Why we joined Stargaze

Stargaze needs little introduction, it is setting the pace for NFT marketplaces in the Cosmos ecosystem. Stargaze is a network that has built an NFT marketplace from the ground up, including designing a new NFT standard (via a module) for the Cosmos SDK ecosystem that will eventually be interoperable across IBC. What’s unique about Stargaze versus other NFT marketplaces is the fact that the same currency (STARS) will be used to bid and sell as well as to secure the underlying network, which creates entirely novel economics that have not previously been seen before.

It is unlikely Stargaze will host NFTs that mimic other ecosystems such as Ethereum. Users can expect totally new collections to drop on Stargaze that combine elements that might be too computationally expensive to use in other networks. In fact, Stargaze solves many existing problems in NFT marketplaces that exist today. We have previously released a whole article on the different types of problems that Stargaze solves, such as centralised curation, bad security, difficult workflows, limited flexibility, high fees, scams, intransparency of contracts & royalty restrictions, which can be read here. In general, what makes Stargaze a powerful proposition is its unparalleled security, decentralisation, transparency and flexibility. Users, creators and curators will be able to maneuver NFTs like never before in Stargaze as it brings in a new level of fairness and fun to the Cosmos NFT ecosystem.

Stargaze launched Mainnet Phase 0 on October 30th 2021, launching the network with 0% initial inflation. Stargaze Mainnet Phase 1 occurred between December 16 — December 18 2021 to offer early adopters the chance to purchase STARS in Osmosis via a Liquidity Bootstrapping Pool (LBP). Our Research Analyst, Xavier Meegan, described the economics of LBPs to educate those in the Cosmos ecosystem about the benefits of LBPs, which can also be consumed for Cosmos LBP events in the future. The construction of the STARS / OSMO LBP was a first-of-its-kind, as Stargaze proposed to borrow OSMO to kickstart the initial STARS / OSMO pool weights. The borrowed OSMO was returned at the end of the LBP when STARS / OSMO weights hit 50/50 and STARS achieved price discovery. Stargaze Phase 2 was completed on Jan 1 2022 when it successfully started minting new STARS after the passing of governance proposal #2 to activate inflation for the network. As a part of Stargaze’s Mainnet Phase 3, Stargaze announced 25% of their token supply will be ‘fairdropped’ to ATOM and OSMO stakers + to Stargaze validator delegators on Cosmos, Osmosis & Regen as a part of their Mainnet Phase 3. By the conclusion of Stargaze Mainnet Phase 3, the fairdrop would have been completed and the Stargaze NFT marketplace fully-live ready for anyone to trade on.

We’re excited to be able to contribute to securing Stargaze to propel a new era for NFTs in the Cosmos ecosystem. Stargaze is unleashing unmatched economic freedom for creators, stellar incentives for curators and superior security for NFT traders and we look forward to contributing to its future success.

About Staking on Stargaze:

Stargaze is built using Cosmos SDK. Users can delegate their STARS to Chorus One using a wallet, such as Keplr.

Validating Rights: The weight of validators is determined by the amount of staking tokens (STARS) bonded and/or delegated as collateral.

STARS Inflation: 35% in year 1, issuance is reduced by 1/3rd every year after that

Reward Rate: Rewards from staking STARS will vary depending on the inflation and total amount of tokens that are staked at a given time. As of time of writing, the APR is ~120%. Learn more about the details of staking reward rates for chains built using Cosmos SDK here.

Chorus Commission: 5%

Withdrawal Delay: After withdrawing, your staked funds will only become accessible after the unbonding period (usually 21 days) has passed.

Slashing: You can get slashed (loss funds) in case the validator you are delegated to commits an offense. Make sure to do due diligence to minimize this risk.

Re-Staking: You need to withdraw rewards and re-stake them with some frequency if you want to make use of compounding returns.

Stargaze is an interchain NFT marketplace that solves many problems that exist in NFT marketplaces today. Since January 1 2021, average daily NFT sales have gone from ~$300,000 USD to $73,000,000 USD as of November 26 2021 (a 24,333% increase). Currently, most NFT sales occur on Ethereum, which has popular marketplaces such as OpenSea, Rarible and Sorare. Like many things in crypto, adoption of a particular primitive tends to start on Ethereum and then expands to other blockchains when users start experiencing bottlenecks. Ronin, Wax, Solana and Flow are the four blockchains that trail Ethereum in 24hr NFT sales currently (as of November 26 2021). Blockchains that trail Ethereum in NFT sales address scalability issues that arise from Ethereum’s network congestion. However, many NFT marketplaces that exist on competing blockchains enforce restrictions on how NFT projects can utilise them. With the advent of Stargaze, the Cosmos ecosystem has a dedicated zone for NFTs that does not suffer from scalability issues whilst differentiating from existing NFT marketplaces by being more secure, decentralised, transparent and flexible.

