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Did you miss our recent Analyst AMA on Discord? Don't worry, we've got you covered with a recap where we discuss FORE's unique NFT validation model, the lucrative Analyst role, and FORE's method of sustainable passive income.
Key areas covered:
SECTION ONE: HOW DOES THE VALIDATION MODEL WORK?
QUESTION ONE: “How does FORE's NFT validation model work, and what role do validators play in the process?”
SIMON KRUSE: FORE Protocol is the first prediction market leveraging non-fungible tokens (NFTs) to maximize value extraction for users. In FORE Protocol’s proprietary NFT validation model, a decentralized network of validators (or ‘Analysts’) perform the role of oracle by uploading the results from real-world events to the protocol.
Analysts are the protocol participants responsible for validating a market's outcome based on a reputable source of results. If a market depends on whether it rained during a sports game, the result source may be the weather in that specific area as determined by a verified source. They act as the market's 'architects' and are responsible for verifying that a given outcome is accurate, and ensuring that all payouts are correctly executed.
Via this model, FORE indexes real-world outcomes via real-world people, creating a prediction protocol that is incredibly scalable and able to offer granular and niche markets on any real world event.
QUESTION TWO: “Why did you go with an NFT validation?”
TIMOTHEA HORWELL: There are several answers:
1. Operational efficiency: NFTs are not only used for validation, every market is created as an NFT. It’s more efficient than the likes of Augur minting a token per outcome (particularly important when we offer more than binary outcomes), and also provides an option for a secondary market for market positions themselves - something in our roadmap for Q4. This secondary market creates an additional revenue stream through royalties and fees.
2. Regulatory coverage: The above model requires users to stake tokens on an outcome. We have worked to avoid staking because we pre-empted recent SEC regulations that associate staking with securities.
3. Hyper-deflationary tokenomics: one of the key priorities for us was to design a mechanism that would have deflationary dynamics. Every time someone mints an Analyst NFT, 1,000 FORE is burned and permanently removed from circulation, so the NFT minting process removes a large portion of tokens from circulation.
4. Incentives: the NFTs power gives us a non-inflationary way to incentivize activity beyond minting and distributing tokens. Wwe provide a multiplier effect according to the number of validations (and tier). This enables Analysts to level up and earn a larger share of each market they validate, increase their earning power, and increase the NFT’s resale value. Meanwhile, it allows us to provide these additional rewards without ever inflating token supply.
5. Gamification: finally, the tiered NFT system is also one aspect of the 'gamification' of the platform which other DeFi predictions markets have overlooked. There’s a clear motivation to level up for increased rewards, but more subliminally for status too. There are a number of psychological drivers for people participating in betting beyond rewards alone - entertainment, status, prestige, and reputation. The more of these needs we can address, the more time and activity we can cultivate from users.
QUESTION 3: “To validate a market, the Analyst will 'vote' their NFT on an outcome, at which point the NFT is sent to the market contract address and the NFT will be locked until the reward phase. How long will it take until the reward phase? And what prizes do NFT holders get?”
RICK KAPANO: The validation phase takes as long as needed to reach the necessary amount of validation power or when the time limit for validation is reached. The necessary validation power is determined on the potential winnings on a certain side of the market to prevent ‘whale play’ and align incentives in such a way that people are incentivized to act truthfully.
Currently we’ve set a time-limit for validation of 4 hours. Any unused validation time is currently added to the dispute window (the next phase in the market lifecycle) to prevent people missing the dispute window (i.e. people who set a reminder at a certain time to check if the market is validated correctly). The timeframes in testnet have been set to a limited time / number, to enable everyone to test out all aspects of the protocol easily and for us to identify potential technical improvements. Currently, with over 1,600 market created so far, we plan to tweak the parameters including required validation time and time to raise disputes in the next couple of weeks.
Our goal is to minimize the market lead time (which maximizes the reward potential for creators, players and validators) without deteriorating on the reliability and correctness of markets.
QUESTION FOUR: “Sometimes projects need competitors to form the market. Is there any competitor or similar project in the market using NFT validation? Interesting model.”
SIMON KRUSE: There are other competitors in the DeFi prediction space, but none that are using an NFT validation model: FORE is the first prediction protocol leveraging non-fungible tokens (NFTs) for maximum value extraction for users. When a user creates a market, they receive an NFT to represent their right to the appropriate creator rewards. Additionally, users validate market results by holding an Analyst NFT, with claimable rewards directly proportional to the locked FORE within the NFT. Since value accrues directly to the owner of these NFTs, we created a dynamic and liquid secondary market for these assets on our own NFT Marketplace.
