We at Maecenas are blown away by the interest that the platform has been receiving. We’ve gotten lots of great questions coming in from the community and compiled some of the most frequently asked questions (and the answers to them) on everyone’s minds. (Last Updated: 25th June 2018)
Q. When can we see the beta product and when will see the first auction process going live?
We already have a MVP (Minimum Viable Product) in beta stage. You can check out the sneak peek at the Maecenas Platform here.
Beta platform was launched on the 20th of June, 2018. The private beta auction started on the 25th of July, 2018.
Q. Do you have any artworks confirmed? If not, when are you hoping to have some confirmed and release info to the public.
Yes we do, we have a pipeline of artworks worth circa ~$100m which qualify for the platform.
Q. Do you have any confirmed partnerships with well known galleries?
For the private beta, we have partnered with Dadiani Syndicate. You can read more about the partnership here.
Q. It’s quite clear from your white paper and website that you see Maecenas as an industry disrupter. You mention that auction houses, art dealers etc. charge too high fees and ART will help avoid those fees, democratise the transactions — effectively put those businesses/people out of business. Do you think the notoriously closed art world will accept that? Will you not need these art dealers on your side? As many will have the best relationships with artists and art owners.
We don’t really think that we will put auction houses out of business. In fact, we are likely to become partners and build good relationships with them. We’re mostly creating a new market to cater for players who are underserved. The traditional collectors who want to physically own artworks will continue to use the existing service providers that we have today because Maecenas can’t help them in that regard.
Q. Have you worked with any exchanges… or have any plans to list ART?
ART is listed at HitBTC, EtherDelta and CryptalDash.
We are in conversations with other exchanges to get listed as well, but it’s proving quite difficult given that there are hundreds of new tokens being issued every month. You can checkout the list of exchanges and current token price at https://coinmarketcap.com/currencies/maecenas/#markets
Q. Do you have any plans for marketing/community growth?
We have zero plans to create artificial hype. However, we do have a marketing plan to promote the platform and the token ecosystem, but we’ll do it when the time is right. The focus has been and will continue to be to hit our next milestone which is to launch our beta platform.
Q. How many staff you currently have?
We are currently at 24 and are growing.
Q. Suppose I want to sell half of my artwork share, can I do it on this platform? If so, will this artwork be kept by Maecenas? And if one day can I buy it back?
Yes you can sell up to 49% of your artwork through Maecenas. The artwork will be kept by a nominated custodian, which will typically be a third party, although in certain cases it can be the seller itself if it’s reputable and has appropriate storage (eg. certain museums).
You can buy back your shares either by purchasing them through the Maecenas exchange, or by making a delisting offer to all investors (typically for a premium price) and you must get circa 80–90% of the holders to agree.
This process is analogous to how public companies listed at stock exchanges are acquired by a private company. So investors are familiar with this process and feel comfortable with it. However, we don’t envisage buy backs to be very common because of the added benefits of having an artwork listed at Maecenas.
Q. What happens if majority of the shareholder never sells the painting?
If Uber sells 20% of their shares in a public market and never decides to sell Uber, it does not affect the shareholders in trading those shares. They are free to trade their shares in the market. The same goes with artworks listed in Maecenas.
Even if the original owner never sells the original painting, investors can freely trade the painting shares using the Maecenas platform. Also this artwork will be owned by a separate legal entity (Special Purpose Vehicle) which acts as a proxy between all the investors and the asset itself.
Another thing is that the physical artwork is not kept with the original owner but in custody by a company that specialises in storing such artworks. Such custodies have viewing capabilities, hence they can be used as a gallery to display the artworks. In short, you don’t need the artwork to be sold to enjoy the benefits as an investor.
Q. Can I as a shareholder with 51% plus decide where to put the painting — Ex. Which museum?
There are restrictions (the location must be suitable and approved by the insurance) but yes the objective is for the artwork to be displayed if possible.
Q. How will you incentivise the collectors who originally own the painting?
Collectors will have similar incentives of a private company raising an IPO by going public, to raise money. By selling a part of their painting as a digital share they are essentially raising money against their painting, which in itself is a good enough incentive for them. In a traditional scenario they can’t sell part of an artwork. With Maecenas, they can sell in parts and raise funds for themselves which they can use to perhaps buy more paintings.