Background

Stargaze is a fully decentralised NFT marketplace in the Cosmos ecosystem, which launched Mainnet Phase 0 on October 30th 2021. Recently, Stargaze announced 25% of their token supply will be ‘fairdropped’ to ATOM and OSMO stakers + to Stargaze validator delegators on Cosmos, Osmosis & Regen. For those who did not qualify for the airdrop, Stargaze is offering early adopters the chance to purchase STARS in a Liquidity Bootstrapping Pool (LBP) held in Osmosis as part of Mainnet Phase 1. The construction of the STARS / OSMO LBP is first-of-its-kind, as Stargaze proposed to borrow OSMO to kickstart the initial STARS / OSMO pool weights. The borrowed OSMO will be returned at the end of the LBP when STARS / OSMO weights are 50/50 and STARS has achieved price discovery. After the LBP has concluded, Stargaze will activate inflation in Mainnet Phase 2 and delegators will have the opportunity to earn staking rewards for securing the network. Finally, Stargaze will go fully-live with their decentralised NFT marketplace as part of Mainnet Phase 3 in Q1 2022, unleashing unmatched economic freedom for creators, stellar incentives for curators and superior security for NFT traders.

Problems That Exist in NFT Marketplaces Today

There are a number of issues that exist in NFT marketplaces today such as centralised curation, bad security, difficult upload workflows, limited flexibility, high gas fees, scams, intransparency of marketplace contracts and royalty restrictions.

In September 2021, the Head of Product at OpenSea used internal information to buy NFTs before they were featured on the homepage and ‘flipped’ them once featured for a profit, which in traditional finance would be considered insider trading. This is an outcome of OpenSea being non-transparent and centralised and could have been mitigated if NFT curation in OpenSea was decentralised. In the same month (September 2021), a critical security vulnerability was disclosed to OpenSea. The critical security vulnerability detected in OpenSea involved attackers airdropping SVG files to OpenSea users, which if signed by a user upon opening (even if opened on the OpenSea domain ingenuously) would give an attacker full access to a user’s funds in the wallet the malicious NFT was being viewed from. On top of these evident issues, OpenSea also restricts NFT projects to setting a maximum of 10% for royalties from sales. Lest we mention that at current ETH gas prices (124 gwei), it costs minimum $200 to buy or sell an NFT on OpenSea, which prices out a majority of retail. However, high gas prices on Ethereum for buyers and sellers can minimise scam collections, which are more commonplace on cheaper blockchains like Solana. Metaplex, a major NFT platform on Solana, also has their own issues when it comes to difficult NFT upload workflows. Finally, many existing NFT marketplaces are not open-source, which increases risks when interacting with the native smart contracts (as users have to rely on one auditing party.

So, what if I told you that a new NFT marketplace is emerging in the Cosmos ecosystem that offers high-quality security, decentralised curation, simple upload workflows, maximum flexibility, low transaction fees, open-source contracts, vetted projects and unlimited customisation of economic parameters?

Stargaze Shines Brighter Than Any Other NFT Marketplace

Security

Stargaze is opting to build out a zone using Cosmos SDK, which enables the network to have an unparalleled level of security and customisation vs existing NFT marketplaces. Cosmos SDK is built with capabilities in mind, which capitalises on least authority to minimise possible exploits at the execution layer. As Stargaze is its own sovereign chain, it also has 100 reputable validators securing it, all of which are specialised solely on verifying transactions that occur in the zone and can react quickly to upgrading the network to enhance the performance and/or security of it. This is completely different to NFT marketplaces on Ethereum and Solana, which are built as applications and have a reliance on validators to secure the underlying network as opposed to the application itself being in full control of its own security. Separately, the Stargaze NFT marketplace is built using CosmWasm, which is orders of magnitude more secure than the Ethereum Virtual Machine (EVM) because EVM attack vectors such as re-entrancy are not possible. All in all, Stargaze leveraging Cosmos SDK and CosmWasm ensures the network is secure and reliable.

Decentralised Curation

Stargaze introduces a new type of ecosystem actor into their NFT marketplace, namingly, the CurationDAO. The CurationDAO in Stargaze is responsible for curating what artwork can be traded in the marketplace. The DAO is membership-based and is governance-driven, ensuring an open and transparent system is in place for the selection of artwork in the marketplace. Stargaze governance may incentivise the CurationDAO by directing an amount of STARS from emitted inflation to reward their work. Having a DAO that curates what is available on the Stargaze marketplace results in better due diligence of projects and reduces the surface area for scams. It could be expected that Stargaze users (both buyers and sellers) benefit from having a CurationDAO too, as only legitimate projects will be able to be traded, which should lead to more liquid markets.

