The Investor’s Guide to Rarible

What is Rarible, and how can one invest in it?

Rarible is a non-fungible token, or NFT, marketplace built on Ethereum with ramps between multiple chains. It is part of the Rarible Protocol, a set of tools used to query, mint, list, buy or sell NFTs.

Want more like the Guide to Rarible? Scroll to the bottom for further reading and a list of other Blockworks Investor’s Guides.

A quick primer on NFT marketplaces

Many NFT marketplaces exist, and while they all support the transfer of NFTs, each has its own primary purpose and audience. Some are focused on event admission, others on GameFi, and others still on music and streaming. Rarible is primarily an art/collectible NFT marketplace, though it supports most NFT styles, including 3D iterations.

For deeper reading on other applications of NFTs and their marketplaces, check out the Investor’s Guide to Music NFTs.

What is Rarible?

Founded in 2020 by Alex Salnikov, the Rarible NFT marketplace is one of the most popular marketplaces in the crypto space. Boasting roughly $16 million in venture capital from firms like CoinFund and Coinbase Ventures, the platform has expanded since launch to a base of 1.6 million users. 

It is part of an eponymous protocol that is DAO-governed and open-source and serves as a toolkit for developers and entrepreneurs to launch not only their own NFT collections but also custom storefronts.

With Rarible Protocol’s governance token RARI, users can directly shape the evolution of the protocol and benefit from its success.

The case for Rarible

With the marketplace war in full effect and platforms like OpenSea under fire for centralized decisions, community-first platforms like Rarible make a compelling alternative.

However, though Rarible plans for complete decentralization in the future, the RARI governance token is still non-binding — the core team still has the final say over all decisions. That said, multiple structures have been put in place to balance power and reward users in the meantime.

Business model

To generate income, Rarible divides a 5% fee equally between the buyer and seller in each transaction. There are no other fees.

Previously, platform users were rewarded every Sunday with an airdrop of 75,000 RARI tokens — 50% divided among buyers based on their activity, and the other 50% divided among sellers in the same manner.

This airdrop distribution was intended to continue for roughly another 2 years, for a total run time of 4 years. However, RARI holders voted unanimously to end this weekly distribution on Jan. 16, 2022, due to the model’s failure to operate as an effective growth mechanism, as well as abuses by wash traders.

Tokenomic model

RARI total supply is capped at 25 million tokens. Ten percent of total supply has been airdropped to users. Thirty percent is currently owned by the Rarible team and their venture capital investors. The remaining 60% was intended to be distributed in the now-canceled weekly airdrop.

Due to the semi-decentralized nature of its DAO (decentralized autonomous organization), RARI tokenomics are flexible and ever-evolving. What this means for token distribution is unclear, as the RARI team has only suggested “the DAO is shifting focus to allocating more funds to next-gen web3 projects building on Rarible Protocol and the long term growth of the space.”

Use cases

As with all NFT marketplaces, the primary use case for the platform is the transfer and collection of non-fungible tokens. However, the Rarible Protocol aims to expand into all manner of NFT usage in the space and has bridged the Flow and Tezos blockchains to allow for greater interoperability.

With no minting fees, Rarible offers a low barrier to entry for creators and makes scaling one’s collection accessible to all.

By using multiple token standards and smart contracts, including ERC-721 and ERC-1155, both private and public, nearly every kind of NFT is supported. Users can decide to mint true NFTs that are unable to be changed, or they can mint flexible NFTs which can use smart contracts to change values in the future, should new utility be needed. 

By enabling independent developers to build projects freely with the open-source protocol, Rarible has buttressed itself against the lack of speed with which centralized organizations tend to operate. Development happens quickly, and further use cases are added frequently. 

Currently, users can not only buy and sell, but also mint, store, display, send and use their NFTs (depending on the utility of each NFT, of course) directly from the platform.

How to invest in Rarible

In the past, investing in Rarible was as simple as using the platform. Because users were airdropped tokens, participating was enough to earn. 

Now, however, the options for investors are more limited and traditional, at least for the time being.

Buy RARI

As usual, the primary way to invest in a project is by purchasing its token. You can buy RARI at any number of exchanges, including Coinbase (centralized) and Uniswap (decentralized).

Use Rarible to collect or sell NFTs

Aside from venture capital funding (which the core team has not announced any further plans), buying RARI is the only way to invest in the project directly. While you no longer receive RARI for using the platform, you may wish to invest directly in NFTs. Buy others’ NFTs to start a collection, or mint your own and gather an audience, if your research helps you decide it is the right platform for your needs.

Final considerations

Purchasing RARI grants you access to the Rarible DAO community and the ability to influence the future of the project. Some choose to buy and hold the token, a few have created independent yield farming/liquidity provision protocols for the token (always be cautious with third-party pools), and others use them for governance. 

Each investor must weigh their own goals and risk tolerance. Rarible is one of many NFT marketplaces, each with their own strengths and weaknesses. Your goals and interests are the best guides.

Further reading

More on NFT marketplaces

OpenSea Polygon NFT Sales On Track to Hit 2.2M by End of January

Coinbase Plans to Launch NFT Marketplace

New NFT Marketplaces Make Grab for OpenSea’s Lead

Coinbase Teams with Mastercard to Make Buying NFTs ‘Easy’

More on NFTs

Exclusive: Why One Investor Bought an NFT of Wikipedia’s First Edit for $750k

Coinbase Wallet to Bring NFTs to Your Browser Extension

TikTok’s Venture into NFTs, the Hype and Alleged Mess

ConsenSys Acquires Treums Team NFT Platform

Visa Partners with Former MLB Player to Arm NFT Creators

The Incarcerated Silk Road Founder’s NFT Collection and the DAO Trying to Save Him

Nexo to Launch NFT-Backed Lending, Bitwise Debuts an NFT Index Fund

Sotheby’s Reports $100m in NFT Sales, Attracts Younger Tech-Savvy Collectors

OpenSea Hits $3B in Monthly NFT Volume

Why Investors are Paying Millions for Virtual Land in the Metaverse

Get educated. Check out The Investor’s Guide to Music NFTs, The Investor’s Guide to Avalanche, The Investor’s Guide to DeFi 2.0 and The Investor’s Guide to the Yearn Finance.

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The content of this webpage is not investment advice and does not constitute any offer or solicitation to offer or recommendation of any company, product or idea. It is for general educational purposes only and does not take into account your individual needs, investment objectives or specific financial circumstances.

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