Q. Why can’t someone just bid really high for the whole painting and take all? Will the formula listed in the article only include successful bid or will it include all bids, including failed bids?
Dutch auctions are not perfect, but they’re a significant improvement over traditional auctions for the following reasons:
a) Bids are private and therefore it makes it very difficult for someone to game the system and bid more than anyone else simply because they don’t know what others are bidding.
b) Everyone ends up paying the same share price, so whales and small fish can compete on equal terms. Whales don’t have more leverage.
c) There is no value in someone taking up the entire share of the painting as they will kill all future liquidity in that artwork. This is equivalent to one big whale taking up an entire ICO, it’s pointless.
Q. I don’t understand dutch auctions. Can you share an example?
Let me give an example:
Let’s say there’s only 100 shares available.
A bids to buy 10 shares at $200 each. B bids to buy 150 shares at $50 each.
The Dutch auction algorithm will find the best price per share. There’s many algorithms, but the simplest one is to pick the lowest price that sells all the shares.
In our example that price is $50. So A gets 10 shares at $50. B gets 90 shares at $50 each. A tried to pump up the price but failed. However, since A’s bid was higher than B’s, A is first in line to be allocated the shares.
Now, say if instead, A had bid $11 for 100 shares and B had bid $10 for 100 shares. Even though the winning price is $10, it is A who will get all the shares. So there’s an incentive to bid higher to get priority in the line. But at the same time you’ll still be awarded a fair price.
You can also check online for more examples on how dutch auctions work.
Q. Can we read a rough framework of the SPV before we invest so we know what we’re getting into?
Yes, once we sign up to the platform, and before you commit to invest, you’ll be able to see all the relevant information, don’t worry about it.
Q. What was the price for ART token in crowdsale?
Approximately $0.60 (1 ETH = 480 ART)
Q. As it’s a decentralized cryptocurrency, would we have any kind of legal rights if the company Maecenas just decided to disappear like Confido did today?
Artworks are protected within an SPV, which is a legal structure that gives rights to investors and this doesn’t depend on Maecenas existing.
Q. With auctions like the $450MM DaVinci one, imagine that had happened on the Maecenas platform. How do those types of things work in regards to the amount being bid? Are those bidders operating on good faith and credit or do they actually have to wire funds in advance to essentially escrow and how would you see it working with Maecenas?
They have to deposit the money before they can make a bid. Either in fiat or crypto. And they get ART in return, so that they can bid. This ensures that the transaction can settle immediately after the auction finishes.
Q. Did you already convert a part of the ETH from the ICO into fiat ?
Yes, we are converting some ETH into fiat to cover ongoing expenses. We will continue converting more in the upcoming months as we want to mitigate the risk of being too exposed to just ETH (we won’t sell everything, just a big chunk, and keep it in different currencies USD/EUR/CHF/GBP/SGD)
Q. How often do you guys expect new artworks to be listed?
Once we reach good liquidity we expect listings to be continuous.
Q. Where will you be expanding Maecenas?
While it is not final, it is likely we’ll start with Asia and USA.
Q. How much ETH received during the crowdsale has been converted into FIAT so far?
As of writing, we have converted 60% of ETH into FIAT (9M~ USD) keeping the remaining 20K ETH~ in reserve for future.
Q. What is the approximate annual budget?
For year one it will be 3M~ USD. Cost will increase in year 2/3 as we’ll be expanding Maecenas.
Q. Could you share more information on how the incentives work for partners and client acquisition?
This is not fully fledged out yet, but essentially ART would be given to clients and partners either as an incentive or as part of a business deal. Vesting periods and clawbacks may be put in place.
Say, we want to incentivise a particular museum to work exclusively with us. We may give them some ART as part of the compensation.
Giving ART as opposed to money, increasing circulating supply and liquidity.
Q. Who exactly owns the shares of the SPV holding the art. Does Maecenas own these shares, making the investor an indirect owner of the SPV and the artwork? If so, how is it insured that the Investor transferring a token also transfers legal ownership of the SPV-shares?
No, the original owner of the painting(s) will remain the owner as you can only sell upto 49% of the tokens. The artwork will be kept by a nominated custodian, which will typically be a third party, although in certain cases it can be the seller itself if it’s reputable and has appropriate storage (eg. certain museums). It is ensured by transferring legal ownership of the artwork into the SPV.
