Bytom Metaverse: A radical market landing attempt

1. World Problems

Affected by the epidemic, the current world is in an unstable state. The current growth, which has reached its limit by relying on fiscal intervention and monetary easing, has caused huge inequality in the world.

The chaos and confusion in the capitalist world are inseparable from the problems encountered by the top-level structure, but if it was the laissez-faire free market that brought about the 2008 financial crisis, then shouldn’t the lesson be to strengthen government supervision and restrictions?

Eric A. Posner and E. Glenn Weyl, authors of Radical Markets, were ambitious from the very beginning. They developed their own new ideas: Why not expand the market more radically and use the power of the market itself to regulate the market? Why not try to use more market mechanisms to achieve public ownership reform of private property rights? Why not use more sophisticated mathematical and game theory tools to design a more balanced voting infrastructure? In the end, the question became whether it was possible to design "socialism that allows free markets."

Of course, it is not very realistic to implement this approach in reality. The current status of private property rights is unbreakable and the concept is deeply rooted in people's hearts. No one wants the house they live in today to be bought by someone else tomorrow.

2. Blockchain: A natural testing ground

Blockchain has a very good economic closed loop, and also has various roles to maintain the entire system. At the same time, it provides a higher degree of freedom in the asset circulation model, so it is naturally more suitable for the implementation of the radical market theory than the real world. Especially with the rise of NFT, the non-standard assets on the chain that are benchmarked against physical assets are gradually maturing, providing a very suitable soil for the implementation of the radical market.

Let’s analyze the two most important points of radical markets: endless asset auctions and Harberger taxes.

“In a radical market, there is no monopoly of private ownership. All items are permanently subject to fixed-price auctions. The highest bidder wins, and there is no end to the auction. Therefore, no one can truly own an item.”

This is basically impossible in the real world. Due to the need for trust, an auction venue must be established and have certain endorsements. The venue and time will be restricted. At the same time, property rights confirmation and authentication are not easy tasks.

The trustless nature of blockchain means that both buyers and sellers do not have to worry about the authenticity and validity of assets. At the same time, with endless on-chain trading time 24 hours a day, the public ownership of assets will never be monopolized at any moment and will be auctioned in perpetuity.

“Harberger tax theory proposes a unique property rights model, where all asset holders need to publicly price their assets and pay taxes based on a percentage of the valuation each year.”

In the real world, it is also very difficult to collect this tax. It requires a strong organization to use violent deterrence to collect it. At the same time, the whereabouts and use of the tax are questionable, which is very likely to lead to corruption and other problems.

However, through the blockchain, it can be easily achieved through models such as handling fees or deposits. At the same time, all transactions on the blockchain are open and transparent, and there will be no evasion or omission.

3. Radical Transaction Protocol of Bytom Metaverse

Based on the radical market theory, Bytom launched a radical trading protocol and built its own metaverse.

1. What is an excited state NFT

Based on Bytom, a new NFT standard is defined - the excited state NFT. In this mode, NFT becomes a non-permanent possession asset. Anyone can only own it "temporarily". They have the freedom and right to set any price for the asset, and cannot refuse anyone's bid at any time. The asset is in a global public auction state around the clock, which is called the excited state. The excited state NFT protocol has its own automatic transaction auction attribute, which also determines its significance as a non-private asset. There is only one subject in the entire system that has permanent rights to the asset - the commons, the public subject of the metaverse, which lays the foundation for the Bytom metaverse fundamentalism concept.

The excited state NFT realizes that all assets cannot be monopolized and are in an endless auction process. In other words, you cannot occupy an asset because you cannot refuse others to buy your asset at any time (as long as he meets the conditions).

2. What is margin?

Any user holding an excited state NFT needs to deposit a certain amount of margin. The margin represents the pricing and holding cost of the user holding the excited state NFT. The margin is a weakened implementation of the Harberger tax.

The margin is obtained by the following formula:

Where D is the amount of pledged margin, a is the pledge rate (leverage factor, 10% as defined in the protocol)

3. Process of Aggressive Trading

① The creator publishes the NFT work and sets the selling price and royalties. At this time, the NFT is not an excited NFT, so the creator does not need to add a deposit.

②After user A pays for the creator’s NFT work, he needs to add a corresponding deposit. At this time, the NFT will become an excited NFT, and the aggressive auction will begin.

③ User B pays the price of User A and also needs to add a deposit. Then User B gets the NFT, User A gets the profit and returns the deposit, and the creator also gets a certain amount of royalties.

④ Similarly, if the subsequent users also follow the above process, the excited state NFT will always be in the auction state.

4. Advantages of aggressive trading

① Promote NFT transaction efficiency

The traditional NFT market uses bidding as a trading method, with sellers setting high prices and buyers offering low prices. It requires repeated bargaining between the two parties to reach a deal, resulting in low transaction efficiency.

Through aggressive trading, NFTs are constantly being traded, and sellers invest a certain amount of money in exchange for better liquidity.

② Better NFT price discovery

In traditional NFT pricing, sellers tend to raise prices, while buyers tend to obtain them at low prices. The pricing of an NFT is vague, and its market value cannot be formed quickly.

Bytom's aggressive trading introduces a margin model. For sellers, setting a price that is too high means paying more margin, which actually does not generate any income, but means paying time and opportunity costs. Of course, if the price is too low, it will be quickly snatched up by buyers, so sellers tend to choose a more reasonable price.

③Creators can receive royalties multiple times

In the traditional market, creators only receive the proceeds from the initial issuance during the transaction process, and will not receive any share of the proceeds from subsequent transactions.

In radical transactions, a royalty can be distributed to creators for each transaction, allowing creators to continue to receive income from subsequent transactions, thereby motivating creators to create better and more works.

④Deposit instead of tax

According to the original meaning of the radical market, the Harberger tax needs to be adopted, which can be done through the blockchain through fees and destruction. However, this is costly and will dampen the enthusiasm of NFT holders.

Bytom’s aggressive trading adopts a margin model. Since the holders have paid time and opportunity costs, they will not suffer direct losses. At the same time, the margin of Bytom’s aggressive trading can be increased or decreased at any time, which improves the overall flexibility.

4. Future Outlook of Bytom Metaverse

Aggressive trading is only a part of the Bytom Metaverse. In the future, more transactions will be launched based on the current aggressive trading model, such as stamp trading, inquiry trading, ring trading, etc.

As mentioned before, the Bytom Metaverse is a larger map and world that will introduce more assets from the real and virtual worlds, and will actively implement various economic models and plans that cannot be implemented in the real world, providing more development possibilities.