POW NFT — The First Mineable NFT

A Lithium Atom created by POW NFT

Gas costs:

Ethereum users will be well aware that gas costs continue to rise, with transactions costing over 100x more ETH to execute than only a few years ago. This is because more people are trying to use a network that has limited capacity. Gas prices often spike around large on-chain events such as popular NFT drops, as users attempt to outbid each-other in a race to snatch up the limited supply of tokens. A system is required that can shift the burden of this demand off the mainnet, so that everyone can have an affordable network.

Front-running:

The Ethereum network has become infested with front-running bots. These bots watch your transactions as you submit them, and if they see an advantageous trade they quicky outbid you and beat you at whatever you were trying to achieve. In the case of NFT drops, a front-runner can see your bid before its accepted and buy the token from under your nose. If it’s a popular drop, the bot’s owner knows they can sell the token immediately and easily recoup their costs. A system is required that prevents front-runners from intercepting user transactions.

Artificial scarcity:

Many NFTs have a hard cap on how many tokens will be produced. This is important, because value requires scarcity — if there is an endless supply of an NFT, then there is no point in holding one since they’ll never increase in value. The issue is that the soul of blockchain is decentralisation — free markets are core to the technology that powers every Ethereum transaction, so I believe that arbitrarily putting a limit on NFT supply runs contrary to the ideals of crypto. It is therefore necessary to design a mechanism that allows NFTs to remain scarce, while allowing market forces to find a natural equilibrium.

The solution — POW NFT

These three issues are all solved with the introduction of a Proof-of-Work mining process. The mining process may take place off-chain, only requiring miners to submit their “proof” as a transaction when they are successful.

A Chlorine Ion created by POW NFT

Mining

POW NFT mining essentially means running a calculation with slightly different data over and over. If the result of that calculation (the hash) is not below a target number, the mining software changes the data a little and tries again. If it is, it has been successful and you can mint your Atom.

  1. The previous token’s hash
  2. The address of the miner
  3. A nonce

POW and the Future of NFTs

The inclusion of POW mining solves many of the issues currently facing NFTs, so I believe that future projects should adopt it as a part of their platform where possible. In order for crypto to flourish, equitable and decentralised solutions must be utilised. NFT mining may take several forms, and don’t need to replicate all features of POW NFT. Some examples are:

Difficulty cooldown

Rather than an ever-increasing level of mining difficulty, a difficulty cooldown could be employed. When a token is minted, the difficulty resets to a maximum level, and then becomes easier with time until another token is minted. The cooldown rate could also slow as token supply grew. This would ensure a slow, paced out token distribution that can still achieve natural scarcity.

Difficulty-price curve uncoupling

POW NFT increases mint-cost and difficulty every time the number of tokens doubles, both requirements must be met in order to mint tokens. However, a model that allows leeway in the difficulty for a higher minting cost, or vice-versa may be advantageous, and allow a more nuanced equilibrium to be met.

Simultaneous token-chains

A mineable NFT smart contract could also employ several independent difficulty targets to mine different-tiered or otherwise-unique tokens. This would allow each to mind its own natural scarcity level.

Interval-based difficulty adjustments

Bitcoin and Ethereum both automatically adjust their difficulty depending on how quickly blocks are being mined. A similar system could be employed for NFT mining, however certain allowances must be made to account for Ethereum transaction time.

Difficulty as scarcity

Although perhaps counter intuitive, the addition of mining makes NFTs more desirable, rather than less. Creating a barrier to entry that is passable by only those who are determined ensures that tokens have a value beyond just being pumped by passing whales.

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Andrew Parker

Andrew Parker

Codeslinger. Melbourne based Solidity developer for hire.