Inside the NFT Boom with G Money, Delphi INFINIT. Snowfro, Art Blocks. Justin Aversano, Twin Flames Artist. Noah Davis, Specialist, Head of Digital Art & Online Sales, Christie's. Priyanka Desai, Vice President of Operations, OpenLaw.
Moderated by Les Borsai, Co-Founder & Chief Strategy Officer, Wave Financial.
SPEAKERS
G Money
Delphi INFINIT
Erick Calderon (Snowfro)
Founder & Chief Executive Officer
Art Blocks
Justin Aversano
Twin Flames Artist
Noah Davis
Specialist, Head of Digital Art & Online Sales
Christie’s
Priyanka Desai
Vice President of Operations
OpenLaw
MODERATOR
Les Borsai
Co-Founder & Chief Strategy Officer
Wave Financial
TIMESTAMPS
EPISODE TRANSCRIPT
Les Borsai: (00:07)
Thanks for being here today. My name is Les Borsai I'm a Co-founder of Wave Financial. We're one of the larger regulated asset managers that primarily do crypto and blockchain. I started my career in the music business so community has been something that's really special to me. I got involved in cryptocurrency in 2013. Bitcoin was really high at 200 back then and was destined to try to find the next one. And did the Ethereum presale and many other pre-sales. I want to start off, we're so lucky to have all these people. These people are the core to NFTs. So it's really great that SALT was open to let us do this and kind of let us do it our way. But why don't we start with introductions?
G Money: (00:55)
Hey guys, I'm GMoney. I'm a collector and investor in the NFT space. I'm well known for buying a CryptoPunk app at the beginning of the year and forming a thesis around it that went viral on crypto Twitter. And I've been pushing the space forward ever since.
Snowfro: (01:14)
Hi everybody. My name is Erick also known as Snowfro. I'm the founder of a NFT platform called Art Blocks. Have been in the generative space for a long time. Have been in the NFT space since claiming CryptoPunks in 2017 which is kind of the, at least for me, the beginning of this. And yeah, crazy to be here. Thank you very much for having me.
Justin Aversano: (01:34)
Hi everyone. I'm Justin Aversano. I'm an artist, a non-profit community art leader and an art collector as well. And I'm excited and grateful to be here. Thank you.
Noah Davis: (01:46)
Hi everybody. I'm Noah Davis and I'm definitely the newest transplant to the NFT space on the stage. I joined in March when I sold the Beeple NFT at Christie’s where I'm a specialist in the contemporary department now very, very much focused exclusively on NFTs.
Priyanka Desai: (02:04)
Hey everyone. I'm Priyanka Desai I work for a project called OpenLaw. OpenLaw has put together several different decentralized organizations including Flamingo which is an NFT DAO or collective of individuals that come together and purchase various NFTs including digital art, collectibles, digital land in different metaverses and invest in different NFT related projects.
Les Borsai: (02:31)
Okay, so let's start with community. And I want to do this kind of free form instead of like calling on people, jump in as it's a topic that might relate to you or be near and dear to your heart. So community has always been an important aspect in crypto, whether it's been for impact or just building economies around projects. Can you guys speak a little bit about the community and what it means? Any one of you.
Snowfro: (02:59)
I'll jump in kind of rewinding there. There's a platform called Discord. Discord is essentially like a Slack or a AOL instant messenger, I don't know how much everybody knows. But it's a big community, everybody gets together. And in 2017, right after the CryptoPunks project launched, CryptoPunks' project is 10,000 unique eight bit cartoons bases that are represented on the blockchain as an NFT or quasi NFT. A community was built then with about 20, 30 people. On a regular basis nerding out about this weird project of 10,000 pieces that everybody was just kind of like early on and kind of feeling this weird energy because this is where this all kind of started. Over the course of those four years, we've gone from 30 people, a hundred people, maybe a whole week with not a single comment in that chat. And then a couple of days where it was just like day after, comments every minute. To a community of about 20, 25,000 people where there hasn't been silence in that conversation for at least six months.
Snowfro: (04:04)
I mean not one moment when someone isn't typing. And what that means is that you have this individuality that's associated with owning something that's unique, a shard of the artist's vision, a shard of this NFT madness that's kind of happening. And people talk about that and they share it. And they describe what it means to them and then they describe what it represents. I'm represented by a green zombie with a bunch of hair, that's kind of how people know me in this space because that's how I'm represented in there. And that community, I don't know that has existed to that degree before.
Snowfro: (04:37)
I'm not a historian, I just think what we're experiencing is something different and disruptive from a human standpoint. Something that we can all kind of belong. Not belonging to the NFT space as a CryptoPunk owner could cost anywhere between a hundred and $600,000. So that level of inclusivity is gone. It's like if you had it, you had it. But there's projects that come around every day that allow a new level of inclusivity, a new level of originality. And I think there's something really special there that goes beyond the value of these JPEGs that are just selling for a lot of money.
Les Borsai: (05:12)
Pri can you talk about how community plays into a DAO and what a DAO is?
Priyanka Desai: (05:17)
Yeah, yeah. And I think that's a great primer. Discord is sort of the backbone for a lot of these NFT and internet communities. So if you're ever interested in a specific NFT collectible or something else, there's definitely a Discord for you. When anyone asks me how they can get involved, I just recommend popping into the CryptoPunks or Art Blocks Discord. So I'm just going to plug that for you guys right now. On the DAO side, that sounds complicated. It stands for Decentralized Autonomous Organization. OpenLaw launched Flamingo which is this NFT collective I was speaking about in the introduction in September of 2020. There's about I think 67 different members now, including GMoney and Snowfro here. The membership really, there's an active Discord community for Flamingo.
