Upshot Uses Chainlink’s VRF to Bring Efficient Price-Discovery to NFTs
NFTs are low-velocity assets — they don’t change hands very often. This means that the open market has a difficult time pricing them efficiently. Upshot is building a crowdsourced NFT appraisal platform on top of a new field of mechanism design called “peer prediction” to improve how NFTs are priced. By paying people to appraise NFTs honestly, Upshot will enable near real-time price feeds for NFTs without requiring them to change hands at all.
A core piece of Upshot’s appraisal platform involves randomly selecting appraisers who will have their appraisals considered in pricing NFTs. To enable this random selection to take place in a verifiable way, Upshot is leveraging Chainlink’s Verifiable Randomness Function (VRF).
The Chainlink VRF
What is the VRF? The Chainlink VRF is a fair and verifiable source of randomness for smart contracts. When a smart contract requests randomness, the VRF creates a random number along with a cryptographic proof detailing how that random number was generated. That proof is then published and verified on the blockchain.
This guarantees that the random selection can not be manipulated, leading to fair and unbiased outcomes for applications relying on the randomness to execute key on-chain functions like selecting appraisers.
VRF in NFT Appraisals
Upshot will use Chainlink’s VRF to randomly select committees of appraisers who will have their appraisals considered when pricing NFTs. This use of Chainlink’s VRF both increases the cost of manipulating NFT appraisals and makes the system more efficient by only requiring a small, fixed number of appraisers’ responses to be considered and/or scored.
It would be intractable for Upshot to consider all appraisers’ responses when pricing each NFT and it would be significantly cheaper for attackers to manipulate appraisals if they knew for certain the breakdown of answers and appraisers considered beforehand. Thus, Chainlink VRF is a necessary component of the Upshot pricing API.
“We’re excited to support Upshot in its innovative use of Chainlink VRF for randomness, creating verifiable security guarantees and lowering the costs needed to obtain better appraisals for the growing NFT market, ultimately enabling more efficient NFT trading,” said Daniel Kochis, Head of Partnerships at Chainlink Labs.
Upshot CEO Nick Emmons describes the use of randomness as “an important tool in protocol design — it both increases the cost of attacking systems while simultaneously making them more efficient. Chainlink’s VRF is a major step forward in protocols’ access to robust sources of verifiable randomness.”
Live Q&A with Chainlink and Upshot
Upshot is excited to work with Chainlink’s innovative infrastructure to bring NFTs into the world of DeFi. Nick Emmons, CEO of Upshot, will be participating in a live Q&A session with Chainlink on May 6 at 12PM ET (more details TBA). Join to learn more about the implications of reliable NFT price discovery and what it means for the broader DeFi ecosystem.
We are inviting passionate NFT collectors and community members to join Upshot. As part of today’s announcement, Link Marines will get early access to the Upshot beta. Click here to join.
Chainlink is the most widely used and secure way to power universally connected smart contracts. With Chainlink, developers can connect any blockchain with high-quality data sources from other blockchains as well as real-world data. Managed by a global, decentralized community of hundreds of thousands of people, Chainlink is introducing a fairer model for contracts. Its network currently secures billions of dollars in value for smart contracts across the decentralized finance (DeFi), insurance and gaming ecosystems, among others.
Chainlink is trusted by hundreds of organizations to deliver definitive truth via secure, reliable data feeds. To learn more, visit chain.link, subscribe to the Chainlink newsletter, and follow @chainlink on Twitter.
Upshot aims to provide near real-time price-feeds for NFTs through crowdsourced appraisals. Using a new peer prediction mechanism, Upshot analyzes correlation and pays people for honest insights. A decentralized community of collectors interacts with Upshot to deliver quick and accurate pricing of assets through appraisal games – unlocking opportunities for a new generation of appraisers and catalyzing powerful new innovations in DeFi.