Questions On Artworks
Q. On what basis do you accept new artwork?
Fraud is one of the main issues in the artwork. Determining the authenticity of an artwork is very critical. We have a very stringent list of requirements that we need to follow.
One of them is full provenance of the artwork all the way back to its origin. Every time the artwork was transacted will be audited to verify the source of the painting. There should also be a certificate of authenticity done by a reputable, relevant and independent art expert. It needs to be stored in a safe facility like a bank or large well known museums etc.
There also should be insurance in place as insurance companies do their own list of background checks before they issue any insurance adding more validity into the painting. Only if all such checks have passed we’ll consider that painting and do our own diligence to double check it. If it all passes, we may add it to our collection.
Q. What would be the worth of the upcoming 30 artworks to be listed on maecenas?
In excess of $100M for the 30 artworks.
Q. Can you please describe the valuation process of an artwork and who is involved in this process?
In all honesty, it is more of an art than science (no pun intended)! Typically it comes from two things: Historical price activity of that art, in which case it’s more sparse as they are traded every few years typically. It also depends on the origin of the art, genre of the art, etc.
An art expert who specialises in a certain form of art — for example if you have a painting by Goya you’ll want an expert who understands all of his paintings and related works like Manuela Marques Mena of Museo del Prado (Prado Museum).
We also rely on insurance companies as they provide a coverage on the artwork which typically exceeds the value of the artwork. So they’ll be conducting their own independent evaluation. Combining all these factors we can come up with a price of that painting.
Q. If an artwork has already been added to the blockchain and later one of the experts finds out that the artwork is not authentic, how do you reverse that artwork from the blockchain?
First of all, this is very very unlikely to happen as we’ll be using the same set of checklist as auction houses before it is being added and using the same set of art experts to verify it. Since they have already passed the validity check, it’s unlikely they’ll find something is incorrect later. If in the unlikely case that it does happen, we won’t need to reverse any transactions. We’ll just revoke the painting from the blockchain with additional data attached as to why we are doing that, and that painting will be removed from the market.
Q. Are you in talks with any digital art platforms to accept ART? Or are these all physical art platforms?
Mostly physical art at the moment.
Questions on Tokens
Q. What is the difference between the ART token and a painting token?
We don’t use the word token for paintings, we call them painting shares because that’s what they really are. The ART token is the currency of the Maecenas platform and it’s the only way investors can participate in auctions. On the other hand, painting shares will represent ownership of each individual painting listed on the platform. Each painting or collection of paintings will be represented by a different type of share having a unique code, similar to how shares in Google or Apple are traded on NASDAQ using a different code (e.g. GOOG, AAPL, etc.).
Q. Are you planning on new blockchain shares for each painting? And where will those shares be traded?
Yes, either each painting or a collection of paintings will have a unique blockchain share issued on the Maecenas chain. They’ll be listed not on a public ethereum network but on a sister chain that will be connected to the public ethereum network, which we call the Maecenas chain. This is required as each blockchain share represents ownership of a physical artwork. Due to regulations, we need to exert control over this, and therefore this can’t be decentralised. Also, in case you lose your private keys, and the shares associated with that key are lost, we can in such scenarios invalidate those shares and re-issue them.
Q. Is it one painting per blockchain share or a group of paintings per blockchain share?
It will be both. If a single painting is of really high value then it’ll be listed individually. If there are collections of medium/low value artworks that make sense to list together, we’ll group them based on some common theme and list them under a single artwork share code, a bit like a fund.
Q. What is the purpose of the ART token?
It plays a key role in functioning of the system. Different investors from around the world would like to invest in their native currencies like Pounds, Dollars, Yen etc. ART token will act as a currency neutral token that the platform will use for efficient clearing purposes. ART token will also enable the use of smart contracts as it is an ERC-20 token. In a nutshell, ART token will be the fuel to the Maecenas machine.
Q. What is the value of investing in ART token?
The more artworks we bring to the platform, the more ART tokens will be required by the platform, and the higher the value of the ART token will become.
Q. Does the traditional investor need to know about ART token or will it be transparent to them?
Crypto-savvy investors would know about the underlying ART token and can look at the smart contracts as all of this will be public. However, a traditional investor who only cares about the art investment need not know (or care) about the ART token or the role it plays. It’ll all be done seamlessly behind-the-scenes, thanks to the blockchain technology being leveraged by the Maecenas platform.
