RCRDSHP Coins
The foundation for market stability and motivating creators to prioritize quality over quantity
SOUND token is a fungible token hosted on the Flow blockchain. This is Part 3 in an ongoing series introducing the RCRDSHP player community to SOUND token and stakeholder rewards. This part introduces RCRDSHP’s in-game currency and introduces how it is linked to SOUND token.
RCRDSHP features a unique in-game currency system. Every card collectible design on RCRDSHP has a face value, which dictates its minting cost. The amount of coins used to mint a given collectible is called coin value. Face value determines the coin value of a collectible when it is minted, but the coin value of a given collectible can grow due to player activity.
Even though coins were part of our design from the start, they did not figure prominently in player psychology until we introduced burning functionality in association with the ‘Germania’ drop and its burn challenge in Nov 2021.
In a blog post titled The Age of Fire Begins, we announced the availability of a brand new feature giving players the ability to burn their collectibles in order to liberate their coin value, which would then be added to their personal coin balance as a form of in-game currency. The challenge generated a lot of buzz and provoked the burning of thousands of collectibles.
Once the initial excitement subsidized, coins became one of the most controversial features of RCRDSHP, because they have a side effect of dampening price volatility in our secondary marketplace. But after seeing how wild price swings had hurt many of our most enthusiastic players last year, we decided that we value stability more than easy profits for traders.
The rest of this blog post delves into how coins play into the idea of NFT-backed collectibles having intrinsic value.
Coin value as intrinsic value?
The ability to burn cards in order to turn them into coins for your personal balance was initially treated as a fun distraction from the core game, consisting of price speculation and set completion. But eventually the coin value of a card became one of the dominant factors in how players determine market prices. The reasons is that assigning a coin value to a non-fungible token (NFT) makes it feel more like a fungible token, more interchangeable.
As operational roadblocks kept RCRDSHP from rapidly adding new features that increase the uniqueness (or non-fungibility) of our collectibles, the market drove prices of most collectibles down closer and closer to a value corresponding to their coin value, regardless of the value of the content or utility of those cards.
Players even started talking about an “exchange rate,” so-to-speak, of coins that can be bought via collectibles in our secondary marketplace to a price in dollars. So much so, that a third-party site called OGAF Club has a feature that tracks the best coin values. At the moment, the exchange rate fluctuates between 30¢ to 50¢ USD per coin.
We’ll get back to the market value of coins momentarily, after explaining how coins are backed by an actual fungible token called SOUND.
SOUND and Coins
SOUND is a digital token hosted on the Flow Blockchain that functions as a sort of raw material for all NFTs minted on RCRDSHP. Every collectible has a certain number of SOUND tokens bound to it at the time of its creation. We think that finding new ways of combining fungible and non-fungible tokens represents one of the most fertile grounds for innovation in the entire cryptocurrency world.
In a practical sense, RCRDSHP coins function as a proxy to holding SOUND directly in a non-custodial crypto wallet. The exchange rate is set at parity (1 to 1) by our software. The little coin icon and an number next to it on a RCRDSHP card is an indicator of how much SOUND token it has inside.
The face value of a card can be considered its “minting cost,” paid in SOUND by its creator. It’s kind of like the cost of the vinyl that goes into making vinyl records, or the cost of the plastic that goes into making CDs. Small, but not insignificant. Unlike traditional music products though, additional SOUND tokens can be “massed” by players into a single collectible, in some cases dramatically increasing its desirability and market value.
Using our SOUND treasury and basic economic principles, RCRDSHP can exert a measure of control over the market price of SOUND. But the most important economic lever we have in our control is the exchange rate between SOUND and RCRDSHP Coins. Since minting on RCRDSHP is subject to mandatory minimum coin values, it means we can use the exchange rate to make minting of SOUND-backed NFTs more or less expensive. The intention is to fight against devaluation by not letting supply in our marketplace outpace real demand.
