StakerDAO NFT Collection

Hi all! My name is James, I have been involved in the blockchain space for 8 years and have been working within the industry for the past 4 years. I am also a long time artist, art collector and STKR token holder. Right now I am extremely interested in NFTs, their uses in collectables and gaming and their future use in decentralized finance. For those unfamiliar, non-fungible tokens are unique and not mutually-interchangeable (in the way Bitcoin, Ethereum or Tezos tokens are). This allows them to be used to create digital scarcity, like in games where a token can represent a unique character or piece of equipment, or in art where the artwork can be tokenized and sold by the artist to a collector anywhere in the world. NFTs got their start in CryptoPunks but really entered the scene with CryptoKitties, a simple game where users can collect and trade unique cats or breed them to make new kitty tokens. CryptoKitties went crazy in 2017, with over $2,000,000 USD volume in just one day in December.

Since then CryptoKitties has dropped off, but the NFT market is diversifying and expanding, and as a result a lot of platforms have grown in the middle of the bear market. Games like Decentraland and Gods Unchained have already overtaken CryptoKitties in terms of interest and activity, and have seen total volumes of $33,000,000 and $3,400,000 respectively thus far.

Of particular interest for me has been the NFT art market, which I became interested in 2018. There are a number of NFT art marketplaces actively trading, with SuperRare, MakersPlace and Known Origin being the biggest names. On these platforms, artists upload and tokenize their original creations and offer them for auction. Once they accept a bid, the tokenized artwork is immediately transferred to the bidder and the bid is transferred to the artist. Volumes on these NFT art platforms have been rapidly growing, and in January both SuperRare and Known Origin saw their single sale records broken (for $11,500 and $731 respectively). In February 2020 a new platform called Asynchronous Art (async.art) launched and in just its first week saw over 5,900 ETH in volume (or 1.35 million USD).

In my opinion all of this is reflective of a rapidly growing awareness of and interest in digital collectibles. Nonfungible.com put out a report last month showing that there are roughly 23,000 active ETH addresses with non-fungible tokens (up 50% from last year), and over 113,000 individuals playing blockchain-based games.

NFTs and StakerDAO

I think it would be a great idea for StakerDAO to consider entering the NFT space and strike while the iron is hot, while the NFT collectible industry is still in its very-early adopter phase. The excitement in the space at the moment indicates a strong potential, and StakerDAO has an opportunity to both further the NFT ecosystem and benefit from its growth.

Taking the NFT art industry as an example: the marketplaces at presents are very young, and there are already hundreds of artists and thousands of enthusiastic collectors. But the idea of collecting with a long-term view has not been fleshed out. StakerDAO could facilitate something like a curated collection of art pieces, all of which are vetted and assessed in detail, selecting and investing in those artworks that have potential to appreciate greatly in value.

There are a number of metrics which could be used to determine a single artwork’s value going forward. Works by prolific and well known artists of course perform better than those of lesser known artists, but deep statistical analyses will open up far more metrics.

One option for StakerDAO is to have a small team of art experts use both subjective and quantitative methods to select the most promising artworks and create a collection which meets their criteria. Artworks can be purchased across many of the most popular trading platforms, both for maximum exposure to the artist community and as a hedging mechanism should specific platforms fall to obscurity. If these artworks do indeed appreciate in value, they are sold (with a small amount of marketing to raise awareness to potential buyers) and their profit is returned to StakerDAO. This appears to me a win-win, as StakerDAO can both invest in an industry very early on in its development, and simultaneously boost and increase the public visibility of NFT art.

Of course, this model can be applied to other NFTs like blockchain game NFTs, where the collection/trust can for instance collect genesis tokens from newly launched games, or purchase real estate on blockchain AR platforms gaining popularity (like Decentraland, Cryptovoxels). The latter also opens the possibility of “renting out” digital real estate, to companies or users who need the land for a short timeframe. Similarly to the art collection, both qualitative and quantitative measurements can be used to ascertain the potential of tokens to be purchased and held.

I would be very interested in getting feedback and input from other members on this idea - do you think it works, are you excited about NFTs, how would you envision a collection like this working, etc. I see this as something completely outside the box, and if nothing else at least food for thought.

If the Staker token holder community and the operations team feels this idea has merit, I will work to develop a more concrete proposal that can be included in an upcoming governance cycle.

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Hi James. Welcome to the forums and thanks for joining StakerDAO as an investor! I really appreciate your thoughts on this space. The opportunity to collect NFTs and monetize their value, be it through long term appreciation strategy, or through something more exotic like tokenizing baskets of NFTs is very appealing to me.

We are very early in the NFT space, but my personal opinion is that in 20 years, we will all be spending most of the funds available to us on digital goods, and digital scarcity managed through blockchains will be a major component of pricing of those goods.

I can see that art, gaming collectables, and virtual real-estate are different categories. The insights needed to successfully collect in those areas are likely quite different. I think there will be additional collectable categories - notably fashion - that will eventually be very large as well.

I personally would love to further explore your ideas and would be interested in working with you on areas where a proposal could be developed. I’d love to hear from other community members as well.

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Hi James. This is a really interesting idea. It’s kinda like buying land during the oil or gold rush. I would imagine that, just like in real life, which artists are successful is difficult to predict. It is an even more difficult job to guess who will succeed than it is for VC’s to understand which of their portfolio companies will become those unicorns.

This is why you suggest to employ an expert group of curators (NFT Council) that decides where to invest. It would be similar to a NFT ETF. However, this collection would truly have to be broadly ranged in order to capture its width and breadth.

The question is, can the group of experts select enough winners so that the overall investment remains profitable? This is a rapidly emerging new market with new players and actors. I’d imagine it would be extremely difficult to maintain a portfolio that accurately reflects the overall market performance given that there will be new trends and products on a continuous basis (And they might disappear just as fast - see crypto kitties).

I am wondering whether it would be easier to benefit from this new emerging market by investing in services for this industry, kinda like selling picks and sieve. This could mean buying stakes or tokens of NFT platforms, virtual galleries, etc.

In any case, I look forward to learning more about this. Have to confess I didn’t really look into it much yet but it seems to be a non-brainer the more I think about it. Thanks for raising this!

For those who are following the space closely a large NFT holder called WhaleShark has tokenized his NFT vault with what he is calling a “social” token - $WHALE. I’ve been following along on their Discord channel: https://discord.com/channels/704949262802485348/705009403136573470

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