Authors: Angela Dalton (Signum Growth Capital), Nick Grous (ARK Invest), August Rosedale (Mirage Gallery)
Signum Growth Capital (SGC) is an Advisory firm that is firmly planted in the worlds of its emerging technology clients. SGC shares DNA with ARK Invest, a registered investment adviser focused on innovation and the future. With blank sheets of paper, our open-source brainstorm hats, and a spirit of creativity and collaboration, it only made sense to build two NFT art galleries in the Metaverse that we can call home. What is the Metaverse? Our best attempt at a definition — an online, human, multi-sensory understanding of authenticity. We believe that spaces like Signum ARK Gallery 8811 will serve not only as the future common website, but also as the company conference room, the cocktail hour spot and late-night party venue.
Please join us for a Gallery tour of Signum ARK Gallery 8811’s first two locations, in Cryptovoxels Berlin (#RNG) and in Decentraland, on May 19th from 4:30pm — 7:30pm EST. Our third stop will be Mirage Gallery, located in SpatialWeb, where we will view experimental work created by August Rosedale and his AI Generated artists.
Signum Growth Capital plans to publish a series of reports exploring various aspects of the NFT market. The purpose of this report is to introduce Signum ARK Gallery 8811, the NFT big picture, and a bit of the lexicon.
Signum ARK Gallery 8811, Decentraland
Conversations between Angela Dalton, Founder & CEO of Signum Growth Capital, Nick Grous, ARK Analyst and…
- 4:30pm ET Artist Panel with Josie Bellini, Alotta_Money, Jeff Davis, ANiMAtttiC, and more. With special hosts Gabby Dizon, Yield Games + Iaonnis Sourdis, Collector & Builder
- 5:00pm ET Cathie Wood, Founder / CIO / CEO of ARK Invest on NFTs, Crypto and Innovation in the Metaverse
- 5:15pm ET August Rosedale on AI Generated Artists and the Art they Produce
Signum ARK Gallery 8811, Cryptovoxels
- 5:30pm ET Sam Englebardt & Richard Kim on #RNG and Social Tokens
- 6:00pm ET Conlan Rios, Founder & CEO AsyncArt
- 6:15pm ET Hugo McDonaugh, Founder & Co-Founder Cryptograph
Mirage Gallery, SpatialWeb
- 6:30pm ET Philip Rosedale, Founder & CEO High Fidelity
- 7:00pm ET Meet & Greet in SpatialWeb gallery
Art on display:
- Auction opening for Mirage Gallery’s A.I. generated artists, Alejandro and Taylor!
- Art from Alotta_Money, ANiMAtttiC, ARC, Ekaitza, FVCKRENDER, Hexeosis, Jeff Davis, Josie Bellini, Miss Al Simpson Souline, Vans Design, Bryan Brinkman and more!
We invite the general public to join us in our livestream. To receive access, RSVP here: https://www.miragegallery.ai/event-details/signum-ark-gallery-livestream
What is a Non-Fungible Token?
A non-fungible token, or NFT, is a cryptographic asset that represents digital uniqueness. Unlike interchangeable units such as bitcoin or dollars, every NFT is a unique asset. In August 2017, NFTs debuted on the Ethereum Network with the ERC-721 token standard. One of the first implementations of this standard was the digital collectible game, CryptoKitties, which allowed players to purchase, collect, breed, and sell virtual cats. Since then, NFTs have evolved to include digital real estate, video game items, digital art, and music.
Non-Fungible v. Fungible
- Fungibility is simply the ability of an asset to be readily interchanged for another equally identical asset.
- Non-fungible means the exact opposite; non-fungible assets are unique.
- The ERC-721 standard for tokens, used for CryptoKitties, allowed each token to be unique or non-fungible.
- Prior to this, the ERC-20 standard for tokens was the most widely used for Ethereum’s other use case — ICOs. ERC-20 tokens are fungible, which is useful in trading.
How Do NFT’s Work?