Priyanka Desai: (06:07)
We have weekly calls where we talk about different NFT collectibles, develop thesis and strategy around specific NFTs. Pop into different communities. And what's really nice about these DAO structures, and just to kind of background on what a DAO is, I kind of skipped over that. It's a way for all of these members of this DAO to pool together their capital and then self-govern through on-chain proposal processes and then proposals to really distribute these strategies or allocate capital to these strategies. So Flamingo as a collective owns about 220 punks. They own, I want to say over a thousand Art Blocks. And beyond that again digital land. They've invested in several NFT related projects as well. And so it's just like this wide swath where they have decided to allocate a certain percentage of their capital into these different categories. And so that one you're speaking to communities really, really important, and it's a really interesting way for these members to kind of cut through the noise of Twitter and the internet and maybe some of these other discourse and just come together and rally around specific projects that they're really excited about.
Les Borsai: (07:19)
One of the things I love about this space is really just the innovation and the disruption that happens in this space. If we take a look at DeFi, DeFi I think really came out of a frustration in finance which is good for this panel. NFTs to me kind of carried on that same ethos. And the disruption I'm talking about is obviously returns in DeFi and existing gallery systems and NFTs. Do you want to talk about that initial disruption?
G Money: (07:51)
Yeah so I think what really attracted me to the NFT ecosystem at first was if you have this view of assets going digital longterm, you want to be owning NFTs because everything in the real world is an NFT. So everything is non-fungible except for cash. So when I think about it through that lens and I think about the future and I think about the way things are headed, I'll give you a little anecdote. On the first day of quarantine last year I bought a PlayStation. I hadn't played a video game in over 10 years. I had to download Fortnite. I start playing Fortnite with my friends and their 12 year old nephews. And the first thing these kids ask is what skins did you buy? And I'm like skins? I'm like they don't give me any special powers. There's no way I'm spending $8 on a skin. Fast forward two or three weeks later, I'm buying every skin I could possibly get my hands on.
G Money: (08:47)
And so it was then, and this is before I knew what an NFT was. This was in March, April of 2020. And it was then that I was like that kid today is 12 years old. 10 years from now he's going to have his own discretionary income. He needs to be totally okay with owning an asset in a totally digital form, it doesn't need to be physical. So there's going to be this massive supercycle here over the next 10 to 20 years where more things will be coming in a digital format. So when I found NFT that started making sense to me right away. Where it's like here you can totally own an asset. It's provable on-chain with this immutable ledger which is the essence of blockchain. And you can have this ownership structure. So as I started formulating a thesis around NFTs, I was like well, I think that there's this massive supercycle over the longterm and NFT art and NFT assets will be one of the first ones that will be taking advantage of this.
Les Borsai: (09:42)
I think going along those same lines and thinking about curation, one of the things that's also been really amazing is the ability for Art Blocks or Christie's or even you Justin with the Twin Flames to really take, not just taste and perspective on an artist, but the ability to select those artists and support them. Do you guys want to talk a little bit about that and maybe quantum as well?
Justin Aversano: (10:09)
I'd like to talk a little bit more about how GMoney and I connected through the Discord that Snowfro was discussing earlier. And that conversation led to not only my work being collected by a whole plethora of new age, crypto art collectors but creating a public art exhibition around the art we are talking about. And I think it's important to recognize that without these communities we're creating online and integrating it in person in the public space. And I think that's a place where I like to spend my time is bridging the worlds of physical and digital and how we get our online community in a space like we are here all together right now. And it's as simple as the art leading the way, inspiring us to work together and create a public art exhibition like GMoney and I have curated through my nonprofit called Same Art Space.
Justin Aversano: (11:06)
The show was called Pixelated and we did three cities. We crowdfunded through the punk collector ship. And I think that alone, seeing collectors band together for art for the community, for the artists was probably the most impactful thing to witness because when have you seen Picasso collectors or Francis Bacon collectors get together and say, let's do public art around this as a unit? No, they're all putting in their vaults or they're putting in their homes. So I think the online distribution brought us together as not only friends and collectors and business partners but we're building the space out as we move forward. And I think it's incredible what just one online conversation can bring about. How we're here today because of this. I met all these people, these amazing trailblazers in the space through that one Discord and I think it's magic. What community can achieve if you just have the conversation with the person sitting next to you or the screen name you see. And I think that one conversation could change your lives, it has changed mine.
Noah Davis: (12:15)
You stole my joke. I was going to say nobody gets together from the Mark Rothko fan club to do an exhibition in the streets when a big Rothko comes to market. That's how Justin and I met. Justin contacted Christie's when we announced we were selling the CryptoPunks from the collection of Larva Labs and our evening sale. And Justin and SaveArtSpace did incredible work to realize this vision of the punks invading New York city through public advertisement. And that was incredible. I mean Justin and SaveArtSpace and G money helped to promote this sale in a really impactful and important way. And that just never happens with any other artist.
Les Borsai: (12:57)
One of the things that's really interesting and I'm actually curious about is how hard was it to sell Christie's on doing the CryptoPunks? Because I mean Christie's has been around since what? 1760. And follow up to that is how impactful is that for the NFT space? Does that validate the piece as real art? I mean not that it isn't real art.
