Alexei Falin discusses Rarible and the marketplace’s mission to bring the next million users to DeFi through NFTs.
Hello! What’s your background, and what are you working on?
My name is Alexei Falin, I’m the CEO and co-founder of Rarible. I’m a full stack developer turned entrepreneur, with 10+ years experience of full stack development in my own projects. I co-founded several businesses, and a few of them are still running and profitable. For example, there’s the leading local real estate ad service, Sticker.place –– the largest premium sticker marketplace with Microsoft, Viber, Skype, Samsung, and others among its clients –– and Aivatar, a neural networks-based app for customized sticker generation.
In passionately researching markets, I’ve gradually developed interest in marketplaces and blockchain technology, which led me to the launch of an ERC-20 token issuance service during the 2017 market bull run days. That’s when I met Alex Salnikov –– my future co-founder at Rarible.
Rarible is a community-owned, creator-centric NFT marketplace where you can mint, buy, and sell digital collectibles and any other type of digital content without coding skills. This dynamic fuels liquid intellectual property rights to an extent we’ve never seen before. Notably, we’re the first NFT platform in the blockchain space to launch a governance token. $RARI rewards the most active creators and collectors on Rarible with the right to vote on any important updates and participate in the platform’s future.
What’s Rarible backstory?
People underestimate the emotional side of products. NFTs offer the “emotion” of owning something, added up by visual and psychological attachment. We all do have this instinct to collect things. Beyond just emotions, from the UX point of view, NFTs are interoperable items that you can see in your wallet. Anything ownable on-chain can be represented as NFTs (insurance, AMM pool share, portfolios, etc.). We’ve been in blockchain space for a couple of years now, but this reality particularly caught our attention. We had a somewhat opportunistic start: looking for a business idea, we picked the NFT space for its mission-driven values. It resonated with me so much, and I knew there was something there.
We validated the idea inside the team: we created several NFTs and flipped those among ourselves. Ilya, our co-founder and head of design, intuitively knew this whole model was exactly what digital artists need. He created a designer skateboard in the form of an NFT, and Alex bought it instantly. Essentially, we managed to create this micro-market of emotions, which got the team super engaged and excited. We felt like we were on the right track.
What went into building Rarible?
It took us 3 months to create and release Rarible. The team paid a lot of attention to the UI states: how to connect a wallet, how to send a transaction, and to the overall UX to make it as slick and user-friendly as it can be.
We’ve been developing and upgrading the product throughout 2020. Crazy year! We watched DeFi sky rocket, reaching its peak by the end of summer and going forward, provoking the growth of DEXes. Two major crypto markets co-exist together: BTC, that has seen the bull run after the halving event, and ETH, which has become the driver for the decentralized finance ecosystem.
Seeing that unfold, on July 13th we launched the $RARI governance token and rolled out yield farming on Rarible to create reward active users and to create an incentive for people to buy digital art on our platform. The growth attracted the attention of market analysts and media, and the NFT market had a real visibility boost. I think it’s fair enough to say that we accelerated the whole NFT market with our token and our product.
That pretty much describes our approach to product development and new features. As a team, we always try to stem from market demand and the needs of our community. Following the demand, we introduced ERC-1155 support, which allows users to create multi-editioned NFTs, at the end of May. Now, it fuels a lot of important use cases on Rarible. Market orientation also led us to launch support for DeFi support (such as YInsurance, for instance), and we’re on the verge of adding new bidding dynamics and other cool updates.
On our journey, we’ve enjoyed huge support from our partners and advisors: Zerion, 3Box, Fortmatic, Kyber, Decentraland,and CoinFund. Jake Brukhman of CoinFund offered his unique expertise and deep market knowledge as crypto artist, investor, and researcher, which is hard to overestimate.
When it comes to the difficulties on our way, there are two of them: 1) wallet connections are not perfect and often don’t function properly, and we are always fixing and upgrading this area of the platform, and 2) entry barriers for non-crypto natives are still pretty high. To start, you need a crypto wallet (which is pretty efficiently solved by Fortmatic/Magic), but you also need ETH to mint your NFT. We are working on solutions to make onboarding for “zero crypto” users easy and fast.
What’s your business model?
We introduced marketplace fees this September after submitting a proposal to the community, which embraced the idea. We had no fees on Rarible before that. Now we’re working on completely new monetization mechanics for crypto space that we’re looking to introduce early next year.
The NFT space is still in its early days. It is small, and we don’t have any direct competitors. For instance, we partner up with OpenSea: we have the option to “sell on OpenSea” on Rarible, and they send over users to us to mint items. Right now, we are all growing and developing and cooperating to create the efficient market together. The real competition will start once there are no new users anymore. But this is way too far ahead, as we are aiming at attracting the out-of-crypto audience.
Our target audiences are, first and foremost, DeFi communities and crypto native people. At this moment, we are a premium platform for crypto art, we know this market well, and do our best to cater for the needs of the existing community and develop features they need. Later on, however, we will expand to other categories in the crypto realm, moving forward towards mainstream Web 2.0 audience outside the crypto world once we have a scalability solution in place.
We have several strategies in place accordingly. For instance, we aim at channeling a part of revenue to subsidize the first mint transaction for users. Our main task here is to develop the space, attract new users, and upgrade categories and use cases.
What’s your position on the regulatory landscape today?
With the development of technology, ownership has moved way beyond the physical. But the current IP rights & royalty management system remains the same: it is still based on tons of paperwork and friction. It’s highly illiquid, bureaucratic, and absolutely not suited for the digital world.
NFTs offer the potential of liquid intellectual property (IP rights) for all forms of digital content, including digital art, collectibles, in-game assets, music, TV shows, and so on. Placing that content on a blockchain in the form of NFTs allows to preserve the corresponding ownership rights on a public, immutable ledger. Additionally, it creates a secondary market for these assets, unlocking colossal illiquid value.
Once most content migrates to the blockchain, an easily accessible and distributed database could be formed allowing anyone to quickly find most types of content for legal use, commercial or non-commercial, and purchase it instantly. A system tailored for the search of duplicates online & further enforcement would also make sense in this context.
What are your goals for the future?
Our major goal is to grow the whole NFT market x10 times and be the largest marketplace: permissionless, open, and community-governed. To achieve that, we are working on attracting more non-crypto-native users, more use cases, more content on-chain. And scalability!
We regard NFTs as a new sales channel for the entire crypto market and develop it that way. As Rarible marketplace liquidity grows, community interest also rises. Essentially, we are expanding the NFT market, creating incentives to join, and raising awareness of this sales method at the same time. That’s why many people and many projects are starting to invest attention and resources to get their services NFT-wrapped. The category of NFTs with a functionality (SDP position, loan, metaverses, and so on) is developing steadily, as well as new trading mechanics for NFTs (price discovery, NFT indexes, AMMs for ERC-1155).
What are your future thoughts for the DeFi market?
The DeFi market has obviously entered the exponential growth stage which inevitably leads to the correction of rates at some point. We most likely will see the dip soon, but I do believe that it will continue to develop and grow with the bankless generation.
DeFi is cool –– and all the building blocks are already in place. Now is the time to scale DeFi in capital. We were excited to see how quickly the art and non-native crypto community started playing with DeFi primitives after the $RARI launch. We do believe one of the missions for NFTs is to bring the next million users to DeFi.
On top of that, NFTs stand out among the DeFi market as they offer a potential of liquid intellectual property for all forms of digital content. Imagine a single traceable online database and Wall Street-style trading and liquidity on the digital rights market! That’s what we’re working towards.
Where can we go to learn more?
Check out our site and community any time at Rarible.com