Why use Venn
What makes us better?
There are already more than a couple platforms that offer solutions related to NFT rental. But this market never really took off. Below we list the main reasons for this and why our platform has an edge on competition, at least in some (really important) aspects.
Uncollateralized
The first NFT rental solutions to emerge involve the requirement of putting out collateral to rent NFTs listed in their platforms. That means that rentees need to lock out assets (e.g. ETH, stablecoins, etc.) in order to have access to listed NFTs. This format is undesirable for both parties because:
Rentees have to put out capital in addition to the the rent value.
NFT owners run the risk of not getting their assets back.
Because of 1 the barrier of entry to the market gets pushed upward, making pressure to lower real demand for listed NFTs. Also the need to have capital sitting idle in escrow contracts makes the transaction less economically attractive.
Aside from the obvious disadvantage of having NFT owners run the risk pointed out in 2, there is one more undesirable implications that is less self evident. This risk will be priced in rent values and internalized by all transactions, even the ones in which the risk is minimal, making the market really inefficient.
Our solution does not require any colateral to be put out and guarantees the NFT to be returned to its rightful owner, so we are not exposed to neither 1 nor 2.
No need integrations required
Even solutions who offer uncollateralized rentals have another characteristic that stifles theirs and subsequently the market's growth. They require third party platforms, the ones using NFTs to provide service to their users, to adapt to their scheme of enabling NFT rentals. That is a HUGE barrier to growth since NFT platforms first need to get sold on the idea, then make the required changes on their end and then educate their customers. That all takes time and resources. Off course that platforms may never entertain the idea at all. The users are the ones who lose.
Venn Protocol has the advantage of not requiring NFT platforms to make ANY adaptations to it specifically, only a broader pattern related to Account Abstraction. That means that, by default, any dapp, game, metaverse platform, etc., that is compatible with EIP-1271 accounts is automatically compatible with our solution.
Since EIP-1271 is a highly recognized proposal related to the next big thing in web3 (i.e. Account Abstraction), this is a really low requirement, and one not at all specific to our platform. As a matter of fact, most platforms may have already made the required adaptations, since they are cheap and have huge upside potential.
EIP-1271 was proposed in 2018 and has been widely adopted by developers and platforms throughout the web3 ecosystem. Checkout this link to learn more about it. To learn more about Account Abstraction and ERC-4337 checkout our Resources sections.
ERC-721 compatible
Some solutions out there solve the rental problem by proposing a new pattern for NFTs which has logic related to this functionality embedded in their contract. As you may know, the widely adhered pattern for NFTs is ERC-721, and to propose a new pattern is effectively to ask every platform to adapt to your protocol, which is not optimal from a perspective of compatibility given the reasons pointed out above. Even when a wrapper contract is provided, third party platforms need to monitor rentals and recognize newly created wrapped-NFTs as authentic versions of the original. That is not a trivial task.
Our protocol is made to work with ERC-721, which means there is no action required by third parties to adapt to our protocol in order for their NFTs to be compatible with us.
We are still not compatible with ERC-1155 but will be soon. To learn more about both patterns checkout these links: ERC-721 and ERC-1155.
Direct custody
The other main platforms that offer uncollateralized rentals, do so by having an escrow contract hold the NFT and a wrapped-NFT minted and transferred to the rentee. This means the rentee never holds the real NFT, just a replica. As already hinted above, this approach relies on the initiative of third party platforms, the ones who actually provide value to the NFT, to adapt to their solution, by checking if a given NFT is rented out and recognizing the replica as legitimate.
An implication of the way our solution is designed, using the concept of Account Abstraction, is that rentees take DIRECT CUSTODY over the NFT they are renting during the renting period. That means that, as far as the NFT contract is concerned, the "owner" of the NFT during the rental period is the rentee. That is a plus because, as mentioned above, the platforms interested in checking ownership of the NFT DON'T EVEN HAVE TO BE AWARE OF THE RENTAL TRANSACTION, and in fact don't have to take any action whatsoever.
Direct custody takes THE BURDEN OF INTEGRATION OFF of third party platforms. ALL things needed to conduct a safe rental tx can be handled internally using this concept, making the solution completely SELF-SUFFICIENT and much more powerful than other approaches.
Simplicity
Another characteristic of our approach that is related to the above properties is the simplicity of the solution. As you may know, simplicity is a HUGE plus in the design of web3 applications, not only for SAFETY concerns (the more complexity, higher the probability if bugs, and more surface for exploits), but also COST (less gas expenses) and EASE OF UNDERSTANDING by the users. It is always better after all to use a platform that you can actually grasp the way it works, at least at a high level.