This is part 1 of the interview with Andrii Shapovalov. To read part 2 of the interview, click here. 

Andrii Shapovalov is the co-founder at stampsdaq.com - a start-up venture building an Ethereum-based blockchain for creating, collecting, and trading digital art variations of existing postage stamps and artwork motifs as NFT tokens. He is dedicated to building the global NFT Philately and Art market with a mission to unite all 235 postal countries and territories of the modern world on a common blockchain ecosystem. APS interviewed Andrii to find out more about his inspiration to create stampsdaq and his plans for future projects. 

Read the first part of the interview below: 

Could you give a brief introduction to your company and philatelic background?

My name is Andrii Shapovalov. I'm the CEO of stampsdaq, a company that is developing a global NFT philately blockchain solution with the idea to unite all postal administrations on one major marketplace called the blockchain marketplace. Our goal is not driven by commercial desire as it is in the best interest of stamp collectors, and this is the message that we are delivering both directly and via the Universal Postal Union (UPU) where we are associate members of the Dot Post Group. 

The offer that we're bringing to the postal administrations is based on a zero investment proposal. This means that there is no need for postal administrations to spend money on the production of NFT philately or NFT stamps, as they can do it with us cost free. But getting back to the question, in the early 80's, stamp collecting was my hobby at the time. It was generally a hobby in town and at school so I naturally engaged in it. I was a collector probably up until university, then life went in a different direction and I pretty much stopped collecting stamps. I still have my old collection though. It was preserved by my parents and kept in a safe and good place.

Around 2015/2016, I got into digital collecting with Topps trading cards. They were developing their digital trading card applications in Google and Apple stores, and I got hooked on that together with my son. Then, I discovered blockchain in 2018 and that got me thinking about technology and which market I would be able to develop if I created my own company. At the time there were a lot of opportunities available. For example, I was walking down the street in downtown Kiev and passed a closed branch of the Ukrainian Post. And this idea came up, you know, check the stamps. This is a very centralized and structured market with a lot of history. I thought it could be an option and a good opportunity.

So then I took some time to research the status of what's going on in the postal administrations and how they are organized, etc. At the beginning of last year, we started communicating with the Universal Postal Unions digital transformation department with the idea to create this common marketplace for NFT philately. It took some time, I would say, to explain the idea and show how it may work. Then in November 2020, we got our membership with one of the subdivisions called the dot post group, a digital development structure focusing on developing and supporting postal administrations. This was our way in to get our idea of creating the global postal industry.

Are there any other organizations that you're currently working with?

By the way, if you get a chance, there was a recent issue of the Union Postale. This is the UPU magazine that they produce, I think four times a year. There’s an article with me talking about our relationship with UPU. The major task is to get UPU eventually working out a standardized global approach or a global agreement. So in parallel, we are talking to many postal administrations to sign some form of a cooperation agreement. This can be a simple license agreement for the stamp images, or this can be a full scale partnership cooperation agreement. It depends on the willingness and desire of the management board of a particular postal administration. Currently, we are probably talking to about 40 to 50 postal administrations in parallel.

That's really impressive. So what were some challenges that you ran into when you were first starting stampsdaq?

Well, these are challenges that still exist. One concern was that generally the crypto topic was, and still is, a little bit controversial, especially from the legal perspective. Out of all 235 postal administrations around the world, around 93% of them are fully governmentally owned. That creates an extra layer of responsibility and due diligence that is required in order to make a deal. Another concern of the postal administrations was that digital philately will kill traditional stamp collecting. We are addressing this issue each meeting, explaining that the reality is the opposite. What we see today is that philately is an aging hobby, and the younger generation is going into the play and learning direction. The blockchain and NFT formats are the technologies where this method can be realized. If everybody comes together on one marketplace, they can benefit from all the different types of synergies that you can derive from the common collecting activity. 

Can you give some examples of your competitors in the NFT philately market?