Q. Where will the artworks and the ART tokens be traded?
ART tokens will be traded on public crypto exchanges while painting shares will be traded on the Maecenas exchange only.
Q. Will the painting shares be stored on a blockchain?
Yes, they are on a ethereum blockchain using the proof-of-authority consensus protocol. However we are looking into using the upcoming plasma technology which may allow billions of transactions per seconds. The blockchain which will hold the paintings will be semi-public, so there will be blockchain explorers, etc. But because of the legal obligations that we have, we need to have some control of the blockchain and hence cannot be fully decentralised.
Q. What determines the price of the ART token?
Since this is a completely new market we still don’t know completely how exactly it’ll be priced yet. But since the supply of ART tokens are limited and ART token will act as a fuel to the platform, the more the platform is used, the more the value of the ART token will be.
Q. How many ART tokens would sellers/buyers need in order to participate in the dutch process?
If the investor wants to acquire 200K euros worth of an artwork, they’ll need to buy the same value in ART tokens. Since the dutch auction will last for weeks, exchange rate between the ART tokens and the investment currency (e.g. Euro) will be fixed on a daily basis using a trusted oracle. We would use the daily price to figure out the number of ART tokens required for any given investment amount.
Q. Will this open up the floodgates to tokenize any assets besides art?
Yes, this model can be used beyond just fine arts. In future we’ll be using the same platform for collectible items, vintage items — wines, classic cars, boats, watches etc. So yes, this has the potential to tokenize assets beyond just arts.
Q. Will the ART token give back some profit to the investor like TenX for example?
Any token that gives back a share of the profit is a security. ART token is a utility token and not a security. It enables the functioning of smart contracts. It’s not linked to any performance, does not give returns, and is not redeemable for any assets.
Q. Will Maecenas act as a market maker for active exchange of these tokens, and if so, won’t Maecenas be forced to get a license?
Maecenas will not be a market maker ourselves. Part of the allocation we are going to issue will be kept as a reserve to incentivise these market makers. Our revenue model is not based around taking spreads. It is based on bringing in high-valued authentic art works to our platform for the investors to invest using our platform safely and efficiently.
Q. How do you prevent money laundering in your system and do you do KYC on every investor who joins the Maecenas network?
To prevent any kind of money laundering we’ll implement bank-grade KYC processes. We have been working on defining a strict and comprehensive KYC process to mitigate the risk of money laundering or financial crime. We’ll have two levels of KYC based on the amount of investment being made. For small investors we’ll do first-level KYC checks. For large investors we’ll be doing EDD (Extended Due Diligence) which involves more advanced types of checks.
Q. Are you considering any token burning or other inflationary pressures?
Not initially. Perhaps in future once we have a better understanding about the market dynamics of the Maecenas economy.
Q. Who has to pay for the system after the work has been picked up by Maecenas and for how long?
The original owner of the artwork in all cases would remain the majority owner of the artwork. So the original owner will be paying for the storage cost. Also, storage costs are relatively cheap. For example, storing a single piece could cost $500-1000 per year, irrespective of how expensive the painting is. And the more paintings we store in the same facility, the cheaper it becomes.
Q. What about website refresh? Is that part of the roadmap?
Yes! We are working with a an amazing creative agency to fully refresh Maecenas website. Stay tuned!
Q. In your whitepaper you have shared that there will be a one-time 6% issuance fee. a) This fee is based on what value — valuation? final winning bidding? b) And when is the fee paid?
a) If the painting is worth $2M and the owner is raising $1M against it, 6% will be off the $1M.
b) The fee is paid on settlement. However there has to be some upfront fees that needs to be paid for security reasons. Once the painting is listed we’ll deduct the upfront fees and take the remaining fees. Total fees will still be 6%.
Q. Can everyone see my percentage holdings or is it private?
No, your holdings will be private, unless you disclose your public address.
Q. Will there be a stop function for transaction so Maecenas could stop trading for some reason?
Yes we may freeze accounts under exceptional circumstances. However, we can’t freeze the assets (artworks) as they don’t belong to Maecenas, they’re structured as independent vehicles.
Q. If you alter the private chain how is the process? Is it still transparent?
The Maecenas chain will be anchored on the public Ethereum chain so everyone can see if the hashes don’t match, so it will still be a transparent process.