NFTs are a new way of authenticating digital items to be bought, sold or traded. One of the powerful aspects of blockchain technology is that it acts as a ledger: keeping track of all transactions completed on-chain. The behavior of trading digital assets is not new — users have been buying, selling and trading in-game assets for decades. What has changed is that they are trackable and programmable, which means that their creators or publishers may now receive royalty payment when they change hands. This relates to our theme of No More Starving Artists — NFT artists garner 80–90% of primary sales, and typically ~10% of secondary sales because it is programmed into the initial sale; in the traditional world, artists typically receive ~0% on secondary sales. While these initial concepts are in place, it is still early and there are still hurdles to overcome, which will be explored in future reports.
Ethereum is the most common blockchain used for NFTs even though it is not likely to be the long-term solution in its current form, and it is challenged when it comes to high volume, mass market applications. Ethereum uses a Proof of Work (PoW) protocol, which means that mathematical equations must be solved, making it very secure at the expense of speed and high transaction fees. As network usage grows, cost per transaction also grows. In later reports, we will discuss Ethereum scaling solutions, along with completely new Proof of Stake (PoS) blockchains like Polkadot along with many others such as Tezos, which solve these challenges inherently in the way they were built.
ERC Token Implementations
- ERC-20: are fungible, which means they can be substitutes for one another
- ERC-721 (First NFTs): were the first non-fungible tokens (NFTs) so they are all unique; first example of an application was Cryptokitties
- ERC-1155: created by Enjin, are also NFTs, and they address the challenge that many games have thousands of in-game items and each must deploy a separate smart contract to the blockchain for every item type. ERC-1155 allows developers to store all items in a single smart contract and mint all game items in a single rule set. Also, it requires less Ethereum gas to deploy new tokens
- ERC — 2665: created by Perpetual Altruism in the UK, the standard allows NFT creators and developers to set up perpetual secondary sales commissions, which allows them to be paid a royalty on all future sales, even outside of any particular marketplace.
NFTs allow for records to be kept of artwork provenance and past transactions, but where to these files actually exist? Every NFT connects to a respective media file, which is often hosted on a peer-to-peer storage network like IPFS. This ensures that the NFT will never point to a dead link.
Why Should You Care About NFTs?
Today, Facebook and Google garner the bulk of digital advertising dollars, with ads sold alongside digital content in Instagram, YouTube, TikTok, Spotify, and other social networks. Content creators receive a portion of the profit, which is largely determined by these Big Tech, centralized entities. By contrast, digital creators can get paid directly by their followers with NFTs, removing intermediaries and changing the game for online creators. Additionally, NFTs are helping to create brand new ecosystems and venues beyond social networks and traditional platforms.
We believe gaming will likely be a very large venue for buying, selling and trading digital assets, as evidenced by Epic Games’ 2020 revenues of $5.1 billion, mostly comprised of in-game item sales. In other words, NFTs can merge onto the highway of behavior that is already happening in gaming. However, video gaming, like other media ecosystems, are complicated with strong incumbents who won’t likely enter these waters until their IP rights are well-protected and interoperability issues are solved.
In the meantime, NFTs will find many other opportunities for digital abstraction. The most prevalent first use case is fine art (e.g., Beeple). Every wallpaper, camper van, and wearable in the online world is art. It is also worth expanding one’s mind beyond this — imagine every watt of energy in a smart grid, every invoice issued by a vendor, individual identity credentials on a driver’s license, the issuance of land deeds, 1000 unique trading cards, tickets to events, tickets within the tickets that unlock surprise-and-delight experiences, and the list goes on.
We are seeing NFTs appear first in experimental venues, mostly in the crypto counter culture. Decentraland and Cryptovoxels are early Metaverse backdrops, while platforms such as AsyncArt are providing brand new ways to allow creators to “layer” artwork. They might sell one piece of art to many different buyers so that ownership is shared among a group, and the look and feel of the overall “masterpiece” changes based on the collaborative efforts of its community.
Early NFT Challenges Are Worth Discussing
Bigger picture, NFT companies can be segmented between Technology Arms Providers and Content Flywheels that supply them. Both are necessary, but neither acts independently.
