What are smart contracts?
As we're closing in on the launch of enter.market, there is one topic that's more interesting than ever for creators to explore - smart contracts. What is it, and should you deploy your own?
We’re closing in on the launch of our new open marketplace enter.market, and many creators in the enterverse are currently exploring what new opportunities this might bring to their project. Like we touched up on in THIS blog article, enter.market opens the doors for creators to deploy their very own smart contracts and expand on the utilities of their collections. In this article, we’ll have a deeper look at smart contracts - the basis of NFTs, cryptocurrency and blockchain at its core.
What are smart contracts?
Smart contracts were the first successful and viral utility extending the idea of blockchain far beyond value transfers. Smart contracts are what drives:
NFTs Non-fungible tokens
DAOs Decentralized autonomous organizations
Token governance Community-run and owned protocols with voting operating on the blockchain,
DeFi Decentralized finance protocols
DEX Decentralized exchanges
Other smart contract platforms Digital platforms operating on smart contracts like NFT marketplaces
Smart contracts are a set of self-executing codes with a rule set that reacts when certain predefined criteria are met. When the criteria of the code are met, actions are executed automatically. The process and agreements are written in codes that operate on the blockchain, allowing for fully transparent and fair transactions with no middle man needed.
In other words, smart contracts are codes operating and executing actions independently with no need for a middle man or human involved in the transactions. It’s a trust-less and transparent system that is disrupting the way ownership and transactions are handled.
Transparency is a key factor in crypto adoption as it allows for open and transparent transactions between parties. The trust-less and automatic ways smart contracts are operating is the backbone of the new internet - also known as web3.
How are smart contracts and NFTs connected?
Smart contracts can also be used to hold assets like NFTs and cryptocurrencies within them. These assets can be distributed upon contract execution when a set of conditions are met based on the code defined in the contract. This enables invaluable features for artists, like royalty splitting and distribution in a completely trust-less way that is locked indefinitely. It is this mechanic that attracts most artists to the NFT space, and for good reason.
Pro’s and cons of deploying your own contract
When NFTs are minted through a smart contract, they are bound by its conditions. When building enter.art and .audio, we wanted to give creators a safe space to dabble with NFTs and creation. When you mint through enter’s smart contracts, you can be sure that royalties are intact on every resale, and all you need to worry about is filling in the correct details in the minting process - like number of editions and the like.
The limitation to this, is that all NFTs from enter belong to the same smart contract, what someone in the NFT space usually refers to as collection, on the blockchain. On a blockchain level, they cannot be separated, and metrics like floor prices would apply to the whole collection on enter (enter’s smart contract). For those wanting to dabble with rarities, floor prices and traits which are increasingly popular in the NFT space, this can be a limiting factor for the way they want to display their collections.
If you deploy and own your contracts, you and your collectors will be able to re-list the NFTs on any compatible marketplace and send them across wallets. When using the NFT minter provided by a marketplace, the technical abilities and limitations are up to the specific marketplace that owns the contract.
So should I deploy my own smart contracts for my NFT collection?
That depends on the needs of your project. Some say that deploying and owning your own smart contracts gives you more control and ownership over an NFT collection. Others trust the marketplaces’ deployers and contracts more than their own technical skill. In that case, deploying their own contract might just be unnecessary work.
Some want the option to move their NFTs across different marketplaces, while some exclusively sell on a certain marketplace. If you are the latter, then it might make more sense not to deploy your own contract.
Because we want to offer possibilities for all types of artists, we will soon launch a deployer on enter.market. This will enable artists to deploy their own contracts just as easily as you can mint on enter.art and .audio.
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PUBLISHED 2ND MARCH 2022
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