Timothea touched on why we opted for a NFT validation model instead of a staking validation model above, but to reiterate:
- Supply reduction: all FORE locked into the NFTs is burned
- Secondary market for NFTs: another revenue stream for FORE (and users)
- Protection against regulation that associates staking with securities
QUESTION FIVE: “How does FORE's NFT validation model compare to other consensus mechanisms used in blockchain networks, and what advantages does it offer in terms of security and scalability?”
RICK KAPANO: Our validation model is fully decentralized and designed to utilize the wisdom of the crowd. It allows users to create markets on any real world event in a trustless way, without limitations of centralized market makers or oracles. We've designed the incentives (validator rewards / penalties and dispute rewards) in such a way that all users are incentivized to act truthfully. By removing the centralized aspect, and empowering users to perform every possible role, the protocol is infinitely scalable.
SECTION TWO: HOW TO GET STARTED AS AN ANALYST
QUESTION ONE: “How do I get started to be either a validator or an analyst in the FORE ecosystem? How else can I support the ecosystem?”
SIMON KRUSE: We wanted to create a democratic system with as few barriers to entry as possible. That’s why in order to get started as an analyst, you just need 1,000 FORE. All NFTs start at the same level (Blue), and Analysts cannot pay for additional power at mint. You can then support the ecosystem with successful validations.
Additionally, you can provide support by identifying invalid markets and raising disputes, closing markets once they are resolved. Beyond the validation role, you can support the ecosystem as either a market creator or participant. We wanted to create a people-powered ecosystem that appeals to various risk profiles beyond traditional prediction markets, so the choice is yours, and the incentives are in place at every step of the way.
QUESTION TWO: “Why 1000 FORE? Doesnt that limit the number of validators?”
TIMOTHEA HORWELL: While we do want as many validators as possible, we want to keep the barrier to entry low while still maintaining efficiency and validity of the system, so there are a few things to consider:
1. The power of the validator is dependent on the locked FORE in their NFT. If someone has an NFT with 10 FORE for example, and they’re validating a market worth 1,000,000 FORE, you'd need a LOT more validators for that specific market for it to close. This would drag out verification time and thus the payout time, something I believe made other similar models unviable.
2. If someone can lock a small amount of FORE into an NFT and use it to validate, the likelihood for fraudulent validations would increase, because there's less risk associated with it. If you participated in a market and lost, why not risk $10 worth of FORE to mint an NFT to incorrectly validate?
So, we have landed on 1,000 FORE as a fair mint price for entry as an Analyst, without sacrificing the validity of the model.
QUESTION THREE: “How to create or print "Analyst NFTs" in FORE Protocol? and how do you increase the nft value?”
SIMON KRUSE: You can learn how to mint an NFT here, but it’s simple. You head to FORE’s NFT marketplace, click ‘mint NFT’, and you’re done. You can increase the NFT’s value through accurate validation, reward compounding, and upgrading your NFT to higher tiers.
Rewards are provided for correct verification of markets, and the reward is provided as additional power into your NFT. You can decide whether to power up or claim your FORE rewards immediately. Powering up can compound your rewards and increase the value (and earning potential) of your NFT, as higher-powered NFTs receive a greater share of the reward pool.
Additionally, upgrading your NFT will add a multiplier effect to increase your earning potential further. We are currently refining the optimal validation requirements to upgrade to each tier.
SECTION THREE: HOW TO EARN / MAXIMIZE REWARDS
QUESTION ONE: “You said that Users don't need to Play in order to Earn, Can You Explain this More Specifically?”
TIMOTHEA HORWELL: FORE Predict is a predictions ecosystem rather than a ‘betting platform’ because it allows (and requires) users to participate in all aspects of predictions - from market creation through to validation.
This allows us to tap into various different audience types and risk-profiles beyond the ‘traditional bettor’. For example, you may be following March Madness but too risk-averse to take a position on an outcome (or, ‘playing’). Typically, that means you aren’t participating in the predictions ecosystem, but on FORE Predict you can still participate and earn rewards.
