Building a Sustainable & Shariah-Compliant NFT Marketplace

6 min readMay 3, 2021

IBF Substance is being built as the maiden Shariah-compliant peer-to-peer curated NFT marketplace on the Algorand blockchain. Users can buy, sell and trade NFTs at this market place, which is focused on the art and culture of Nusantara or of the South East Asian region. Each artwork is authentically created by an artist and is tokenized as a crypto-collectible digital item that a user can own and trade. IBF Substance is part of IBF Net: The Islamic Business and Finance Network.

Each artwork is a digital collectible — which is a digital object that is secured by cryptography and can be tracked easily on the blockchain. While regular cryptocurrency is a fungible token, each NFT is unique. Its value is created by factors like — utility, ownership history, future value, and liquidity premium.

Due to the recent sale of the record breaking NFT by Beeple for a whopping 69 million dollars, the crypto-art space has seen a gold rush. A majority of users seem to have flocked to the already established Ethereum based marketplaces, such as Rarible and NiftyGateway. As such, Ethereum based marketplaces currently dominate the volume of transactions. Given the multitude of environmental and sustainability issues surrounding Proof-of-Work (PoW) blockchains like Ethereum, many big-name artists have started to look at other alternative sustainable marketplaces. As more and more artists migrate to these safer and better waters, this will encourage collectors and investors to follow along.

A Planet-Friendly Market Place

Selling work on a blockchain can be a challenging task for many. For this very reason, many platforms and websites have emerged aiming to make this process more seamless and as easy as possible for artists worldwide. Many of the most popular marketplaces are currently built on the Ethereum blockchain which as we all know causes irrevocable damage to the environment. In a recent research (Akten, 2021), it was found that selling a single-edition artwork on Ethereum has a carbon footprint as high as 100 KgCO2, which is equivalent to that of a one-hour jet flight. When you extrapolate all the different artwork sales happening simultaneously, a very bleak image starts to form about the damage that is being caused to the environment. This is why an NFT marketplace built on the Algorand blockchain can prove to be a game changer. Algorand being the first Pure Proof of Stake (PPoS) blockchain uses drastically lower energy. In another piece of research (Bassi, 2021) it was found that compared to the 80KgCO2 emission of Ethereum, Algorand only used a miniscule 0.0000004 kg of CO2 per NFT. Algorand has always been known to be Carbon Neutral. It is now steadily moving towards being Carbon Negative. An NFT market place on Algorand blockchain like IBF Substance is expected to start a new trend of green NFTs, setting to rest all apprehensions related to carbon footprints.

Conformity with Faith and Culture

In the preliminary stages, IBF Substance will focus on onboarding a plethora of local Indonesian and Malaysian artists. The Nusantara region has a very diverse and rich art scene due to its long and well documented history. Indonesian art forms capture a rich convergence of multiple religions and cultures, such as, Hinduism, Buddhism and Islam. Foreign influence on Indonesian art forms was brought about through centuries of exposure to other cultures through trade. IBF Substance being the first Shariah compliant marketplace will focus on a collection of different regional and Islamic arts to promote the halal art space. Sharply under focus will be the local Batik art forms as well as Islamic calligraphy.

Own your gallery for a song

Many of the different marketplaces have varying levels of fees and commissions. For example, Nifty Gateway takes five percent of the sale price in fees and taxes along with thirty cents to cover transaction fees while Rarible opts to take a flat three percent transaction fee for all purchases. Foundation on the other hand charges a hefty fifteen percent commission which is a big turnoff for many artists. These platform fees may not seem like much. However, when you consider that users also have to pay gas fees, all that can stack up to very unreasonable amounts quickly. Gas fee refers to the extra payment for the computational mining engendered by transactions using the Ethereum blockchain, which the majority of NFT marketplaces currently use. These fees can fluctuate depending on the network demand and essentially cover the huge amounts of energy required to validate transactions. To put into perspective how exorbitant the gas fees can be, an NFT on Rarible with a price tag of thirty dollars worth of Ether recently ended up with a payment of two hundred dollars due to gas fees.

IBF Substance will use its own token- IBFx which is a fungible ASA (Algorand Standard Asset)- as well as Algos for all transactions. IBFx is an intra-network token which is widely used for different purposes within the wider halal ecosystem of IBF Network. Due to the nature of the ASAs, users will enjoy lightning-fast transactions in under 4.5 seconds per transaction. If that wasn’t good enough, there are minimal fees too. Algorand charges a meager 0.001 Algo fee for each transaction. When compared to the excessively high and volatile gas fees of Ethereum, this implies full value realization for the artists and the buyers alike. This means they will pay minimal fees and not lose out on their complete piece of the pie.

Below let us have a quick breakdown of the various currently available NFT marketplaces.

Ethereum-based Marketplaces:

OpenSea

Houses all types of digital collectibles. (art, domains, land, music)
Anybody can mint an NFT

Rarible

Community focused marketplace shifting towards becoming a fully Decentralized Autonomous Organization (DAO)
Houses all types of digital collectibles. (art, domains, land, music)
Anybody can mint an NFT

SuperRare

Specially curated marketplace focused primarily on art.
Curated (artists need to register and get approved before they can mint)

NiftyGateway

Specially Curated marketplace focused on art.
Curated (artists need to register and get approved before they can mint)
Buyers can transact directly with their credit card rather than a cryptocurrency

Foundation

Specially curated marketplace focused on art.
Curated and Invite Only (Once an artist has sold an NFT, they receive 2 invite codes)

Other blockchain based marketplaces:

Viv3

Digital art marketplace
Uses the Flow blockchain (FLOW) made by Dapper Labs. Used by some of the largest NFT projects such as CryptoKitties and NBA Topshots.
Anybody can mint an NFT

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