What I’ve come to love

Since the inception of KnownOrigin I have always been amazed by the people and the projects I have come across and spoken to while being on this journey. It was the first project I was directly involved in for myself and not an external client. I have learnt so much and couldn’t be more grateful in all honesty.

From what I can see, all the projects in the crypto-art space are trying to push forward this new domain and are fundamentally trying to onboard new artists and collectors at all opportunities.

Everyone is trying to increase the value proposition in what currently exists as well as trying to increase value in the artworks, the brand, their platform and the tokens they issue. It’s still a nascent and growing sector only set to grow further in my mind, some would say it’s the perfect combination for investment and growth if it can be capitalised successfully.

Most if not all crypto art projects on Ethereum have gravitated towards using non-fungible tokens (NFTs). Unique cryptographic nuggets of data which represent ownership, providing provenance and tradability for digital artworks sold on platforms such as KnownOrigin, SuperRare and Makersplace. The standards which have emerged such as ERC-721 have been fundamental in the expansion of the NFT space, facilitating new innovations on top of NFTs, facilitating adoption and propagating the use cases for so called crypto collectables. Most mainstream ETH wallets now support these standards which represent a large step forward in terms of acknowledgement.

Typical problems I see in the space

Most teams find it hard to get funding, are typically under resourced and are restricted by what they would like to and what they can achieve with the limited resources at there availability.

Volumes are low but growing, the numbers of collectors and artists entering the space is growing but on boarding still provides a challenge due to user experience friction, inconsiderate use of language and gaps in user education.

Not only that, onboarding new users is a time consuming and expensive task — education is a key factor and the onboarding process is time consuming, error prone and scary to most collectors and artists who don’t know the new fangled cryptoart world. Education is also often best delivered from those already onboard and by those who know how. Joining the dots and getting educators together in the decentralised and distributed world can be tricky.

UX is an issue as mentioned above, not just at a dApp level but also clunky tooling, MetaMask issues, understanding transaction costs, transaction confirmations and understanding what it really takes and looks like to interact with a public blockchain like Ethereum.

Interoperability and missing standards is a problem which isn’t often brought up. Although standards such as ERC-721 stipulate a solid foundation to build upon, things like secondary sales are still enforced by the platforms or marketplace themself.

There is no standard for implementing things like secondary sales commission back to the artist which is not platform specific.

Smart Contracts and immutable blockchain tech should be leveraged to its full potential in order to shape and direct the crypto-art movement to is fullest. On-chain artists identity validation and artwork verification is still a missing piece. I believe in creating an open system and this represent a missing gap in the crypto-arts world. Lets not simple replicate the existing system but try to do something innovative and original which is better than the status quo.

Some of these problems are well know and teams around the world are looking at new and novel approaches in solving these.The problems above however in my mind are platform agnostic, not dApp specific, needing a greater level thought and resource applied to them. I also believe that since they will often benefit multiple participants in relation to the platforms, collectors and ultimately the artists themself, they should be tackled in a more open and transparent way.

DAO ‘what..?

An idea which I’ve had neem formulating for a while is the idea of introducing new funding mechanism to help this space, possibly with other purposes than just funding development of a product. Not classical angel or VC funding but a more altruistic and almost anarchist’s approach, something which can be driven by the early adopters, the collectors and artists themself.

What I am proposing is the creation of a domain specific Arts focused DAO, also known as a decentralised autonomous organisation. This is what I want to talk in more detail today.

A little confesion – having never built, deployed or managed a DAO this is purely an idea and mostly opinon with some reading and research via the interwebs and topic, so go easy on me 😛

Now most people know what happened to the famous DAO hack of 2016 and since then there has been a reluctance to engage in the concepts of DAOs and onchain governance, especially in the Ethereum space. More recently projects such as DAOStack and MolachDAO, DAOIncubator have been pushing forward the use of DAOs and shaping how they could operate.

Maybe, just maybe, we can also try and leverage the advancements and techniques to create something which works for the space.

What could this Arts focused DAO fund?

To increase the value proposition in arts based platforms, we need to reach a wider audience of collectors and artists as well of solidifying the value proposition on why art based NFTs are superior. This comes in the form of a few initiatives which I would like to explore further.