Noah Davis: (13:19)
Yeah. So punks was easy because it was after Beeple. Beeple was a little trickier because that was the first art that doesn't exist that we sold. And I think that the timing was really crucial because we got this opportunity towards the end of the first round of the pandemic I guess, in the beginning of this year. And we had spent the last six or eight months doing a lot of things for the first time. So doing something for the first time is no longer scary. Usually Christie's is a very risk averse company, but it was actually surprisingly simple to get this across the finish line.
Noah Davis: (13:56)
And I think it was especially attractive because of the opportunity to take cryptocurrency for payment. That was actually the way that I wrapped up the entire opportunity for the business to review. We're selling this asset that is non-traditional. It doesn't technically have a physical representation so you don't have to photograph it. You don't have to take care of it, you don't have to insure it, that's all good. And we can take cryptocurrency for payment because I knew there were certain executives who were really curious about this and definitely very many of our top clients were really curious about when we were going to step into the cryptocurrency ray. So taking ETH for that NFT was really the way that we moved it all forward.
Les Borsai: (14:38)
And now you're doing a collaboration with Art Blocks. How does that come about where you make a decision on what you're going to collaborate on, what's coming next?
Noah Davis: (14:47)
So the Art Blocks consignment is coming from the collection of a guy who goes by the [inaudible 00:14:55] in Canada. And most of the works in the consignment were minted directly from the smart contract. So that's actually really a collaboration between Christie's and Barcella. But I'm working directly with Erick and Art Blocks to help to promote this consignment. We did an after dinner mints episode recently which is Snowfro's and Art Blocks weekly. Is it weekly?
Snowfro: (15:18)
Every Sunday.
Noah Davis: (15:19)
Every single week and talk about community. Weekly podcast, live podcast, video session I guess, with the people. So that's the new paradigm. It's really about engagement and having a constant connection and a meaningful, organic, true connection to your audience.
Les Borsai: (15:38)
Did it feel like a validation when Sotheby's did the Bored Ape?
Noah Davis: (15:42)
I'm not going to talk about Sotheby's brains.
Les Borsai: (15:47)
Considering you did it first it's okay.
Noah Davis: (15:48)
Well hey, no it's look. A 101 in one lot is a lot, that's all I'm going to say. I'd rather focus on one Ape at a time.
Les Borsai: (15:59)
Exactly. So let's, I mean obviously this is an audience of finance people. Let's talk now a little bit about NFTs as an asset class and where we see it going in finance. That might be a good one for you to start on.
G Money: (16:13)
Yeah. So one of the things to me that I found interesting right from the start, like I said earlier is that if everything in the real world is an NFT that means you can bring everything on-chain. So as I was thinking about that, I'm like okay, great. As I look 10, 20 years into the future besides just let's say this massive supercycle of younger kids growing up and being okay with digital ownership, what happens if we bring financial products on-chain, right? Where the market cap is massive? What happens if we bring mortgages on-chain? You're not going to bring mortgages on-chain tomorrow because there's trillions of dollars of assets there. But you need to kind of get that TVL, the total value locked up so that the chains prove themselves and they prove that they have that security.
G Money: (17:01)
And then over time, as people feel more comfortable with the security of all these assets, you will be bringing stuff on-chain. What is a mortgage? A mortgage is an NFT. What is a house? A house is an NFT. So as those things come on-chain, you're going to have this massive opportunity where these products and the photo calls are being built today to support the art market and collectibles and things that we know and understand as humans. But then long-term you're going to be getting all these assets that are coming. And that to me is a really interesting part from an investor standpoint. I've spent 20 years in traditional finance and to me, looking at NFTs I'm like wow, this is much the same way if you look at the global GDP and you take a look at the finance sector and what percentage is that of GDP. DeFi is going to be an important to NFTs but NFTs to me is the major market.
Les Borsai: (17:52)
NFTs definitely has a broader appeal, so it impacts so much more. Generative arts been around since the '60s. And we talk a lot about on-chain and off-chain and I'm not sure that everyone understands that. So we might want to just explain that a little bit. But we really saw the acceleration in sales I believe with anything that was on-chain. A lot of the great art that is sadly off-chain may not have the same impact. Is there a reason?
Snowfro: (18:22)
Well to touch on the concept of on-chain. So we say the phrase on-chain all the time. And what that basically means is that the information relevant to the asset, in this case an NFT is stored on the blockchain versus not stored. So within NFT, you can't actually put a home inside of the Ethereum blockchain. So it's considered an asset represented by a token. And the token is represented on the Ethereum blockchain. In the art world, a traditional NFT is stored as an image on a decentralized infrastructure in general called IPFS, InterPlanetary File Storage. That is not a blockchain. It is a source of information that can be managed and uploaded to by anybody, but it's not on the blockchain. What's on the blockchain is the actual proof of ownership based on cryptographic hash of the information that's on IPFS.
Snowfro: (19:25)
So sorry if I'm kind of losing you guys here but it's a little bit complex. But the point being is that even though there's a lot of commentary about stuff like art not being on-chain, no matter what, you can still prove that you own it. Even if these other sources and these infrastructure places go down, you can still prove that you own that digital photograph and that digital image with information that's stored on a chain. And really at that point it's your job when you buy a $10,000 piece of art that's not stored on-chain, for you to also put it on a thumb drive, maybe put it in a safe. If I go into a gallery and I buy a piece of art I'm not just going to shove it in a box, I'm going to be very careful with it. I'm going to put it on my wall.
