📄️ Introduction
Web3 markets offer several comparative advantages over their Web2 counterparts they will have to contend with both human and AI generated copy-cats that eventually enter the market [Reference//www.plagiarismtoday.com/2023/06/28/yet-another-nft-plagiarism-scandal/]. This reality, coupled with the fact that art is traditionally illiquid, suggests that secondary market activity for Digital Art is unlikely to grow significantly. For Physical Goods, especially high-end fashion products, some brands are using the blockchain to prevent fraud from imitation. However, most handbag or shoe owners will not trade their items; so their secondary market activity will be limited. Projects would derive more long-term value from Web3 by tokenizing credits instead of products or works of art.
📄️ Service credit using ERC-3525
Web3 projects have not embraced credit issuance perhaps because of infrastructural and regulatory challenges. On infrastructure, until recently there has been a lack of flexible smart contract standards. What remains is user-friendly credit issuance and a flexible redemption process. Until 2017 many projects minted their own ERC-20 fungible tokens, which served as funding vehicles and, in many cases, credit issuance: one had to acquire a project’s tokens to access some service offerings. In late 2017 though, regulators curtailed that practice due to fraud associated with ICOs. Since then, Web3 projects have relied on ERC-721, the Non-fungible Token standard, and its successor, ERC-1155 to tokenize their offerings . While ERC-1155 can represent fungibility and non-fungibility alike, it does so by binding fungible value to wallet address rather than to token IDs. This type of binding makes ERC-1155 unsuitable for representing semi-fungible service credit.
📄️ Implementation
Meritic is building a platform and marketplace for creators and projects to issue four types of credit using ERC-3525 SFT standard.
📄️ Discounted Cash credit
For Cash credit tokens, a project may issue credit at discount by, for example, requiring a minimum bid of 70 USDC to own a token with 100 USDC of credit. In Meritic’s implementation, each cash token is minted with a discount factor of $d$%. When the customer redeems $X$ units of credits then
📄️ Remarks
We have mentioned the minimum bid price for credit offering may differ from the actual sale price for the offering, and in such cases will used the minimum bid price to set discount factors rather than using the actual sale price. Our current view is that any amount paid in excess of the minimum bid should pass-through as revenue to the creator / project.