Instead of using your expertise on the future outcome of a game, you can do so by taking part in the validation process once the game is over. If you know the results of the games already, it makes validation that much easier for you. So in that sense, you don’t need to ‘play’ by taking a risk on future outcomes. You can instead generate ‘nearly’ passive-income through validating the results of a market.
QUESTION TWO: “How can I earn maximum passive rewards? Is it by owing the four tiers of the NFT? Can a person hold as many NFT as he wants?”
RICK KAPANO: Many existing ‘staking’ or ‘passive income’ models have turned out to be pretty unsustainable because of inflationary tokenomics, which essentially supersede a lot of the value promised through these models. We have opted for an ‘nearly passive income’ model to reward activity in a sustainable manner.
While the validation process is not entirely ‘passive’ in that it requires a user to validate markets in order to receive rewards, we believe that in order for a reward model to be sustainable, it must be attached to productive activity. Also it’s important to consider that those rewards are paid from the FORE that players used to participate in the market, so the rewards are tied to the protocol activity.
You can hold as many NFT’s as you want, but as mentioned previously: you won’t earn anything by doing nothing. When you’re actively participating as a validator and use your NFT’s to ensure markets are settled correctly is when you start earning. Every NFT earns its respective share of the validator rewards depending on its (multiplied) power compared to the total power of the validator NFTs used in the market.
To put it simply: higher power / tier, will give you a bigger share in the rewards for the market you use that NFT for. Earning potential on NFTs thus depends on the number of markets you validate, the market size of those markets and even the lead time of those markets. Owning multiple NFTs might enable you to participate in more markets at the same time, but if that’s a strategy suitable for you is yours to decide.
QUESTION THREE: “Could you tell us a bit about how the rewards will be calculated for users who confirm the result of a market? Will this be the same rate for everyone or will it depend on the capital invested by the user? And also will this reward be deposited daily in my wallet?”
SIMON KRUSE: As everyone starts at a 1000 power blue level NFT, your power and earning potential doesn’t depend on the capital put in, but by your activity.
2% of every market is shared among the participating Analysts. You are rewarded a % of that share in proportion to the power within your staked NFTs. Every time you validate a market, this reward share can be compounded into your NFT as additional power, which would give you a bigger share in your next validation. You can also withdraw this in the form of FORE if you wish to claim instead of compound.
Your validation power is determined by the value of the NFT power and is limited by the value of the required power for the market validation (e.g. if the user has a power of 3000, and the required power to validate is 1000, the validation force for that market will be 1000).
QUESTION FOUR: “What are some strategies for maximizing rewards as a validator in the FORE network, and what factors affect the amount of rewards that can be earned?”
TIMOTHEA HORWELL:
There are several different strategies, including:
- Having a diverse NFT portfolio with different tier and power NFTs to suit different market sizes
- Utilizing the analyst filter to find markets soon to close or close to validation end
- Compounding your rewards to increase your tier and multiplier
Check out the guide created just yesterday by one of our seasoned validators @Kevtam515 for more tips.
SECTION FOUR: HOW THE TIER/UPGRADE SYSTEM WORKS
QUESTION ONE: “I read that each user can evolve the tier of their NFT to increase its power. How can we upgrade our NFT tiers and are there any cost implications?”
RICK KAPANO: Upgrading is simple! Head to your Portfolio, and review your NFTs to see which are eligible for an upgrade (based on the number of validations). Click upgrade, and that’s it! You only pay gas fees to do so.
On this aspect, it's relevant to mention that currently the necessary validations to upgrade your NFT to the silver, gold and/or black tiers is set to a limited number of successful validations (2/4/6). We did this on purpose for our test net as we want people to try all functions of the protocol to ensure technically everything is working as intended. When we launch mainnet, it will take a lot more validations to reach the higher tiers and earn the tier-bonus on validations.
Also, please note that we’re aware of some reported errors with the upgrading process due to a disconnect between the front end and the API (the front end is displaying that the NFT is available for upgrade, when in reality it isn’t) and incorrect messaging about failed transactions popping up. We’re working on this.
QUESTION TWO: “What is the benefit of the black and above rating? I think a special benefit is needed to maintain a good verifier.”
TIMOTHEA HORWELL: The black tier provides a number of additional benefits beyond the rewards multiplier. You can see these below.