Snowfro: (20:04)
And that responsibility lies within the NFT space as well. What he's alluding to with on-chain art is essentially all of the information or most of the information necessary to reproduce an image actually lives on the Ethereum blockchain which is beautiful but incredibly limiting as well. So in many cases, what I specialize in is generative art. Art Blocks is a platform that enables generative art to be created and managed on-chain. There's something really special to me about it being on-chain and to a lot of the community that participates but it's not the same. It's not like a one is better than the other. It's just two different technical qualities of NFTs that are to be discussed. Sorry if I totally lost you there. I don't know if that, does that kind of cover?
Les Borsai: (20:53)
I think that does. And the other thing is when we talk about chains, we're primarily talking about Ethereum right now. Even though we're seeing noise being made from Solana or Smart Chain, the Binance stuff. So can we talk about the differentiation with Ethereum? Obviously there's well culture that exists with Ethereum that drives a lot of these prices and how are other chains going to impact it and how important is Ethereum in the ecosystem?
Snowfro: (21:24)
Anybody else want to take that? I mean to me Ethereum is the gold standard. It's where I claimed my CryptoPunks. It's where I've been for the last four years. It does not mean that something not on Ethereum is not going to be successful. It's just Ethereum is the Christie's right of the blockchains. And so yeah, there's many other I'm sure auction houses.
Noah Davis: (21:49)
I think when good art starts appearing on Solana, that's going to change the conversation. But for right now, it's really just copy and paste what we already have on the Ethereum blockchain. So until that changes then this conversation is a little irrelevant. I think Solana is a great chain for DeFi. But right now for NFTs, as far as I can tell there's room for improvement.
G Money: (22:12)
So yeah. So as a collector one of the things that I always tell artists that are coming on-chain is like, drop it on Ethereum. There's a certain sense of gravitas with it. It's like branding. It's like if you're going to go on a side chain, you could be like the world's best artist but there is some sort of branding that goes around with it. If you're selling a piece for $10,000 or more, a couple of thousand dollars, do the hundred dollars amending costs necessarily matter? Not really in the long run.
Les Borsai: (22:42)
No, and for me, it's even something else. I take a look at DeFi and what they did in DeFi is they made markets. These are market makers and it's exactly what has happened with NFTs. So when we talk about someone buying the floor, because at the end of the day these are also financial instruments. That can't happen without the whale culture that exists in the Ethereum and I think a lot of the other chains don't have that. So can we speak about some of the whales and I won't call them out that might by the floor and we see the prices move. That's a good one for you.
G Money: (23:15)
You want to talk about people buying the floor?
Les Borsai: (23:18)
Yeah.
G Money: (23:18)
Okay. I mean it's just like a financial asset. It's like if you want to deploy money into a project, it's like you could buy something either at the really high end or you can buy something that's a floor, the cheapest ones. And those are generally more liquid. If you buy something at the really high end, when you do go to sell it, you might need an auction house to sell it. You won't get instant liquidity when you choose to sell it.
Les Borsai: (23:42)
I think I'm talking about buying the floor wide. Buying many pieces and it actually moves the price, sweeping the floor.
G Money: (23:48)
Yeah, it definitely happens. But I think the mindset is for sweeping the floor is I want to be able to, let's say if I want to get 10. I want to be able to sell them on the way up like kind of position size it and manage the risk. And I think that to me is a lot of the thought process behind sweeping floors.
Les Borsai: (24:10)
And in terms of that happening, obviously it creates value for the collectors. How does it impact the artist or does it?
G Money: (24:21)
Oh, the royalties. Every project has a different set of royalties but generally it's around somewhere between 5 and 10% for the most part. And so Justin can speak to that. When we spoke, I remember he came to me and he sold a hundred of his photos for half an ETH each. And they sold out in a week maybe.
Justin Aversano: (24:46)
Like three days.
G Money: (24:48)
In three days. And now you get, you have a 10% royalty?
Justin Aversano: (24:51)
10% royalty.
G Money: (24:53)
10% royalty. What was the last sale?
Justin Aversano: (24:54)
Like $2 million.
G Money: (24:57)
And that was a thousand dollars to original sale.
Justin Aversano: (25:01)
Yeah.
G Money: (25:02)
Yeah. So as an artist [crosstalk 00:25:05].
Justin Aversano: (25:04)
Royalties for me as an artist is the key most important part about NFTs in general because it's doing something that the traditional art world has lacked for living artists forever. And now the artists get to take their power back. And I think that's the most game changing aspect about... I guess the financial tools are great,, the liquidity is amazing. But I think as an artist, as a consumer and a user, an activist for it, it's like the royalties saved my life and changed my life and brought a whole new self-sustainability that I could only have dreamed of. But this new technology is literally the caretaker for artists to finally do their job and create art for humanity and not struggle or be in debt.
Justin Aversano: (25:52)
This allows you to propel and be abundant. And I think this is why I got into NFTs is simply because there was a royalty aspect and seeing it play out and receiving royalties changes your whole perspective. And once you understand that, you realize how important it is for not only in this moment with NFTs but for art moving forward forever. This is the new standard for artists signing contracts and smart contracts. It's like if you're not getting a royalty you don't do the job, you don't make the art.
Snowfro: (26:26)
There was a huge controversy about secondary market royalties in 2019 and 2020. And somebody just put it very simply. And I can't say this enough, NFTs are allowing artists to participate in their own success, period. That has never existed in the traditional art world. And that now exists on a weekly payout basis without having to have somebody like say, oh the check is in the plate. It literally is happening. And everybody in the space is being elevated as a result of it. We're not there yet where this happens automatically. This happens automatically with some platforms, not others, people are coming around. But the important part is that the precedent has been set and it's being abided to for some massive sales. So my best friend sold a NFT the other day for about $6 million. And he just turned around, he did it in a private sale. And he turned around and sent 5% to the artist which is the standard for Art Blocks. Two and a half percent to Art Blocks.
