The overview of CoArt, Maecenas & Masterworks business models
After the CoArt project was published, we get many questions about the differences between CoArt, Maecenas and Masterworks platforms. That’s why we prepared an overview of all three companies business models, taking into comparison their similarities and differences.
Maecenas
Maecenas uses blockchain technology to create tamper-proof digital certificates linked to pieces of art. A single artwork is broken down into thousands of certificates, similar to how a public company issues shares. Investors can then purchase these certificates to own a percentage of a given artwork, and they can sell them back to other investors via the Maecenas marketplace.
Once listed on the platform, artworks go through a bidding process following a Dutch auction process whereby investors submit private bids stating how many certificates representing a fraction of the artwork they want to purchase and at what price.
When Maecenas platform is fully operative artworks will be listed in any fiat currency (e.g., USD, EUR) or cryptocurrency (e.g., BTC, ETH). Conversely, investors may also prefer to invest in either fiat currencies or cryptocurrencies, creating a multi-currency conversion scenario.
Masterworks
Masterworks firstly identifies potential acquisitions and makes research on upcoming auctions for undervalued paintings with the highest appreciation potential. After the painting is chosen, Masterworks acquires it and files an offering document with the SEC pursuant to Regulation A.
Once qualified by the SEC, investors will be able to buy shares of the SPV which will be represented by ERC20 tokens on the Ethereum blockchain so long as their investment in Masterworks shares does not represent more than 10% of the greater of their annual income or net worth (non-accredited). Also, Masterworks plan to release an approved trading platform to provide liquidity.
CoArt
CoArt uses the following steps to resolve fine art industry problems:
- The CoArt openAPI Protocol
- Transparency and authenticity of transactions
- Collaboration with hedge funds, family office, and other financial institutions
- Tokenization of art-assets
- Cooperation with crypto funds and other exchanges using CoArt API
- Professional participation in the fine-art industry for buying art-assets
Independent review of acquisitions through the CoArt Platform
Retail investors
Investors transfer money (fiat or crypto) into smart contracts created by CoArt’s Investment Fund. The fund acquires an asset (such as a Picasso or Van Gogh painting) with its funds, tokenizes it, and sends it to the smart contracts of retail investors. Each artist has his type of token, e.g., a Van Gogh painting will have VNG tokens, a Picasso painting will have PCO tokens, etc. In exchange, the Investment Fund receives COAT tokens. Fiat currency is converted into COAT tokens only if the investor gets tokens relevant to the artwork they purchased, i.e., the investor successfully acquired a share of a particular painting. In that case, the smart-con- tract is considered fulfilled.
Traders
Traders can exchange specific artist tokens (e.g., VNG-tokens [Van Gogh] or PCO-tokens [Picasso]) on our secondary marketplace called CoArt Exchange and trade on other exchanges using CoArt’s open API Protocol. Placement and sale of specific artist tokens on exchanges allows traders and investors to participate in a new type of commodity trading: art-assets. Access to said placement and selling is available 24/7 globally.
Owners of Art Assets
Owners of art-assets (Collectors, Artists, Galleries, Museums, Hedge Funds, Family Offices) can offer portions of their art-assets for investors to invest in while retaining control of said art-assets. Owners of Art-Assets, through CoArt’s open API Protocol, are capable of tokenizing their art-asset and then offer it for investment for their investors. Essentially, an owner of an art-asset (for example, an owner of a token that gives rights to 50% of a Van Gogh painting), can further tokenize share of the Van Gogh painting (for example 50% of the 50% token, for a total of 25% of the painting) and offer that new share (25% of the painting) for investors to invest in. The other option is owners of art-assets can directly list their specific artist tokens on various exchanges using CoArt’s open API Protocol.
All in all, we are happy for all of the companies that create products to make investments into fine art easier and reachable for more people. However, everyone should decide on their own, which of the models is the best fit for their individual needs.
