NFTs as Collateral for Wagering

[ethanroseman]

Can a front-end be created using Monaco Protocol that does not take a side of a wager (0 counterparty risk), tapping into the liquidity exclusively garnered by Monaco to consummate wagers? This platform would exclusively mediate transactions and would have 0 capital to fill requested user orders by taking the opposite side like DraftKings' sportsbook. It would aim to exclusively leverage the liquidity aggregated by Monaco to fulfill wagers instantaneously, without needing to fundraise to acquire a sizable war-chest, deployed to compete against users in hopes of catalyzing liquidity and a profitable business. Essentially, operating an exchange that provides users a sportsbook level experience.

If this is possible with Monaco, when do you project this ecosystem actually becomes liquid enough for dapps to leverage? Thanks!

[varunsudhakar]

Just so I understand are you looking to create a 'simple' GUI which users can access to place wagers on Monaco?

[varunsudhakar]

Theoretically yes but that would mean that Monaco itself becomes a lending protocol if I understand what you're proposing. That functionality is definitely possible down the road but not included in the current iteration of the protocol code which has functionality for a limit orderbook with no in-built lending for v1.

We'll be open sourcing the raw code as well over the next few months once the security audit is complete, so would love for you to contribute any thoughts/edits you have to it to enable the functionality you're envisioning.

[ethanroseman]

The proposed functionality would leverage the use of novel tooling that can accurately assess the valuation of NFTs, enabling holders to wager NFTs for fungible capital by tapping into the Monaco orderbook. I did not envision lending - technically, users could borrow against their NFTs on myriad platforms and use the borrowed capital to wager on a platform like BetDEX (but perhaps you are right and users would value having this feature natively built into a wagering platform). In light of the strong accuracy of the NFT fairness opinions, the thought is that those wagering fungible capital could be paired with counterparties wagering NFTs. Perhaps, both users are unaware they are even being matched with a counterparty wagering an NFT or vice versa, and there is a liquidation mechanism in the smart contract if the counterparty wagering an NFT loses the wager.

Also side note, I am a big fan of what your team is building and wanted to say congrats on the protocol launch! I checked out your background and appears we are both former Raymond James associates! I graduated from college in 2021 and joined RJ's IB division out of school. I am now working on a web3 wagering project powered by NFTs. Does Monaco aim to provide any grants to bootstrap application development on the protocol? Particularly in the wagering space, it is tough to navigate launching an operational MVP to gauge product-market-fit in light of licensing requirements. This is a major roadblock, as VCs providing pre-seed funding will likely want evidence of product-market-fit, which can only truly be evaluated upon attaining a license to operate the MVP.

[varunsudhakar]

So right now for v1 the liquidity in the market has to be of the same type due to the volatility in crypto assets. I.e. a USDT market will only accept liquidity in the form of USDT. For a NFT to be used as the form of medium in a non-NFT market (i.e. USDT, USDC, SAMO, etc.) there needs to be some collateral / lending / conversion mechanism somewhere in the ecosystem to allow that NFT to be used as a form of capital in the current ecosystem - that could change down the road and obviously more than open to suggestions / smart ways to do it.

And thanks! Nothing specific to announce on grants right now, but we are looking at ways for the Protocol and community to incentivize builders so stay tuned!

[ethanroseman]

Thank you for taking the time to clarify Varun, and sounds great! Highly looking forward to collaborating in the future to pioneer the wagering space!

[druspencer]

Renamed this question from Protocol Utility - Front-End to NFTs as Collateral for Wagering to enhance discoverability. Fantastic thread both. 🙇