Snowfro: (27:29)
The platform is participating in its own success. The artist is participating in their own success. And what that does is it brings joy to the people selling the piece to a degree. Like it almost you can be proud, not shy or like awkward with the artist like oh man, I just sold your piece. I just sold your piece and I just sent you $300,000 because I sold your piece. And it's special. It sounds really crazy. I think there's no way that if you guys aren't totally ingrained in NFTs that this doesn't sound totally crazy. I think everything that we're saying has to sound crazy. Especially to anybody that's educated. And I mean it is, I think the more educated you are, the harder it is to just kind of really want to understand what's happening here. But I just encourage people just to take a step back and understand that everything that you've learned about community and art and intuition is changing here. And give it a chance and give it a shot because it's really special on so many different levels.
Noah Davis: (28:33)
I really want to say. Oh, I'm just going to say for the record, I'm all for it. For artists resale I think it's very much overdue. And probably the traditional art world needs to give artists a lot more credit than they normally do. I mean we wouldn't exist if it weren't for artists. So the idea that artists don't deserve to participate in their success is the idea that they weren't already participating in their success is really upsetting to me. That's part of why I gravitated towards NFTs because this stuff, I feel like there's a utopian edge to everything that we're talking about, a utopian capability or a possibility. And if I can help to push it forward then I'm all for that.
Snowfro: (29:15)
When Christie's secondary market royalties.
Noah Davis: (29:18)
So-
Snowfro: (29:18)
I say that jokingly. I spoke to Marcella who was actually going to manually pay out to the into the artists [crosstalk 00:29:25].
Noah Davis: (29:25)
Yeah. So this is the new paradigm. My clients are not going to great lengths to avoid compensating the artist. They are going to great lengths to compensate them. To do the thing that people used to try to not do.
Les Borsai: (29:39)
So innovations often have kind of pushed back from traditional infrastructures. I read something that [inaudible 00:29:47] had put out being kind of vehemently against NFTs.
Noah Davis: (29:50)
I used to intern there.
Les Borsai: (29:51)
What's that?
Noah Davis: (29:52)
I used to intern at Larry's shop.
Les Borsai: (29:54)
So the question is, well you probably got a call from Larry. How do you balance the innovations that you want to do and the way it moves forward when you're getting push back from these galleries that have the biggest artists in the world?
Noah Davis: (30:09)
Controversial, maybe hot take. But I think that those galleries that run the world are probably going to not run the world soon. And the people who will run the world have the mindset that GMoney was describing. My entree, my accidental entree to NFTs was also Fortnite. And I ended up in this position where I'm trying to explain the appeal of NFTs to the old guard frequently given I'm a specialist at Christie's. I was recently giving a talk in Aspen to people who had never heard of NFTs before, trying to wrap their mind around it. And I used the Fortnite example. And the guy I was engaging with the audience in the Q and A was like, oh so this is something that like kids are into right. And he said in a really kind of cynical way. And I said, yeah and do you know what kids turn into right? And there was this really awkward moment where he's like, oh yeah. So they're going to want this stuff. This is what people want going forward.
Les Borsai: (31:05)
We hear a lot about it being a bubble. We've seen a pull back over the last handful of days. What do you say to people who say it's a bubble? Pri, why don't you?
Priyanka Desai: (31:16)
Yeah, that's a good question. I firmly disagree. I feel like we're just kind of going. Of course, I'm a bit biased here. Flamingo as a community it's right now 67 people. We constantly are getting emails and individuals wanting to join this collective of people that are collecting NFTs. There's actually several DAOs that are spinning out of Flamingo. Some of the membership is overlapping but it's really to harness certain subcategories of NFTs. So for example, we have one that's going to be focused on the metaverse and buying digital land and building up the digital land, almost like a virtual real estate collective if you will. We have something that's in the gaming space, there's these games that are kind of dubbed play or earn. And so you play them and can earn real money for playing these games.
Priyanka Desai: (32:12)
And it's definitely mobilizing people in developing countries and all over the world. So setting up a guild for that. We talked about possibly shared ownership over a specific NFT. There's this alien punk that we have which we actually purchased back in January and are thinking about almost giving that to the community through a DAO structure where they can kind of decide the fate of this NFT and decide like whether or not it should be a podcaster or like a real character in the metaverse. And so thinking about beyond just collecting NFTs and it is a bubble is I guess in my view, a little bit simplistic just because there's so much energy around this community that we discussed. And there's so many more innovations happening around specific NFTs and NFT sub categories.
Priyanka Desai: (33:09)
I mean every single week on crypto Twitter or through Flamingo DAO I'm hearing about a new, incredible NFT. And so I think people are thinking really critically about this. For example I mean it's really still a pretty young, I guess as far as I mean the technology itself isn't that new, I guess it's been around for a couple of years. But as far as the mainstream institutional interest in NFTs through the auction houses and elsewhere, I think we're really just getting going. So yeah, it could be like a short-term. And there's a lot of it's commemorative to the price of ETH at a given moment. So some people might want to be liquid. They see the price of ETH going up so they're like, well, let me sell an NFT right now. And that drops the floor price for a couple NFTs. So there's some mechanic between the price of ETH and the price of an NFT. Oftentimes sometimes that doesn't affect certain collectibles. I think yeah.
