinking of aping into a collection and Binance was not processing Solana. 

So, we thought that the NFT lending protocol is the best thing we can do for the market, moreover, protocols like https://aave.com or https://compound.finance which work with fungible tokens have already had enough traction. We’ve searched for the web and didn’t find any working solutions on the market. There are some already like https://nftx.io or https://nftfi.com, but all of them are not giving you the same nft back, or loans are p2p means you need to find a person who will give you the money. Instead, we are building the first p2pool protocol, which means that any person will be able to get an instant loan from the available funds. No need to wait, stress or ask us to do you a favour. If the collection is verified, you will get money asap. Fully decentralized, safe and anonymous. 

So we’ve started by looking into FLOW NBA TS as it was the hugest on the market that day. Huge thanks to DEVS we were able to make some price trajectories, we were bullish af but the problem was and it still exists, NBA TS is not moving from custodial wallets, which means that the ecosystem is locked and Moments can’t interact with any other market solutions. We even had a call with FLOW talking about WAGMI but we didn’t get any short term solutions. That was frustrating as we’ve spent so much time believing that something will change but nothing happened. We also had a lot of calls with VCs and they were telling us that our project is good but risks are multiplied by the FLOW ecosystem. 

Then we thought that maybe we should look into Ether collections and we’ve started to test CryptoKitties using machine learning. And again, our tests were running smoothly as we had enough historical data. We’ve solved the biggest market problem which is the pricing of NFTs. Imagine millions of certified appraisers are looking into traits, market condition, sales volume, transactions and evaluating the price every second! This is how it works. That is why Gnomies are unique as they will also issue loans because they will know the best market price of any accepted NFT.

As I said previously, we really believe that all of us eventually will live in a metaverse one day. Imagine how big is the space with all of these galaxies, and right now communities are building their own worlds. Look at these robots “Spot Me Up” | The Rolling Stones & Boston Dynamics, they will run the real world making our life easier while we will enjoooooy sailing in a meta-sea and drinking pixel-art champagne with Monkeys and Thugs.

That is why we thought that it is very important for us to get the first funding from the community. Firstly, we wanted to gather some feedback, secondly, we like the idea of web3 where communities stand over organisations. We believe that gnomies one day will be fully and truly decentralized owners of the protocol. And finally, we wanted to experience the building of our own collection to understand the value of it, find difficulties and “feel” the market and the community. It is very important if we aim to build something reliable and safe. 

Why Solana? To be honest, I personally believe that Solana is the best blockchain ever. It feels like home here, it is very friendly and I love the community. It is a good place to start as it is not that big like ether, it is easier to make connections here and it is growing very fast. We also took tests using the pricing algorithm and thought that we should start to grow our community here. Twitter spaces are always welcoming and interesting, you can see familiar faces every day. Chillchat, if you are reading this, thanks a lot for helping me communicate there as I am a bit introverted. It was not easy to build a community and I can write an article on how to do it, maybe this will help you to grow your own. Let me know if you want a guide. 

As for the future, our short-term goal is to build an MVP as we promised and get some extra VC funding to scale and grow even faster and deliver a fully operational trustless protocol. We already had a couple of meetings with them and they are very interested! We also have plans to build bridges to other chains and start to work with a variety of assets like decentraland, sendbox or issuing loans against real-world assets via https://centrifuge.io. The possibilities are endless, just imagine how far it can go! We are very proud of you gnomies, you are still early and we are building the future. It is a pleasure to grow together with you, see your reactions and the endless chat activity. Sometimes it is so funny I can't breathe, seriously, Turtles are funny af!

Thanks a lot for the support and trust. I hope that this article helped you to get our vision and inspire a bit!

Aaaaaaaaahhhhhh, finally I can post this! 😎

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