Actually, there is no competition in this area right now. I can't even say that the NFT stamp exists in full sense. Nominally it does exist. In 2019, the Austrian Austrian post was the first who issued crypto stamps. The format that was used and is still used by the post is issued in a hard form and comes with the NFT twin. So what you actually buy is a two in one solution where you can use the paper to collect or pay for the postage, and the NFT kind of comes as a compliment, like a gift. At least this is my view of this. 

There are several other administrations that have experimented with the same format. However, what is actually happening is that this format does not allow the creation of an active, cost efficient secondary market. This is because some of the stamps are issued on the Ethereum blockchain, and some are issued on the dai blockchain. Now, the Swiss Post, for example, is issuing their first crypto stamp in the same format on Polygon blockchain. So if you are a collector, and you are thinking about engaging in NFT stamp collecting, it's a nightmare. How do you put them all together in one album? Right now, it's not possible. There is hope that all of them will be traded on marketplaces like OpenSea, but every transaction on these marketplaces costs money. So the stamps do exist, but collecting them is really, really difficult.

We are building stampdaq with the view of the collector in mind. We are 100% collector centric. The stampdaq blockchain is a gas-free blockchain for all transactions. So the only thing that will exist for the collector is the traditional marketplace transaction fee. Our job is to make sure that the results of our negotiations with postal administrations benefit the collector. In the long term, transaction fees will generate more income to postal administrations than primary sales.

What currency solution are you currently using on the stampdaq platform? 

Dai is the currency solution. The stampdaq blockchain is a dual currency ecosystem, which means that we will have the stable coin, the payment currency in the system. Then there'll be another staking token, called staking coin, which will be used for operating the blockchain nodes. Dai is an instrument for us to peg our stable coin. So 1 dai = 1 dollar.

And are you considering using any other stable coins? 

No, we aren't because it doesn't make sense. What we are doing, and this is something where we are a step ahead, is that we’ll have a currency exchange available for the customers. That means you can come in with whatever currency you have, exchange it to our stable coin, and use that for transactions in the marketplace. Otherwise, if we would allow other coins to be used in the marketplace, that means the customers will still have to pay those fees to other blockchains which doesn't make sense. 

So are you focusing on only stamps that currently exist or are you planning any unique designs?

The way we put our offer to the market is based on the proposal to bring the history of philately into NFT format. I was not able to find the exact numbers since it’s difficult to get statistics on postal markets, but I estimate that there are close to 1 million unique motifs of stamps issued over 180 years with all the existing and dead countries and territories, etc. That's a huge asset that's basically sitting on the shelves of postal administrations and can be utilized, or brought alive again into NFT format. The version of the revenue structure that we propose is based on five levels of rarities.

1. Common - has a limited edition of 10,000 copies
2. Rare - has a limited edition of of 1000 copies
3. Super rare - has a limited edition of 100 copies
4. Ultra rare - has a limited edition of 10 copies
5. Unique - has a limited edition of 1 copy

Each rarity level will be different by its design. The way it works is that we take the original picture of the stamp and develop five digital variations of it. So first you have a static version. Then you have a simple animation, then you have an animation with little detail. Next you have another animation with even more detail. Then the unique one is like a little cartoon with sound and some story behind it.

How did you come up with this pricing tier structure?

Pricing is another example of a collector centric approach that we try to employ. If we would issue 1000 stamps, for example, this would probably be limited to only 1000 people. We've opted to go and make it more affordable to the mainstream collector. What we are suggesting is the pricing may vary based on the agreements with postal administrations. This means that not every stamp will cost the same on stampdaq. What we’re trying to do is persuade the postal administrations to work with us and come up with a price that will allow people to not spend thousands to get the collection in full. For example, with the postal administration of Côte d'Ivoire, we will be selling their stamps via the traditional method for the American market, called packdrop. So when you buy a pack of stamps, you don't know which rarity you get. It's randomly pre-minted. There's a factor of uncertainty that you get when you buy it, but it's also a chance to get a unique, ultra rare version for the same price as the common one. So it gives the same opportunity for every collector to get a rare stamp in their collection.