Les Borsai: (34:15)
Anyone else want to touch on the bubble?
G Money: (34:17)
Yeah. To build on what PRI said is I agree. I think when price action escalates quickly, it's because there's a good narrative there. It's because people are getting excited. But more so than that it's like when people tell me, oh this is a bubble or whatever. To me, the way I look at the world is everything's in a bubble right now. I can make a case the S&P 500 is in a bubble. So to me, when I take a look at NFTs and I take a look at like every asset class and as an asset allocator. As somebody that positions my money for myself, of course I want to belong in NFTs because NFT has given me the most convexity on the upside. To me, being long, Art Blocks being long a path is the same exact trade as being long the S&P 500. But if I'm right, I'm going to get paid better because there's only a limited amount of quantity. There's a much smaller market. But to me it's like to people saying that it's in a bubble, you can thank your central bankers.
Les Borsai: (35:24)
Okay. So we've got about a little more than 20 minutes left. I wanted to open it up to questions because I'm sure there are some. I don't know if there's a mic out there. If not, just stand up and ask.
Speaker 7: (35:42)
[inaudible 00:35:42].
Noah Davis: (35:42)
Oh I have a funny answer to that one. I got a cold email from the IRS like karen@theirs.gov during the Beeple sale. But I just forwarded it to the lawyers so I don't know. But they're definitely interested. That's what the email said, we are interested in NFTs.
Les Borsai: (36:01)
Yeah, after the Beeple sell I'm sure.
Noah Davis: (36:03)
Yeah, right. During. Yeah, during the bidding. When the bidding was like at 13 million I think it was when I got that email.
Les Borsai: (36:08)
Wow. Anyone else want to touch on the tax question or should we move?
G Money: (36:12)
I mean, I'm based out of Puerto Rico so.
Snowfro: (36:17)
I should be out of Puerto Rico too I guess. The tax question is going to kind of overlap with the KYC question as well and kind of people revealing who they are. There's this kind of theme in crypto where there's a relative anonymity for three, four years. Three years I was this green CryptoPunk went by Snowfro. Now my name is out there and I feel like I can act like a normal human. But I miss very much my internet persona. But yeah, there's a lot of tax implications. There's some things that are actually pretty wild. Like for example in some countries there's a maximum to how much you can donate to charity. And so with for example, with our blogs, we are cognizant of kind of how intense things have been with the platform and are helping artists divert money to charity.
Snowfro: (37:08)
So we're a nine month old organization that has facilitated $28 million to charitable contributions in the last nine months. And what that means is that the artists might be, this is stuff that's actually breaking stuff. The artists might receive $3 million to give because they made $15 million in three minutes on a [inaudible 00:37:30]. But there's a maximum amount of contributions that they can make without actually having to be taxed for it. And so they're actually being taxed on the amount of money that they were going to give to charity. In some countries they're accountants, governments are asking for letters saying, where is this money coming from? It just seems like such an absurd amount of money. And there's some really serious tax implications kind of involved there because if they can't get an accountant because the accountant doesn't want to do the work because they don't have a really legitimate way of proving who made this purchase.
Snowfro: (38:00)
And in the crypto space nobody knows who made the purchase. It's just a bunch of numbers. There's some kind of concern there. And then finally, once you get into a point where you're regularly selling something for a pretty big chunk of money, the IRS says, I don't really care if it's crypto or not, we want to know who these buyers are. And so for tax implications and also just KYC implications. So it's all very, very, as a platform scary. But we have incredible regulators, people that come from regulation that we get to work with on a regular basis and consult with. And we're just going to be proactive. That's the best that can do. We can't actually take any measures because we don't know what those measures are.
Snowfro: (38:39)
The clarity is not there. So we're just being as proactive as we possibly can. And as transparent as we possibly can in anticipation of the government kind of coming in and saying, hey, we need more, we need more information. And I think in a year, just a year from now in this conference, there will be a much more direct answer. And I think the conversation, like core panel could exist specifically on taxation principles in the NFT.
Les Borsai: (39:07)
What about the regulatory concerns you just brought up? When we look at tokenization that's clearly security. Do you have any regulatory concerns at all being a platform?
Snowfro: (39:17)
We don't have regulatory concerns in terms of securities because we are, I mean as weird as it is, we are just selling art. But we are starting to get to a point in dollar value of per initial sales where it does start becoming a little bit more scary. So again, we're just going to be very proactive and ultimately KYCing inside the crypto space is like that one, just like you just don't do it.
Snowfro: (39:40)
But if we're forced to do it, we're going to do it. I mean I'm not shutting down Art Blocks because of some dogma of everybody having to be anonymous, I'm not. If we lose 80% of our market, we lose 80% of our market but we're going to comply because we think we're doing something that will transcend crypto. That's our target. I get to talk about that all the time. And to transcend crypto if it's required to KYC and for people to know who they are. Then that's what's going to be required. But we're not just going to jump into doing it for fun. I don't want people's data. I don't want to be responsible for anybody's information as long as I possibly can avoid it.
Priyanka Desai: (40:13)
And I would just like to add on the DAO side. With Flamingo, everything is really compliant. We make sure everything's above board. So on the KYC side, on the tax side, it is a limited liability company based in the US. Because it is for-profit, everyone has to be accredited. We get all the proper requisite information. Just mailed the annual KY1s last week. So in some sense, joining a DAO could mutualize some of those concerns which is great.
