May 29, 2023

The first NFT rental service for TON (EN)

What can NFT rental be useful for? Here are a few examples:

  • Renting a username for a Telegram channel (e.g., @crypto or @nfts).
  • Renting a visually appealing anonymous number for a business account (e.g., +888 0000 0000 or +888 8 888).
  • Renting an NFT from a particular collection when you need to use its utility once (e.g., renting TON Daimons for participation in a sale or renting DaoLama for advantageous lending conditions).

It's worth noting that the service was launched on May 24th and has just started operating. There will likely be updates that will make it more user-friendly. For now, we're sharing our initial experience with the service, using the example of renting an anonymous number.

How NFT rental works in DAOLama:

  • The renter creates a listing, specifying the rental cost per day and the security deposit amount.
  • The listing is published on a separate page on the service's website.
  • If the NFT is not returned within the specified period, the landlord automatically receives the security deposit, which is held in a smart contract.

Let's list an NFT for rental. We have the number +888 0396 0424, and we want to rent it out.

Step 1: Go to the DAOLama website: https://daolama.co/

Step 2: Log in using your Ton wallet (we have Tonkeeper).

Step 3: Click on your wallet and go to "Profile."

Step 4: Go to the "For Rent" section.

Step 5: Choose the NFT you want to rent (in our case, it's the number).

Step 6: Set the security deposit amount (the full cost of the NFT) and the rental cost per day. In our case, the NFT's cost will be 200 TON, and the rental cost will be 1 TON per day. This means that in approximately 200 days, the rental will cover 100% of the NFT's cost.

Step 7: Click "OK."

Done. Now our number is listed and available on the NFT rental page. It's also important to connect your Telegram account to the service as it is used for rental confirmation and notifications of the rental's completion.

Renting an NFT

Now let's try to rent our own number, +888 0396 0424.

To do this, log in with a different wallet and go to the DAOLama website.

Step 1: Go to "Profile" again.

Step 2: Go to the "NFT Rental" section.

Step 3: Choose the NFT you want to rent.

Step 4: Click on "Rent." You will need to complete two transactions: the first one is the fee for creating the smart contract, and the second one includes the security deposit, rental payment, and a 1 TON service fee.

Step 5: Pay for the first transaction.

Step 6: Pay for the second transaction, which includes the security deposit, rental payment, and fee.

Done. Now, after the rental is confirmed by the NFT owner, we will receive the number. It's also important to keep track of the rental period because once it expires, the smart contract will immediately transfer the security deposit amount to the NFT owner.

Since we are renting from ourselves, we can observe the rental confirmation process. After sending the security deposit to the smart contract, a request was received in the Telegram bot indicating that someone wants to rent the NFT. Only after confirming the transaction did the smart contract transfer the NFT to the renter.

Video tutorial - How to rent out a number, Shorts

It is also worth noting that DAOLama has not yet released the source code of the rental smart contract for public testing. By using the service, users assume certain risks. The service's support team explained that a user agreement will be published on the website in the near future. Open-sourcing is also planned, but the timelines are currently undefined. "Contracts will be opened over time," said a representative from DAOLama.

Overall, this is a common practice in the market where a startup first grows into a relatively stable business before opening its developments for public testing. This is done to protect intellectual property and innovations. However, during this period, a well-drafted user agreement plays an important role, which should clearly outline the process and conditions for refunding users in case of errors on the service's part.

The value of NFT rental for the NFT market

Undoubtedly, the rental service is an important milestone in the development of NFTs on TON. Now, collectors have hope that their dusty vaults filled with valuable JPEGs can generate passive income in the near future (which, by the way, can be used to buy even more artwork). However, the potential application of rental is currently limited as the security deposit amount for particularly valuable NFTs may be unattainable for most potential renters.