• Education & Onboarding— onboarding is time consuming, slow and error prone in most cases from my experience — creating educational content, open wiki space, community run initiatives, running education workshops and projects on the ground could help in this regard. Grassroots organisations already working in the creative space could be encouraged and helped to pivot to cryptoart.
• Driving Standardisation —above I touched on things like the miss match and current platform specific implementation of concepts such as secondary sales commissions. I feel it would beneficial to standardise how this process currently works and attempting to enforce this on a wider level.
  What if the DAO could sponsor this work and help bring those involved together to unify how this works, benefiting the all artists on all platforms?
• Verified artworks & artists — lots of #cryptoart sites place badges like “verified” on there site but what if this could be done without trusting the site, this is more a marketing gimmick than anything useful at present, at least for me as a tech enthusiast and collector. You currently are trusting the platform in what they list. What if the DAO could fund the research and creation of a token/edition registry which meant the artists who were creating the artworks could unequivocal vouch for the authenticity of the artworks on sale, providing an open verification service for all to use?
• Reputation systems — A domain specific decentralised reputation system needs to be built to help ensure things like validity of artwork and the platforms themself. Helping collectors understand what’s safe vs scammy vs new and known. Could a DAO help fund research into how this would operate in a decentralised way which is platform agnostic?
• Transaction Relayers & Meta Transactions — meta transactions rock, we know this. They are being used more and more in the industry such as burner wallet and xDai, new wallets like MetaCash and collectives like the GAS Station Network. What if we could build a DAO which funded transaction relayers for use by the users and collectors themself? Imagine if all sites that contributed to the DAO could then abstract away the concept of paying GAS fees and attack one of the biggest UX challenges in the space.
• Funding GAN/AI Artwork computing power— there are high costs involved in obtaining or leasing the compute power and resources for artists to create beautiful GAN/AI artworks. This is without a doubt going to be the ideal breeding ground, no pun intended, for the start of a new acceptance in the artworld for such creations. Golem & dfinity for example are existing decentralised computing platform which could be leveraged. What if the DAO could be used to lease or purchase compute hardware, GPUs etc which can be used by those artists who create these works?
• Interactive cryptoart — last year we worked with Snowfro and helped shape the first early version of Artblocks, one of the things which I always loved about this was the idea of a large scale interactive cryptoart displays at things like festivals. Imagine getting Coachella or Glastonbury onboard and showcasing the creative possibilities of new interactive models which could be leveraged. Leveraging tokenised artworks, ownership and identity to interact with these installations. DAO funding could help drive these initiatives for larger cities, events, fundentally furthering adoption and mass media exposure to the ecosystem as a whole.

Possible Funding Mechanisms

Funding and obtaining the revenue sources may come from variety of sources. The corresponding rewards given in return may also vary. The factors which may drive these mechanisms will largely depend on the value that the produced from the invest given. Below are some ideas on how this could work, I’m sure some of them are infeasible once more research is done so think of it as more of a brain dump than researched and data driven list.

• Primary sales commissions — if platforms which utilise and benefit from the DAO payouts, propositionally they could put back in at the point of the sale. Also if the artist themself are offered the ability to send a certain percentage of sales to fund the DAO.
• Secondary sales — marketplace places like OpenSea allow for a secondary sales commissions to be defined, these could be directed towards a DAO fund. Most platforms have the ability to defined a commission on primary or secondary sales to the platform and other collaborating addresses, these feels like a ripe entry point for DAO funding.
• Lending/leasing artwork models — could artists lend out their tokenised artwork to galleries both physical and digital for a fee? Using the DAO as a trusted third party and arbitrator of these sort of deals. Generating an income stream which could fund the DAO.
• Collateralisation of artwork — could the artworks themself be put up as collateral to generate new revenue? The hard part would be valuing them but maybe a reputation based model and data feeds from sales may help provide this.
• Direct contributions — those platforms, collectors and artist which leverage the DAO and the services it has produced may wish to contribute directly. This is altruistic and philanthropic but I believe the committee would support funding in this form.
• VC/Angels/Funds— more of traditional model where investors want to spread there investments into a domain, recognising the growth potentially of the space and wanting to increase the tooling and service around it to bolster the value proposition in general.

The mechanic of purchasing tokenised artworks is a meeting of worlds in regards to the artist, the collector and the platform which the token is being exchanged on.

It therefore feels to me like this is the ideal friction point in which all parties who in theory will benefit from any advancements of the Arts focused DAO is the correct point in which to fund it. Artists benefit from higher levels of adoption, collectors benefit for increasing the value proposition of cryptoart and the platforms can benefit from increased traffic and other services which can attract new collectors and artists.

There are other topics and considerations to bring up such as governance models, reputations system pitfalls and problems as well as logistically how possible is the above. I will explore these in further detail in the coming weeks but the above represents my current thinking and this subject.