In a recent article, @kurtivy argued that NFTs are keys, not art. Their value in the metaverse is the access they provide to an exclusive community.
@PotionLabs agrees that building a community is one of the key reasons why NFTs are such a powerful value driver for their new game, Potion Unlock 22’. However, they don’t believe in communities being exclusive - in fact, that’s the entire ethos behind the public launch of the Potion Protocol.
Contrary to everything we’ve seen before in GameFi, Potion Unlock gives players access to the protocol’s fundamental files. This isn’t just a decentralized gloss on a fundamentally centralized system. It’s “aggressive decentralization” that allows anyone and everyone to join the Potion community and work collaboratively to bring long-term sustainable risk management to the many.
Why Potion Unlock NFTs are Keys
There are 10,000 Potion Unlock NFTs, each of which contains a password segment of varying length. When these segments are joined together, they will unlock the Potion Protocol - a new, powerful risk management layer in DeFi that offers transversal products like insurance from an automated smart contract.
The codebase of the entire project has already been uploaded onto IPFS (decentralized file storage). From March 14th, the Potion Unlock Auction will go live, allowing interested investors to purchase their own piece of the puzzle.
Once players have an NFT in hand, they will have to work together to decrypt the entire protocol. The game itself is totally open-ended: players will have to self-coordinate - without the input of Potion Labs - to find their own solution to the problem.
When the protocol’s file is decrypted and released into the public domain, a community with ‘skin in the game’ will have been formed. This community will then have power and stewardship over the future of the Potion Protocol as a public good. In this way, Potion Labs hopes to have created a new, fully regulatory compliant paradigm for decentralized software release into the community.
Why Potion Unlock NFTs are Art
The Potion Unlock NFTs have been meticulously designed based on the principles of data visualization. Given that protocol is based on the Kelly Machine, it made sense to utilize this concept in the NFT design. The outcome was the Kelly Dictionary, a book of 10,000 insurance options that have been generated by the machine and embedded into NFTs.
As mentioned above, each NFT contains a segment of the password that the community needs to unlock the protocol source code. But at the same time, each NFT incorporates a visual language, based on proprietary symbology, meaning that they are not just keys but art in their own right.
The Kelly Dictionary
You can read about the entire design process underpinning the unique NFTs in Potion’s medium post-Deep Dive on Design.
Each visual characteristic of the NFT has value and meaning:
- (Covered) Asset: assets were selected for their brand reputation and market impact, then placed into three different categories (crypto native, DeFi and Metaverse).
- Strike (Price) and Duration: these are represented by the two overlapping circles containing the asset. They display the maximum % price that the insurance will cover, as well as the coverage time window set for the insurance.
- Training: by counting the number of curves (years) and the number of solid lines (months), you can calculate the time window within which the bonding curve has been trained.
- Curve parameters: these describe the 4 parameters of the one-of-a-kind bonding curve that each Potion insurance contract is based on.
- Secret: this is represented by an auto-generated pattern based on a rune alphabet. It is the segment of the password that is needed to unlock the protocol.
- Naming Convention: the final sprinkling of magic - it translates the insurance parameters into a metaphorical potion made up of different sized vessels and levels of power.
In addition, elements of the artistic design allow NFTs to reach their full potential as ‘keys’ to a game.
It was decided to create 6 NFT types or “rarities”, each with a different “decryption power” (length of the password segment), giving the various players different capabilities and powers. Each NFT rarity will also have a different “redundancy” level (based on the number of duplicates), so no single holder can block the resolution of the game.
The result? A robust, decentralized model that combines art, technology and math into a strong brand narrative. Plus, strong proof that as value drivers for the Potion project, NFTs can be keys AND art.
What else is there to know?
Unsurprisingly, there has been strong interest in the project to date. The private sale of NFTs held in January 2022 raised $12m, during which two Potion NFT rarities (Kelly Knights and Wise Wizards) were bought by prominent DeFi players such as Polychain, Placeholder, Maven 11, Pantera, The LAO, MetaCartel, Parafi, Spartan, Robert Leshner, Fernando Martinelli, Synthetix founders, Crypto Plaza, Roble VC, CULTUR3, Lemniscap, Zee and beToken Capital, among others.
More recently, an airdrop made NFTs available to 1,000 leading members of prominent DAOs. The event was hugely popular, with NFTs running out in a matter of minutes.
In addition, Potion’s early community members (OGs or Original Gangsters), received a generous allocation of Potion OG NFTs at no cost, in recognition for their early community support and inspiration.
Starting on March 14th, the majority of Potion NFTs will be sold to the public via a Dutch-style auction of the Fellowship, Advanced and Legendary Potion NFTs. High-profile DeFi and NFT participants are expected to take part, but anybody can potentially participate by whitelisting themselves and registering their MetaMask wallets on the Potion Unlock website.
Watch this short video to find out the steps you need to take to access the game yourself:
A final word on Potion Protocol and Analytics
The Potion Protocol was born out of the sheer necessity for proper risk management in decentralized finance. It uses a web 3.0 application and smart contracts to protect user assets and liquidity, ensuring that traders have increased market power and earning possibilities.
To do this, it leverages the Kelly Criterion, a systematic allocation strategy that improves liquidity distribution, reduces the risk of poor resource allocation during uncertainty, and minimizes capital losses. It does this through a unique and proprietary bonding curve that dynamically adjusts prices to offset risk.
In essence, the protocol works as a decentralized order book that allows users to trade collateralized risk contracts on anything from insurance to derivative products, puts and calls. Potion Protocol’s router instantly and automatically identifies the best possible price on the network, meaning that users do not have to oversee their positions non-stop.
Finally, Potion Analytics provides traders and LPs with high-end risk analytics and simulation abilities. This includes user-friendly, interactive tools such as:
Risk Optimization: Thanks to its use of the Kelly Optimization Criterion, Potion Analytics reduces risk and enhances projected returns.
Sustainable Alpha: Potion Analytics uses a Monte Carlo backtesting technique. This way, it sets the ground for successful investment, with higher success odds than bankruptcy.
Programmable Alpha: With an additional backtesting layer, Potion Analytics creates return and risk estimates to provide investors with long-term, sustainable alpha benefits. This tool is ideal for LPs since its design helps them survive and grow over repeated risk exposure.