RARI: REVOLUTION, GOVERNANCE, OR SCAM?

liquidity mining, nothing could go wrong here

Once upon a time at a virtual pool party where most noobs were underwater…in the dark doldrums of the 2018–2020 bear market…there lay the memed remains of the Pepecash bull run, the Crypto Punk contract error and the Cryptokittie network cat-mating-induced clog (how about those fees bro), and the many who learned of the self-mocking degenerate art and degenerate gambling of the NFT world. From these dusty doldrums arose many new and improved minting platforms, marketplaces, experiments, and art. As with the Defi manic frenzy of finding the next uniswap 100x flip, so is the nature of finding the next nifty gateway drop “100% Organic” 10k USD NFT sale; open price-floor fixing by co-founders of minting platforms ensuring the first-ever sale is of an “acceptable” price; and of course, wash trading! But not just any wash trading ~ also wash trading to incentivize liquidity and an “organic” affiliate referral system. If you were to combine rebate market-making, NFTs, Governance Tokens, ETH with blockchain something something…then you are indeed in the right place…

Welcome, intrepid reader! Explore further with me…unless your ego is already rekt and you are accustomed to the fluffy “let’s be positive” vibe in your community of so-called leaders that are exploiting your cult-cowtowing, koolaid-drinking, your-shit-don’t-stink-and-your-art-is-god’s-gift-to-humanity sub-beta sensitivities. Now keep reading…

What is Rarible?

Raribe is a noncustodial NFT minting platform and marketplace. It is a web3 website with which you interact using MetaMask or another web3 wallet. You can mint an NFT with a few clicks and uploads, and sell it on the platform. All NFTs are also automatically listed at Opensea.

Does Rarible even permaweb bro?

What external database weave that is not forever does Rarible point to in order to not put everything on chain? All uploads are stored on IPFS as well as a hash of any lockable content. In the past, people could see lockable content if they were clever enough to navigate the smart contract tx to see an IPFS link to where the locked (hidden) content was uploaded. There is a cool unlock function that allows you to hide content which is only unlocked if you have the NFT in your wallet.

“When Token, Sir?”

Recently Rarible announced its governance token $RARI. You earn it by having bought or sold NFTs in the past, on Rarible, or any other platform. You also can earn it weekly for buying or selling NFT on Rarible. The tokens are going to be used in a DAO that decides (among other things) fees, moderation, curation, and developmental features. That sounds fair and as though it could help with liquidity, which is something that the NFT market struggles with.

Liquidity Mining

The concept of incentivizing market makers is not something new, and is very common in the crypto space. For example, there are currently 0% maker fees in the Deribit ETH perpetual contract and futures markets. Some places might offer a rebate for making a market. In this case, a maker is simply someone that places a limit-order in the order book. Why not do something similar with the NFT market to get the order books deeper?

Markets crave a liquid

The problem is that given the nature of non-fungible tokens, it is easy to wash-trade your NFT to earn $RARI token. This means that if I buy and sell my own NFT back and forth X times in a week, I earn some RARI each time for buying and selling. This does create more action and volume on the platform. All markets are addicted to liquidity. As humans need the liquid water, markets need liquidity, and crave it as if it was a particular precious ring.

The incentives are not that bad

We have seen this before in crypto. Back in the ancient times of okcoin having no fees on their spot market, we would have some very “interesting” candles. People knew to take the volume there with a grain of salt, but it still injected momentum into the market, as the flashing lights of the casino ~ volume flashing here and there, regardless if fake or not ~ do attract attention from the market, even with this added attention and possibility of “real” orders matching “fake” wash-orders, I reckon, nay, posit! that just about damn near everyone is in agreement: wash-trading is not something that is sustainable in the NFT market at large. Wash trading is yet just one example of common market manipulation and other hacks (how about those “random” booster packs) that take place in the NFT market.

Experiment, Scam, Revolutionary

The real test is going to be how the $RARI holders treat the current situation of wash-trading in order to earn $RARI. Since some of the people voting on such topics have earned their $RARI from said wash-trading, their incentive to stop it is just not there. Was this simply a scam and people on the inside knew already how the distribution would take place, acting accordingly beforehand? Is this a worthy experiment in governance of an NFT platform that is trying to stay as open as possible? Or is this the new standard and the vanguard of a new NFT revolution full of governance tokens, incentives to take part in markets, and leveraged NFT trading? As often in crypto, it is probably a healthy mix of all three. You can talk about it in the Rarible telegram.

Do your own research.

Post Scriptum

I am more than willing to discuss any and everything on a voice or video livestream with neutral third party host. I have taken part in hundreds of youtube panels, countless real-life panels, and informal discussions. Ask around. If one would like to see the references of said panels, I am more than willing to reference them as to provide evidence with the aim of reassuring anyone potentially involved that I do indeed debate in good faith. Maybe I am wrong. Let me know on twitter, telegram, or below in the comments.

With the power of Zeus and the fury of Hades,

Theo Goodman

The power of Zeus — The fury of Hades