Les Borsai: (40:43)
I actually didn't know you did all that. So that's-
Priyanka Desai: (40:46)
Yeah, it's fun.
Les Borsai: (40:47)
Oh, there you go.
Noah Davis: (41:00)
I sold Beeple and I also sold Warhol like a month afterwards. So it already happened. But I loved the Beeple sale, it was really fun. I thought it was an incredible price and it sent a message to the world that what artists are doing in NFTs and virtual art is meaningful and valuable. But we already did Warhol. Damien Hirst has a collection of NFTs called The Currency. Tom Sachs has a really successful collection of NFTs, his Rockets. So we're already seeing that in real time.
Les Borsai: (41:33)
Yeah, I flew out here for the Rocket launch. It was fun. The global appeal is something that also really kind of creates impact around the sales. I mean are we seeing, when we list a Beeple versus a Warhol for instance. You're having a wider appeal with the Beeple right? Just based on the way it's been brought up and presented in the marketplace? That's actually a question.
Noah Davis: (41:55)
So the Beeple sale very much spoke to a specific new audience, new to Christie's audience. It's actually a very established and sophisticated audience in and of itself which is why I've just dove into this. But for Beeple we had more than 40 bidders place bids, something like 48 or 49. And there were 20 bidders above a million dollars which is amazing. But only three of those 40 plus bidders were previously known to Christie's. So everyone else is brand new. That kind of shift is just insane. We never see those numbers in any category ever. And especially for a nearly $7 million purchase is just kind of staggering.
Noah Davis: (42:38)
But with Warhol, when we did the Andy Warhol machine made NFTs, we did see more engagement from the traditional fine art world. Three of the five lots in that sale went to established collections. Two went to new NFT crypto collectors. But three went to people we've done business with previously. So we went from three people placing bids out of 50 in Beeple to three out of five of the lots in the Warhol sale going to the old world blue chip fine art collecting scene. So yeah, you're seeing a shift in real time too.
Les Borsai: (43:17)
Go ahead. And boy I can answer that one. So my perception on that is we just haven't got there yet with music. And when you have labels and publishers as rights holders, it's incredibly difficult to license content. So that puts musicians in a place of either owning the content outright so they can do things with it in terms of NFTs or do something that isn't music related. There's a whole bunch of complexity around that. And I also think the audience and you guys might disagree, they're not a hundred percent focused just on pure music NFTs right now. I think when we get into sharding and creating these other initiatives around those music NFTs, we'll see kind of more of a demand.
Noah Davis: (44:15)
I mean I think we'll also see a lot with 3LAU, with Royal, the platform that he's developed. So I don't know if you're familiar with 3LAU and, and his album sale by NFT but he also recently just announced the creation of a platform called Royal which will allow artists to basically sell futures for their careers. If you love an artist, I like to use the example of Nirvana because when Nirvana became super popular a lot of their initial fans resented that and they were seen as sellouts. But Royal what they're proposing is to allow the audience to also share in an artist success. So instead of leaving the concert and buying a t-shirt at the merch booth, you can buy a token. And based on when you buy that token, you potentially can profit off of the artist's success. So that's, to my understanding part of what 3LAU is trying to do with Royal. And I think it's one of the more innovative and exciting projects in the music NFT space so far.
Les Borsai: (45:14)
I think my kind of point on that is then you start to see the regulatory stuff kick in and that's going to be complicated. And the thing that's so great about 3LAU and RAC and all those guys is they were a part of the crypto community kind of way before and it shows the impact of being part of the community. And I think back to your question, when you have an artist that comes in to try to do an NFT. And I don't know about you guys, but when the NFTs first start really hitting, every artist in the world want to do one of these things because everyone wants to make a million bucks for a song. And I think that's where some of the problems are going to come in.
G Money: (46:45)
So thank you for the question. I think that's really relevant compared to stuff that's been going on over the last couple of days. I don't have anything against NFTs on other side chains. The thing that I've seen with Solana projects for the most part, I think Solana Monkey Business is great. I love the artwork. But what I've seen is a lot of copycat projects like Solana Punks, Bored Ape Punks, I don't know what they're called.
Snowfro: (47:12)
Solana Apes.
G Money: (47:13)
Yeah, whatever they're called. That's just copy and paste. So to me, that kind of like unless people within the Solana ecosystem can kind of self-regulate themselves. I'll use Tezos as a great example. There's a lot of great art on Tezos. There's a big collectors community going around Tezos because artists are going there, high-quality artists.
G Money: (47:34)
I think the advantages that Solana has is obviously backed by SPF. You have your On Labs which is going to make stuff much easier. But I think you need to bring the talent. And so to me, it's like I'm by no means a maxi for ETH NFTs but as a collector before. I wasn't first with punks. I bought punks a year ago. But to me it's like what do I see with regards to creativity and community and stuff like that? Interestingly enough I think I reached out to Monkey DAO literally yesterday or the day before because I'm interested in it. I haven't made a decision yet but it's interesting.
Les Borsai: (48:18)
I think the other thing we should touch on is the fact that when ETH launched, consensus did a really good job creating development on top of the chain. You have such a kind of outweighed proportion in terms of just development on Solana versus something like ETH. So those other guys got to catch up before they see the scale.
Snowfro: (48:40)
I also-
Priyanka Desai: (48:41)
Yeah.
Snowfro: (48:41)
Oh go.