Maximum Flexibility

The Stargaze marketplace has a built-in feature that gives NFT projects the flexibility to choose what type of launch they would like to have (e.g. first-come-first-served mint, auction over t periods, etc). The flexibility of launch options offered by Stargaze allows NFT projects to satisfy demands of their community by working closely with them to determine what type of launch is fairest. Stargaze being a sovereign chain also lets governance exercise a high-level of customisation on protocol parameters, which is beneficial for keeping the network competitive in the long-run. For example, governance could vote on specific network upgrades proposed to improve the performance of the network (which would not be possible in an NFT marketplace that existed as an application). In turn, Stargaze can be much more adaptive than existing NFT marketplaces because governance can vote on introducing changes at the network level to give it a competitive edge.

Simple Upload Workflows

The Stargaze marketplace provides a simple interface for NFT projects to upload files and add metadata into, which uploads to Interplanetary File System (IPFS) in a matter of seconds. Files that are uploaded in Stargaze are immediately and permanently stored in a distributed and resilient system. The user experience is seamless, as the entire storage process is abstracted away from the end-user via nft.storage. All Stargaze users can be rest assured that the NFTs they own are permanently available, unlike some NFT collections that rely on a third party to host the file the NFT points to.

Low Transaction Fees

Fees on Stargaze are negligible compared to what can be seen on Ethereum, so the network is accessible to all types of users (not just those with a high amount of initial capital). It can be expected that fees will be just high enough to prevent spam but low enough to encourage frequent use. Low fees in an NFT marketplace enable more growth and innovation as buyers have greater purchasing power and projects can release more NFTs without transaction fee concerns.

Customisation of Economic Parameters

Another unique layer of customisation available on Stargaze vs other NFT marketplaces is that of staking on the native network. One could imagine utility being introduced to STARS that would not be possible on existing NFT marketplaces like OpenSea. For example, in the future users might be able to deposit their STARS into a liquid staking protocol to receive the equivalent staked STARS (stSTARS) that could be used to bid on NFTs (i.e. users could earn yield whilst bidding on NFTs). It might also be a requirement to stake STARS in order to join the CurationDAO (the DAO responsible for selecting what collections are released on Stargaze). Or perhaps, users could stake a minimum amount of STARS in a given time period to be eligible to vote on what collections are reviewed by the CurationDAO. Another option could be to stake some amount of STARS in order to have a higher chance of getting into lottery-based NFT launches. There are limitless possibilities that could be thought of to add utility to STARS. On the flipside of staking STARS, the inflation emitted by Stargaze could also be used to reward creators of NFT projects. Once an NFT project has been vetted by the CurationDAO, it might be eligible to earn x% of staking rewards reserved for creators. In other words, NFT project creators might be entitled to a double source of income in Stargaze — royalties coming from trading of their NFTs on the marketplace + their proportion of a steady stream of STARS emitted every block directed towards creators.

Open-Source Contracts

Stargaze code is fully open-source and the core team recently released a LBP simulator that other projects in the Cosmos ecosystem can use to experiment with tweaking parameters before launching an LBP on Osmosis. The Stargaze code is available in a repository on Github for anyone to see, which means anyone can audit the code to ensure there are no vulnerabilities and engineers can easily build on top of existing code to enhance the platform in a collaborative way.

To conclude, Stargaze is a marketplace that exemplifies security, decentralisation, transparency and flexibility, which differentiates it from any existing competition from NFT marketplaces. Due to the nascency of the NFT space, there are many existing inefficiencies in NFT marketplaces across a multitude of blockchains. Stargaze has an opportunity to capture a large segment of a growing NFT market by offering distinct products and services for stakeholders such as NFT projects, curators and users. Novel web3 products will be built out that incorporate Stargaze NFTs in ways we cannot possibly imagine. A new era of interchain NFTs is upon us, enter Stargaze.

Written by Xavier Meegan, Research Analyst at Chorus One

About Chorus One

Chorus One is offering staking services and building tools that advance the Proof-of-Stake ecosystem.

Website: https://chorus.one
Twitter: https://twitter.com/chorusone
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Newsletter: https://substack.chorusone.com

About Stargaze

Website: https://stargaze.zone/
Twitter: https://twitter.com/StargazeZone
Stargaze LBP Details: https://gov.osmosis.zone/proposal/discussion/2882-details-and-parameters-of-stargaze-lbp-on-osmosis/