Part 4 of this series delves into the tokenomics of SOUND and how it plays a vital part in the economic cycle of RCRDSHP via Stakeholder Rewards that gradually replenish the accounts of successful creators on the platform, so that they can continue minting new collectible designs at little to no minting cost compared to creators that don’t bring new fans or exciting engagement to the community.
No free minting
The problem with free minting in a field like music is that it’s trivial to infringe copyrights. We know based on the experience of other projects in the space that free minting is an open invitation to bad actors. Even if no bad actors showed up at all, over time the marketplace would still get cluttered up with endless amounts of less than desirable music, just like Soundcloud and many other existing platforms.
During the initial phase of RCRDSHP, we have been subsidizing invited artists with free SOUND so that they can mint, but once those subsidies stop why would new artists willingly participate in an NFT platform that subjects them to minting costs comparable to manufacturing physical world objects?
The most fundamental answer to that question has to do with how costs affect perceived intrinsic value of a product. It’s at the heart of a debate that‘s a hot topic in NFT circles, this idea of cost factoring into value. A foreign concept for digital items, but one that reigns supreme in the physical world. Handmade Lamborghini Venenos cost orders of magnitude more than production-line assembled Chevrolets, which again cost orders of magnitude more than toddler cars made out of $10 worth of plastic.
If the cost of making a product is free, then that product is probably garbage.
You could of course argue that artists invest much time and hard costs into making music. But remember that the reality that we’re dealing with at the moment is that no matter how good or special a piece of music is, music recordings are effectively worthless. The only (rational) music artists investing in manufacturing vinyl records are doing so because they are confident in the quality of their work and the loyalty of their fanbase. The same dynamic should apply to artists who invest time and resources into minting their NFT-backed art on RCRDSHP.
As we open the doors to self-service instead of invitation-only, creators (or the players that back them) will only invest to the extent that they believe they can turn a profit on the SOUND minting costs involved. This is a good thing. Over the long term it should incentivize our creators to prioritize quality over quantity in their work.
The value of coins
RCRDSHP doesn’t sell coins directly to the public, however coins cost a dollar when you buy them via our collectibles. The reason is that the retail price (aka “drop” price) of packs and collectibles is based on the face value of the collectibles contained within. For instance, if you buy a two-collectible pack that is guaranteed to contain a ten-coin artist card and a two-coin release card, then that pack will always cost you approximately $12 USD.
Our pricing system has been in place since our launch in September 2021 and we do not plan to change it. The system effectively protects the secondary resale values of collectibles in our marketplace since it gives them a base value regardless of whether the player likes their content or not.
As mentioned earlier, coins can be acquired in the secondary marketplace for 30 cents and up, but we expect that situation to change rapidly as new game mechanics destroy our current oversupply, and bring us back into a balanced market dynamic. At some point there will be no rational reason for players to sell cards for less than a dollar per coin, unless they’re fine with taking a loss. But the idea is to give them plenty of other uses for those coins, so that they don’t have to dump unwanted collectibles on the market.
If you’ve played RCRDSHP, you may have noticed that we disallow players from selling individual cards for less than a dollar, but that’s a rule that is there only to make sure we do not lose money on secondary transactions. Due to fees and overhead, we do not make any money (and sometimes take a loss) on one-dollar transactions.
Pricing discretion for creators
Creators will soon have the ability to sell individual packs or collectibles directly to fans outside of big RCRDSHP promoted drops (aka “Hero Drops”) using a new feature called storefronts. When they do so they will be allowed to price their goods at their discretion, as long as it’s greater than or equal to one USD per coin.
Speculative value
The way that burning got players thinking about their coin holdings was criticized by some inside and out of RCRDSHP as “destroying speculative value” of our collectibles. The claim being that the more that players think about cards in terms of their coin value, the less that they can engage in flights of fancy about the speculative (and sometimes absurdly inflated) value of the card’s content. There’s probably some truth to that claim, and we think it’s fine. NFT projects that encourage speculation tend to also encourage pumping, which is almost inevitably followed by dumping.