SECTION FIVE: PROTECTING AGAINST RISK AND INCORRECT VALIDATION
QUESTION ONE: “On the Fore Protocol platform when analysts invalidate the market their NFTs get burned. Is this a deflationary mechanism for the NFTs and token? What is the reason behind taking away NFTs for a mistake made?”
SIMON KRUSE: We created an asymmetric incentive model to ensure that validators won't fraudulently validate outcomes or risk losing their NFT, but we do realize that mistakes can occur due to subjectivity of user-created markets, and a one-strike rule is quite harsh.
We are reviewing how best to ensure accuracy of validation without dramatically penalizing human-error, and we are leaning towards a three strike rule. Each strike, the power of your NFT is reduced, and on the third strike it is burned.
So, this penalty is focused on deflation as that FORE is already locked out of circulation at mint of the NFT, but it’s to ensure validity of results.
QUESTION TWO: “I happened to see some erroneous validations but no dispute the result was clearly no the validators had bet on yes. so i lost the bet even though the result was no. will there be a way to challenge the validators' decision even after the market has closed????”
RICK KAPANO: After the validation phase completes (either by reaching the necessary amount of NFT-power on a certain side or when the validation time runs out), the market automatically transitions into the phase in which a dispute can be raised regarding the validation result. Similar to the limited timeframe for disputes, on our testnet we purposely use a very short timeframe of 30 minutes for it to limit the market lead time and have as many markets move through their full life-cycle as possible to identify any technical issues.
Having over 1,600 markets that went through the full life-cycle by now, we're sufficiently confident all possible outcomes of a market have occurred and working as intended, which is the reason for us to adjust the window in which a dispute on the validation outcome can be raised to 24 hours (in accordance with planned settings on mainnet). This ensures that all market participants (or those intending to earn on disputes alone) have sufficient time to raise a dispute if needed. A successful dispute earns you part of the validator rewards / power of the incorrect validators, so there’s definitely an incentive to raise those disputes. By increasing the timeframe, our expectation is that erroneous validations shouldn't happen.
We are also looking at potentially implementing an auto-dispute function at the point when validation occurs on two opposing sides if increasing the timeframe doesn’t prevent incorrect settlement.
SECTION SIX: BENEFITS OF BEING AN EARLY ANALYST
QUESTION ONE: “Will we need to mint NFT again to become a validator on the Mainnet network? If we need to mint, will the NFT supply be unlimited, as in the test network?”
SIMON KRUSE: Yes, new NFTs will need to be minted on mainnet. Technically the NFT supply is unlimited (except for a maximum determined by the total supply of FORE), but it will depend on the total protocol volume if it's economically rational to keep minting NFT's. Ultimately the protocol volume determines the available validator rewards.
QUESTION TWO: “What are the benefits of being an early validator in the FORE network, and how does this affect long-term profitability?”
TIMOTHEA HORWELL: We are still finalizing the optimal number of validations to reach additional tiers for main net, but this will increase over time in such a way that it will get harder to reach the higher tiers. This will ensure that the top-tier NFTs remain rare (and valuable) and by doing so reward the people that are continuously participating on the protocol, much like the BTC halving scheme.
In short: by becoming an early validator, you benefit from the lower number of validations to level up your NFT, meaning you can increase your multiplier effect and earning power much faster.
SECTION SEVEN: EXPANSION OF THE VALIDATION MODEL
QUESTION ONE: “What industries or sectors is FORE targeting for the use of its NFT validation model, and what are some potential applications for this technology?”
RICK KAPANO: While we are leading with FORE Predict, we haven’t overlooked the use cases of the underlying technology that we’ve developed to disrupt a number of other industries.
Applications built on the protocol will be separated into two core architectures: applications leveraging the technology itself, and applications leveraging its output: the data recorded on-chain. Two other applications leveraging the NFT validation technology will include:
FORE ORACLE will be a people-powered oracle indexing real-world results on chain. Via a decentralized network of validators, FORE Oracle “indexes” real-world outcomes onto the blockchain to create an infinitely scalable oracle for businesses in any sector.
FORE AUDIT is a crowd-sourced auditing tool to evaluate for example proof of reserves and transactions.
Something for further down the line, but definitely something for which we’re laying the ground work already.
We are pleased to inform you that all the Analyst AMA winners have been tagged in the appropriate channels to send their wallet addresses via DM. This will enable us to send you the FORE tokens on TGE. Thank you for your support and active participation. We look forward to having you join us in our upcoming events.
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