Technology Arms Providers are Working to Solve Early Tech Challenges
- As Ethereum usage ramps, it becomes more expensive for users
- Interoperability between minting platforms and blockchain protocols. While many understand the idea of NFT ownership, it is not well-understood that they don’t easily travel between blockchains or platforms. One can imagine how difficult the internet would be if we weren’t able to freely roam.
- Rights management — protecting IP rights, especially between platforms, is still nebulous.
Content Flywheels are spinning and ready for takeoff! Most are familiar with Beeple’s $69 million NFT sale, and many are familiar with the action video clips that can be purchased as NFTs — NBA Top Shot Moments. As soon as NBA Top Shot became popular, content owners around the globe had to ask themselves the question, “Are NFTs a new revenue stream for us?” A few considerations-
- While content flywheels are incredibly important (NBA Topshot would not have taken off without the NBA players’ decision to mint them), it’s also important to remember — like in traditional media, content comes and goes with tastes and trends.
- NBA video clips are like any other entertainment content — movies, TV, video games, music — and they are analogous to the movie, not the movie screen or production equipment. The NBA Top Shot Moment value chart posted below by @jfresshhh_ on Twitter was instructive. Tastes are fickle and content is fun, until it isn’t.
- Rights management — protecting IP rights, especially between platforms, is still nebulous.
Mirage Gallery was founded on the premise that art can be more than human. We are living in a world of technologies advancing exponentially around us. Part of what makes art so valuable and intriguing is that backstory of the artist who painted it. At Mirage Gallery, each artist is fully A.I. generated and is unique with their own personality, headshot, biography, and overall artistic style. Just like any human artist, these artists will only ever release a certain number of artworks, and over time they will improve as their models continue to train. Each artist has their own twitter account and can have full conversations with others explaining their thought process when creating each piece of art. This adds a whole new layer of depth to A.I. generated art. Mirage Gallery believes that value is not only in the art, but also in the artist.
Alotta Money is a French pioneering crypto artist and ‘NFT Machine’ who produces a wide range of digital art and love to explore all kind of virtual and augmented realities. His work is often a trippy mixture of anarchic, cyberdelic, nonsensical and humorously subversive art. He is perhaps best known for his Twitter banners art and his classical paintings profanations. His work can be found on many of the major crypto art platforms out there today and he is also a renowned architect and designer within the metaverse. We think that one of his most famous pieces is his artistic expression of our very own Cathie Wood.
ANiMAtttiC is a designer/artist from London, with an intention of evoking unique thought across all platforms.
Josie Bellini is a pioneering artist and designer who has been creating crypto art since 2017. She has a background in finance and creates art that tells the story of the crypto ecosystem. Not only does Josie utilize canvas and paint in her work, but she also releases digital art and augmented reality scenes to fully immerse her viewers. Josie has exhibited in virtual worlds and at major blockchain conferences like Consensus, NFT NYC, and Satoshi Roundtable.
Jeff Davis is a geometric, abstract, digital artist and author of Foundations of Design and Foundations of Color.
Many More to Be Announced!
Featured Virtual Worlds
Decentraland & Cryptovoxels
One of the main differences between Decentraland and Cryptovoxels is that Decentraland is governed by a DAO, which is a decentralized autonomous organization. In order to be a part of this organization, users hold Decentraland’s native cryptocurrency, MANA. With MANA, owners can vote for changes in Decentraland. MANA is also used for the in-world transaction in Decentraland. Another difference between these two platforms is the graphics. Cryptovoxels is much more Minecraft-like while Decentraland has more smoothed out edges, which can also cause it to run more slowly at times.
SpatialWeb is an off-chain virtual world. This means that as of now, no aspect of it involves blockchain technology. This is a more centralized approach to virtual spaces. Each user has their own space, meaning that they have more affordable access to larger spaces, without having neighbors. One of the most enjoyable aspects of SpatialWeb is their implementation of High Fidelity spatial audio. This allows for users to talk in these spaces and enjoy crystal clear audio that feels similarly to how it does in the real-world. SpatialWeb allows users to import 3D models into their spaces in order to build environments or structures. With SpatialWeb, users don’t have an avatar. Instead, users exist as a disk with their profile image that can move through the space. Users are also given the option to turn on video as well.