For example, the cost of an anonymous number like +888 0000 0000 today could be around 500,000 TON. It is unlikely that anyone would want to send such an amount to a smart contract, not to mention that there are currently only about 220 wallets with such a TON balance. Therefore, in the current implementation, the service may have an inherent price ceiling for rented NFTs. It could be 1,000 TON or even 10,000 TON... In any case, the current capacity is sufficient for the majority of collections on TON.

The future of NFT rental

On the other hand, the most liquid NFTs today are usernames and numbers. According to data from the GetGems marketplace, these two collections alone account for approximately 90% of the monthly trading volume on TON. From a financial point of view, it makes sense to create a tool for working with these collections. Additionally, the DAOLama service's channel previously published a post describing the mechanism of collateral-free rental. The idea is that instead of receiving the NFT, the renter gains access to the smart contract that holds the rented item. This way, the renter can utilize the utility of the NFT, such as creating a Telegram channel using the rented username or having an account with a desirable number. At the same time, the owner is protected because the NFT cannot be resold or moved from the smart contract.

If the rental of numbers and usernames is implemented, and the security of the smart contract is verified through independent auditing, it will significantly expand the audience of the service itself. Moreover, the ability to rent out expensive numbers and usernames will positively impact the trading volume in these collections, benefiting the entire NFT market on TON in the long run. Increased financial activity among participants leads to GDP growth for the entire system.

Today, there are already major holders of numbers and usernames who are directly interested in the development of NFT rental. Many of them have their own clients who are ready to rent a number or username right now. All that is needed is a secure and accessible way for the owner and renter to enter into agreements with minimal risks for each other.

It is important to note that for completely secure operation of collateral-free rentals, the adoption of a special contract standard by the community and conducting public security tests will be required. Additionally, for mass adoption of such a contract for Telegram collections, special user interfaces and infrastructure may be needed, which are currently not available (e.g., a rent button in the Tonkeeper wallet or a "Rented NFTs" section on Fragment).

The story of one whale

Especially for JPGM, the famous whale Fragment @rare shared a story about renting out a number without using specialized services. His collection includes over 200 random and more than 50 beautiful numbers.

The profile @Rare on GetGems

Around mid-April, someone from China contacted me. They were interested in the fact that I had a beautiful number, +888, in my profile. They asked me how much it would cost to get a similar number ending in 8888. The price of 1 million dollars greatly surprised them. According to them, in China, one can buy a mobile number with even more 8 digits for just $30,000. I argued that along with the number, they acquire lifetime ownership rights and the ability to pass it on as an inheritance because it's an NFT. That's when they proposed renting the number from me. I must admit, I found it interesting right away. Unfortunately, there is still no secure way to rent out an NFT, so we had to conduct the transaction based on mutual trust. The person from China transferred 388 USDT to me, and I provided them with the activation code I received from the Fragment website for the number +888 **** 8888. The rental agreement is valid for 1 month, after which the tenant decides whether to extend the deal or not. In the meantime, the NFT remains in my wallet.

It is worth noting that this method of renting NFTs is based on mutual trust between the parties. It is only suitable if the owner and the renter have confidence in each other's honesty. There is no third party or smart contract involved here to guarantee the transaction. Therefore, all risks fall on the shoulders of the participants in the transaction.

Examples in other blockchains

For example, in the Ethereum blockchain, there is already a technology for secure collateral-free rental. It is implemented based on the new token standard ERC-4907, which was officially introduced quite recently - in the summer of 2022. It is worth noting that the field of rental in the crypto space is still emerging. Currently, there are not many NFT collections with clear utility that would be useful to ordinary users. TON and Telegram, in this sense, can be pioneers with their highly successful collections of Usernames and Anonymous Telegram Numbers. More information about the NFT rental market can be found in an article on airnfts.com.

Opinions of TON participants

The JPGM project proposes that everyone interested in the emergence of a special token standard for collateral-free NFT rental join forces. To do this, all they need to do is vote in an anonymous poll in the Telegram channel. This will allow services and stakeholders on TON to assess the interest of network participants in the technology.

Link to the poll

With respect to you,

JPGM Team