Q. Usually in markets, market makers gets lower fee while takers get higher fees. Why is it the opposite in case of Maecenas platform?
We will reward market makers with lower fees like in most other markets. The only difference in our case is that we will subsidise sellers who participated in the auction so that it’s free for them to cash out.
Q. What happens if the original/majority owner passes away?
Same as with any other type of asset, the ownership will be passed into their family, etc. or as per the will of the deceased (if they had one).
Q. Who keeps the 30% reserve token? If it’s Maecenas then they’ll end up holding 50% of the tokens, correct? And how does the management of the reserved fee work?
We won’t be holding 50% of the tokens. The 30% reserved token will not be available in the market and will be strictly used to keep liquidity for transactions only.
The other 20% tokens will be used to incentivise new partners. These tokens, when granted to new partners will also have vesting periods of 2–3 yrs.
Q. How do I get in touch with the Maecenas team?
Check out the following links:
- Telegram channel (to talk to the team & community directly): https://t.me/maecenasart
- Company website: https://www.maecenas.co
- Whitepaper (to learn more about the project timeline) https://www.maecenas.co/Maecenas-WhitePaper.pdf
- Kakaotalk group: https://open.kakao.com/o/gBJBpuA
Q. Is the automatic conversion from fiat-to-crypto already in place?
This is not ready yet.
Q. Do we still have the same amout of artworks or more/less then in the whitepaper?
Yes, we now have more artworks in the pipeline than what was announced in the White Paper.
Q. Will you inform the price of the art for some years — like 10 or so? Will be interesting to know — how much that art was cost like a century ago, of course you may not know exactly the price of that days, but how the artist was valuable in that days may be very interesting.
Yes we will show price history information for artworks listed on Maecenas
Q2. Price history preceding the artwork being traded on the Maecenas platform?
Price history of the artwork before it was listed at Maecenas. This includes prices at auctions and private sales.
Q.Do any of the ongoing exchange dialogues including any of the larger, more well known exchanges? Those will likely be the very best chance of liquidity.
Just stay tuned and trust that we are working full on to get the token listed on more exchanges.
Q. Is fiat also allowed for the first auction? How many people will be in the beta?
No fiat during this first auction. First 100 will people can join the Beta.
Q. If pieces of the painting are paid for in BTC/ETH, is that same BTC/ETH used to purchase ART at market price?
Yes, but we also use liquidity reserve to do the conversion instantly, we won’t necessarily go to external exchanges on every transaction as that would be inefficient.
Q. So btc eth and art for the first auction?
Yes. We will expand in future, One step at a time. Rome wasn’t built in one weekend.
Q. What will happen if a owner of a art sharte die ? Ownership can be passed on like physical art?
That’s inheritance law, nothing to do with Maecenas
Q. How long will each auction be to place bids?
Auction will last up to a few weeks but may end very quickly depending on demand, similar to how some ICOs work.
Q2. Will the price of ART be dynamic during this period of time?
Price will be dynamic.
Q. Will there be a benefit to using art token directly to invest in a painting? Like discounted fees?
ART acts as a clearing and settlement mechanism that Maecenas uses to issue digital shares of paintings. The more paintings are auctioned the higher the demand for ART will be.
Q. What happens to ART tokens after you bid and won? Say you bid 1 share of Warhol with 10000 ART and won. Are the tokens now locked in the contract in exchange to the proof of ownership of that 1 share you won? Or is it returned to Maecenas’ which can be sold again by Maecenas?
ART is locked in the auction contract for the duration of the auction, and if you win, Maecenas will settle the transaction by issuing and allocating some Warhol shares to the investor, and ART tokens to the seller.
Q. How will the conversion rate from ETH and BTC to ART on the platform be calculated? And will the same method of conversion be used for beta and final product?
We will calculate the price index using external data sources
Q. How does the rate on the platform relate to the price on the exchanges?
This will be real time rates. so it really depends on how much will be the conversion if they will convert it on the spot.
Q. If I participate in an auction as an art token, will the art token I participated in perish? Is ownership of the art available for sale?
No, tokens are never burnt.
Q. In which currency Dadiani will get paid for the artwork shares fiat?
Yes you can use your ART, and you save the fees if you do
Q. Is’nt a token representing ownership of the art piece a security?
ART as a token is not a security. Holding painting tokens is a security.