Pulling the proverbial rug
The long awaited discussion regarding how NFT metadata is stored has finally been thrust into the spotlight by what is commonly described in DeFi circles as a rug pull.
Recently, digital artist Neitherconfirm listed 26 NFTs for sale on the OpenSea marketplace. The artist then pulled a bit of chicanery on collectors by changing the images associated with each of the NFT tokens he sold — from computer generated portraits into photos of literal rugs.
“All discussions about the value of NFTs are meaningless as long as the token is not inseparable from the artwork itself.
What is the meaning of creating an unforgeable token on a highly secure network if somebody can alter, relink or destroy your possession?
As long as the value of your artwork relies on a central service you do not own anything.”
Originally the digital pieces featured people and animals in a beautiful seemingly avant-garde style. They are now nothing more than an expensive euphemism for why you cannot trust the store-of-value proposition of any digital collectible that maintains any aspect of centralized control.
A rug pull is a scam whereby the value of a token suddenly collapses when liquidity disappears. NFTs that do not store their metadata in a decentralized fashion run the risk of losing their value proposition. That is why it is so important to choose the right blockchain for your NFT
Where is your NFT metadata hosted?
NFT metadata is similar to a manifest that defines what the NFT is, and is available to the user via a standardized JSON format. This comprises a link which points to where a user can find the actual image, a cryptographic hash identifying the image as authentic, as well as the name and attributes of their digital masterpiece. However, on legacy blockchains like Ethereum the JSON is not stored on-chain (as that would be too expensive) but rather as a URI (Universal Resource Identifier) string.
The hosting of the metadata is a really important piece of the NFT puzzle that most people have overlooked until now. When a collector buys an NFT, he or she is actually buying a cryptographic hash. Unless that hash is hosted on the actual blockchain — and not on some form of centralized server — you run the risk of being rug pulled.
The artist Neitherconfirm exposed the fact that NFT metadata stored on centralized servers can disappear if the server fails or the artists themselves have malicious intent. Therefore, collectors need to know something about the underlying technology used before they buy an NFT: where is the metadata hosted, and what does it point to? They should be certain that their digital collectible’s metadata is hosted either directly on the blockchain or on the Interplanetary File Storage System (IPFS), and that the smart contracts are open source.
Phantasma stores NFT metadata on — chain
Phantasma’s next generation solution to NFT metadata hosting is made possible in large part due to the power of the Phantasma blockchain. Phantasma has improved upon the limitations of legacy blockchains by building the blockchain from the ground up.
Powerful features such as NFT minting, oracles, decentralized storage, dMail and chat have been natively built into the chain. This has not only allowed Phantasma to deliver next generation technology, but also to overcome the high costs of minting NFTs. On top of this, Phantasma is able to store NFTs through a combination of on-chain metadata storage and decentralized media storage via IPFS at an extremely low cost to creators.
The Smart NFTs being minted on Phantasma are unique in that they are able to hold both ROM and RAM metadata. The ROM is an immutable storage which can never be altered after the NFT has been minted, while the RAM can be reconfigured — for example when your character levels up in a game. Furthermore, these storage options give collectors total ownership over their NFT’s metadata, and eliminates the chance of a rug pull due to the metadata being stored on-chain while the media files are stored in a decentralized fashion through IPFS.
GhostMarket offers truly decentralized NFTs
One of the most revolutionary dApps in the Phantasma ecosystem is GhostMarket. GhostMarket is the world’s first fully trustless cross-chain NFT marketplace. Trading and collecting on GhostMarket is facilitated by smart contracts, and one of its most powerful and innovative features is the uMint NFT Factory. uMint allows collectors to have peace of mind because the Smart NFTs minted have their metadata stored directly on-chain and are truly decentralized. This is a major part of the reason why GhostMarket has seen an exponential growth in the number of amazing artists, musicians, and photographers creating and sharing digital masterpieces on the marketplace.
Protecting your investment — The next generation of collectibles,
Your Phantasma Team
Community website: https://phantasma.info/