DEIP's Alex Shkor: Fractionalized NFTs turn intangible assets into loan collateral

Ashton Addison: What is DEIP, and what problem are you trying to solve?▶ 00:49

Alex Shkor: Bringing real-world assets onto the chain will unlock unprecedented potential. Crypto has focused on crypto assets, but there are so many assets beyond crypto, and intangibles in particular are not well utilized in the real world. We are building a protocol for the creator economy. It is basically a protocol for tokenization and governance of intangible assets, because all creators produce intangibles. If we put them on-chain and tokenize them, it gives people the opportunity to govern these assets, and it unlocks liquidity for them. That is something the crypto industry does really well, and it can boost the development of many other industries.

Ashton: Intangible assets can be almost anything. Where do you start?▶ 02:03

Alex: We provide infrastructure for others to create platforms for tokenizing assets in any industry, whether that's movie scripts, inventions, human capital or music. But we also want to lead by showing how our tools can be used, so we selected a couple of industries as showcases. One is technology transfer, which is the organization of inventions. The other is tokenization of human capital, through income share agreements for bootcamps. We chose them because they sit at opposite ends of the spectrum. Inventions and technologies are high-risk assets with potentially higher profits. Income share agreements are lower risk but have very limited returns. We believe all other assets lie somewhere in between, so we want to show how it works with these two use cases and let others implement their own.

Ashton: How does the NFT process on DEIP differ from a regular NFT?▶ 04:29

Alex: Because we tokenize intangibles from the real world, the process requires specific legal compliance for intellectual property, so we developed a regulatory framework for it. To recognize an asset, you need a legal agreement that attaches economic or governance value to the token. You can attach rights, such as who the asset can be transferred or licensed to, as well as economic value such as royalties coming from the asset. Any economic asset can be recognized on our platform this way.

Ashton: Once assets are tokenized, how do you actually increase their liquidity?▶ 06:08

Alex: This is the main USP of the protocol. Boosting liquidity helps at every stage. While an asset is being developed, it lets you raise more capital, and once it's finished, it increases the asset's commercialization potential. Our fNFT framework lets you issue an NFT on a product and also fractionalize ownership of it. That alone increases liquidity, because selling a fraction of an asset is easier than selling the whole thing, especially if it's expensive. But that is just the beginning. Once an asset is fractionalized, you can use it as collateral in our dynamic liquidity protocol to borrow stablecoins, in an amount calculated from a collateralization ratio. You can use that money to market your products and develop more assets. This is basically a decentralized bank for creators.

Ashton: Where is DEIP right now, and what is coming next?▶ 08:14

Alex: We have been building this ecosystem of products for almost four years. This year we are launching our Substrate-based testnet and two portals. One is for tokenizing human capital in the form of income share agreements, and the other is a technology transfer platform for technology transfer offices. We also released our Web3 constructor, which lets anyone create portals for tokenizing assets in any industry. Later this year we are launching a public token sale, probably around the middle of November. We will also launch a portals builder program that gives grants to people who want to build tokenization portals. Imagine someone in the music industry who knows all the stakeholders. They could build a portal for tokenizing music, charge a fee for every asset tokenized, and become a portal in our network.

Ashton: What incentives do you offer creators who come in early?▶ 10:42

Alex: We are not only incentivizing people to create portals in the network. For every portal, we will also help provide liquidity for its assets. Those who come first and tokenize assets will benefit even more from the dynamic liquidity protocol, because we will subsidize liquidity at an early stage, so you will be able to get funding. We will also help market these assets. We want our marketplace network to work well and have a lot of usage, so we will be helping every portal that comes to us all the way.

Ashton: Are you building for creators who aren't technical and may not know about Substrate or NFTs?▶ 11:59

Alex: Yes, that is exactly our approach. We want to make it look and feel like you don't even know that there is a blockchain under the hood. We build functionality so that anyone can use it seamlessly without technical expertise. One feature in our network is free transactions. Paying for transactions, for example to invite people into your DAO, is a very high barrier for people who don't come from the blockchain space. We are very focused on user experience and making it smooth for anyone, because we want to boost adoption. We don't only want to capture the existing market; we want to expand it drastically for every player in the industry.

Ashton: Looking four to ten years ahead, what will be the key to becoming the go-to platform for tokenizing intangibles?▶ 13:41

Alex: Recently I realized that the number one thing we need to worry about is being as transparent, open and inclusive as possible. We want to let anyone come into this ecosystem and not try to be a middleman anywhere. If we build portals, we want others to be interested in building the same kind of portal, because we don't want to capture the value of those specific assets for ourselves. We want to show how it can be done. The same goes for the constructor: we don't want to be the only constructor provider in the ecosystem. We believe this is a good approach for anyone in the crypto industry.