Loot NFT for Creators
I finally get to write this piece for the creators whose creations are embodied in the NFTs sold on Loot NFT!
Over the past few weeks, I have been focused on the foundational work of the Loot NFT platform. That done, I am glad to shift gears to address some of its amazing features.
But first, we do not use the term “artist” on Loot NFT; instead, we term “creators” as anyone originating NFTs for auction. This captures more than the idea that NFTs are solely linked to art; they include sculptures, videos, captured historical moments, audio files, mechanical objects (think Batmobile!), and more. Secondly, NFTs on our platform are either linked to digital, or digital and physical creations.
I usually get asked, “Why is Loot NFT better for creators?”
I never think in terms of one thing being better than another. I think in terms of things being different, and what is better suited in a particular situation.
But to answer this question, I usually present an analogy, then drill down further until it becomes self evident why Loot NFT exists.
Let’s say someone created a painting and brings it to an auction house to sell it. The initial considerations are: Who will bid on it? How much could it go for? Who is the creator? How many followers do they have?
Picture me going to Christie’s with my artwork.
I would not even get past the receptionist. For one, I cannot paint and the end result would likely look like a dog’s breakfast. Second, the amount of people that would be willing to bid and buy the art is approximately zero (and that includes my family members and closest friends — if they did, I can say with 100% certainty that it would not hang anywhere and be relegated to the trash before they even got home!).
This is because the strength of a creator’s brand is paramount in this process.
Building brand takes time, marketing dollars, dealing with curators, gallerists, critics, and hours of schmoozing people creators like and that they are not that fond of.
Their reputations get them to the point where someone is willing to pay money for their creations. If their work gets, say, $1 million, that amount recognizes their brand power (and talents) and generally sets the tone for their future work and expectations.
As such, a huge number of amazing creators go through life missing the brand exposure that equals their objective talents.
The NFT craze of 2021 broke out many lesser known artists fueled by what I call the “crypto nouveau riche” (i.e., those that bought cryptocurrency at a low price and made a lot of money out of the rise in the crypto markets).
However, quickly DIY NFT auction houses were flooded with people that (like me) should have no business creating artwork. Hence, creators that came in a little late to the party were crowded in a noisy space…yet, again!
Something about me: my first degree is in Aeronautical Engineering and I see life with a mathematical filter; that is good sometimes, sucks at other times. The way I see the ingredients to discover the price of creations at auctions are as follows:
Value = Brand Value + Talent + Desirability,
Brand Value = Function (Time [Critics, Gallerists, Marketing, etc.])
Brand Value = 10 x Talent
Desirability = Function (People that can afford and want the creation)
When we started on the quest to build Loot NFT, the above equation was the first thing we wanted to provide a solution for. And if we could not do it (or at least had good enough solution for it), then we would not have gone down the path of creating a business in the space.
Thus, we needed a way to break this equation or significantly dilute brand and desirability. Put another way, we needed a way to build brand and achieve price discovery at the same time (i.e., collapse the above norm into one single event).
Our solution lead to something like this:
The same, Value = Brand + Talent + Desirability
Desirability = Function (Fans + Gamers + People that want the creation)
Talent = 10 x Brand
Note the subtle differences.
(1) Talent weight flips with Brand and (2) Desirability is diluted by (a) the removal of purchasing power disparity and (b) the inclusion of Fans and Gamers in the Desirability function.
This is similar to shows like American Idol, the X-Factor, etc. It, however, goes further, by immediately commercially valuing the work (much like if Kelly Clarkson won American Idol and in the same breath immediately sold the rights to her first album for a gazillion).
Here’s how we achieve this on Loot NFT:
(i) We created a new kind of time-limited auction whereby anyone can get a creation at a discount in a pay-to-bid manner. Each bid is reasonably priced at $0.20 per bid that is spent and not returnable, whether or not bidders win the item or not. If a bid is received in the last 15 seconds, it resets the timer back to 15 seconds. This means that auctions could last days. The last person to chuck in the bid when the timer expires gets the creation.
(ii) We created a novel time-locked wallet and a fixed supply of bid units (that is locked in at a certain amount forever). The time-locked wallet collects all BUNs spent by bidders and only releases them at a certain time every week (i.e., every Sunday). However, bid units are “trapped” in the auction and only get sent to the time-locked wallet once that auction concludes. Since there is a limited supply of the bid units, whenever they are spent, their circulating supply decrease. Hence, at some point, there must be an auction winner.
(iii) All bid units collected in an auction get converted back to a USD value and locked in as the proceeds of the auction. As more bid units are spent, the value of the NFT (and creation) grows.
(iv) Each bidder has a maximum cap of the amount of bids unit they can have in their account at any one time. They can buy more, but they can’t buy beyond the cap. With a decreasing circulating supply it is possible that Loot NFT runs out of bid units to sell, hence we’re not able to sell more of them until the auction concludes and the time-locked wallet releases them. This significantly reduces purchasing power advantage.
The above, however, does not address the the desirability function fully.
But, keep reading:
(v) All NFTs are part of a themed set of 5. This means that work is commissioned from creators to fit in that set. If bidders collect a full set of those works they get an amazing mystery gift. If they collect a majority of the set, they get a status level called a degree. A degree rewards them with “free” bid units based on their participation levels in auctions.
(iv) and (v) makes NFTs important to those collecting sets beyond the intrinsic value (or perceived value) of the creations themselves.
That’s the Gamer in the equation. Now onto the Fans:
(vii) As we’ve significantly removed purchasing power from the equation, it means that mum, dad, brother, friends, and fans can participate to use bid units to as a vote to show love since they can participate at a relatively low cost to support the people they want to see break out. If they win the creation, fantastic. If not, then they have showed support.
Now, since NFTs may be in auctions that could last hours or days, peoples’ eyeballs are likely on them and provides two things to the creator (I call this the eyeball equation):
Future Brand Value = Function (Auction eyeball, Price discovery of creation)
Following this exposure and a price achieved for their creation, creators can then move on to bigger and better things.
This is why we say: “Welcome to the world’s first NFT talent show.”
The side effect of this is also a mechanism to value brands commercially.
Let’s say we create a theme called “The Master Influencers” and get five influencers to do a 10-second video that we tokenize as an NFT. We can quickly see how many of their followers are super fans. Followers are to some degree deconstructed into a direct commercial value (this can’t be faked, like buying followers, since it costs real money).
More, because creators actually get paid the proceeds of each auction, less our fees, they in effect make their brands liquid. In return, fans can own a piece of unique memory from their favorite influencers.
Of course, the above is a theory and the proof will be in the pudding, as they say. This is why we note that Loot NFT is a theoretical experiment. What we expect may not come to pass and may instead result in something completely unanticipated. Or, I guess, it could be exactly as anticipated.
We do not know.
Join our Telegram group (t.me/lootnft) and let’s discuss this. I would love to chat to those interested in diving deeper — we might learn from each other.