That’s not to say that we are opposed to some collectibles being expensive, even wildly so. We just think that collectibles subject to major speculation and risk should be special by merit of their actual intrinsic value, whether it’s their special and unique limited-edition content, a single-digit serial number, ultra low mint counts, or (especially) the physical-world value conferred by holding that collectible.
We have collectibles on the platform right now that feature benefits such as lifetime free guest list access to shows — those should absolutely be bid up to the maximum price possible.
But for ordinary card collectibles, we’re fine with their perceived market value being correlated to their coin value. The coin value provides a “floor” that insures they will never become completely worthless, because there’s always the option of burning an unwanted collectible in order to unlock its coins. On the flip side, upcoming game mechanics lead us to believe that many cards will eventually contain many more coins than their original face value.
NFT projects that encourage speculation tend to also encourage pumping, almost inevitably followed by dumping.
Burning liberates SOUND
Remember that we mentioned that a collectible’s coins represent a bound amount of SOUND token. So what happens when a player burns a collectible and coins are added to their balance on RCRDSHP? Do they also get the SOUND token staked to that collectible? The answer is yes, but not exactly.
Coins in a player’s balance represents SOUND token controlled by that player, but only for use on-platform. Coin balances will eventually be offered as an option for buying new collectibles from creators (if they choose to accept them.)
Players will also be able to use coins to mint new collectibles for themselves or to subsidize minting by others. The main limitation on coins is that they may not be sold on the open market or transferred directly to other players, in order to prevent incentivizing fraud and other kinds of abuse of the system.
For creators, losing subsidized SOUND token due to burning represents a sort of penalty for producing less than desirable material, or more likely, for failing to drive significant numbers of fans to buy their collectibles on RCRDSHP. In this way, we incentivize quality over quantity, demotivate bad actors, and reward artists willing to engage deeply with our community.
We’ve mentioned SOUND token gets bound up in collectibles, its relationship to RCRDSHP’s in-game currency, and also how SOUND can get liberated by burning. What we haven’t discussed is probably the most interesting part of this system, that is: how an artist’s balance of SOUND token is regularly replenished so that they can profitably mint new collectibles. More on that next week!
Legacy Artist and Label Card Upgrade Program
Here’s a reward for making it to the bottom of this long blog post!
Months ago we standardized on the following face values per card type:
- Artists and Record Labels: 10 coins
- Release Plus: 5 coins
- Artifact and Merchandise: 3 coins
- Releases and Moments: 2 coins
- Stress Test and Wristbands: 1 coin
A source of recurring confusion and occasional resentment in the player community has to do with the variability of face values. Many older artist and label cards held by longtime members of the player community have only 2 to 5 coins face value, which makes them feel devalued in comparison to newer designs which have 10 coins.
While we can’t automatically upgrade those old cards to have more coins, what we can do is to give you a method for upgrading them yourself!
Start with a DJ Mixer in your hand in order to unlock the Mixing tab of your collection screen. In case you haven’t used it before, the Mixer is a feature of RCRDSHP that lets you change your collection cards in various ways, mostly by combining them.
Then you’ll want to locate a Holiday Greetings or Fashionably Late card in your collection and then long-press the card face in order to add it to the Mixer.
Next add any number of Artist or Label cards that have less than 10 coins. If you’re using the Holiday Greetings card then make sure you have some coins in your balance to pay the mixing fee. (The Fashionably Late card does the upgrade operation for free, because it is a more valuable card.)
If you don’t have the Fashionably Late card and you want to not spend a bunch of coins, keep in mind that you can upgrade more than one card at a time.
Once you click that Mix button and let the server do its thing, it will re-render your collectible to have its shiny new 10 coin value.
But why do Artist and Label cards have 10 coins?
Artist and Record Label cards play an outsized role in the RCRDSHP economy because they are at the heart of the RCRDSHP Stakeholder Reward system that we will describe in the next and final blog post in the series.
Part 4 of this series includes information about SOUND token itself and how it powers stakeholder rewards and patron rankings on RCRDSHP.