Priyanka Desai: (48:43)
No, no I was just going to totally agree. I think the answer to the question, what we were touching on earlier about ETH. It's just the developer community there, the solidity language, everything there is just so far along in development that that's I think what we were noting towards more before. Solana, kind of agree that copy and paste thing is kind of. But yeah, Tezos is, I felt like we touched on that but the digital art community on Tezos I think is brilliant. And I think there's actually several people buying on Tezos since there's a lot of similar artists, both on EVE and Tezos. And Tezos is a bit less so it's almost like an arbitrage opportunity for a few people as well. So yeah, I think it's ETH is a starting point for sure.
Snowfro: (49:29)
I just want to like-
Noah Davis: (49:29)
Sorry for hurting Solana.
Snowfro: (49:30)
No I don't think hurting Solana shouldn't even be relevant here. Ethereum has been around for this many years and I think that they have to prove themselves. And so I am very much an ETH maximalist. However, anybody in this space that can be closed off to innovation of any sort is completely counterproductive to the reason why we have had success in this space. So there's a couple of things. Number one, Solana has trade-offs in terms of decentralization which will eventually be addressed as the chain grows but that is a very real trade off. Ethereum is significantly more decentralized than Solana at the time being. In exchange for that, you get millions of transactions per second, that's fantastic. On Art Blocks, our problem is not trying to be able to handle millions of transactions per se.
Snowfro: (50:21)
We are however interested in potentially having the minting of an Art Blocks piece happen on Solana while provenance exist on Ethereum layer one. So we believe at least that each blockchain will have a really good solid use case. And we will use each blockchain for each specific use case that it offers. And I think the friction is so high right now for new people entering this space and understanding what a gas fee is and purchasing something. And it costs you more than a meal just to pay the network to process your transaction because that's what it's like on Ethereum. And that's not what it's like on Solana. But that friction is already really high.
Snowfro: (51:04)
And understanding MetaMask, which is the bugin that everybody uses to operate on Ethereum is really high. And then asking that person that has decided to dive in to also try to wrap their brain around a whole another blockchain and potentially another extension and understanding that they're transacting on it's just too much. So Solana's going to have to prove itself. I believe in Solana, I have a couple of projects that I'd like to see happen on Solana. Right now there's a knockoff of my own project called Soul Squiggles that literally is copying my code and generating 10,000 my piece of art on Solana. And it's literally like every project on Solana right now that has come across my desk has been a knockoff. And I know that they're not all like that but it just feels.
Les Borsai: (51:54)
Well having said that, Noah, in the traditional art world, you can look at Warhol than anyone else. I mean it's the greatest compliments of derivative work from an artist. So I you can argue that CryptoPunks having so many derivative works elevated CryptoPunks.
Snowfro: (52:11)
Totally agree.
Noah Davis: (52:12)
100% yeah.
Snowfro: (52:14)
It's the derivative difference versus derivative and straight up just like carbon copy. That's where it kind of feels, I feel kind of naked on Solana. Just because my project is out there without my signature.
Noah Davis: (52:23)
It also is not using appropriation as a conceptual technique. It's really just about securing the bag and that is not cool.
Snowfro: (52:36)
Solana will be, there's internal conversations and we believe that Solana will be one of very few competing layer one blockchains that will be around in 5 years and 10 years. So I have nothing against Solana but it needs to work its way up. Much work has gone into Ethereum for another one to come in and within the first year start saying, well, what about me? No, let us get there. And that's my stance.
Noah Davis: (52:59)
It could be the Pepsi to the Coke. There will be a Pepsi.
Snowfro: (53:01)
Oh yeah, yeah There will.
Les Borsai: (53:02)
Go ahead.
G Money: (53:40)
So I'll take that. I think it's going to happen slowly over time and then suddenly. That's something we always use slowly then suddenly. I think the real advantage to that is to having stuff on chain. And every time we have a massive draw down in crypto, I love it because it just makes us more anti-fragile. In May, we had a 50% draw down and nobody needed to get bailed out. So what if I had mortgage backed securities on-chain and they're collateralized and everything. You have your counterparties and all this stuff. And then there's some seismic event that happens and it causes a massive draw down and you don't need central bankers coming in. So that's to me is the advantage you're not re-hypothecating a collateral. You don't necessarily have counterparty risk as much cause it's on-chain.
G Money: (54:27)
So to me, that is like the best advantage of all. We just had 20 or 30% draw down last weekend. Nobody needed to get bailed out. People that took on a ton of leverage, for sure. They lost a ton of money. But for the most part if you're operating well in the system you don't have to worry about losing your money. Which is kind of the essence of where crypto came from. Satoshi came up with Bitcoin from the depths of the financial crisis. So to me bringing these assets on-chain is just the perfect compliment to that.
Snowfro: (55:17)
Oh man. Oh yes. Oh my God.
G Money: (55:35)
He has good taste. He has great taste.
Speaker 8: (55:37)
[inaudible 00:55:37].
Snowfro: (55:37)
It's just growing pains. This is really happening fast for everybody here. It's simply, there's an oversubscribing towards what we have to offer and there's a limit to what we can offer. And there's more people that want something than what we have to offer. And our goal for example at Art Blocks long term is to have open projects ready for minting at any given moment in time. And we just can't get there right now because things are completely bad shit crazy. But we will because this is also, I don't think we're in a bubble but we're also in an unsustainable.
Snowfro: (56:42)
Somebody said the other day, if Art Blocks continued at its pace, it would be 10% of the entire worldwide art market. Like no, just like Solana can't have authority in decentralization in its first year, Art Blocks cannot have authority in the art world in its first year. And so it's just going to have to calm down a little bit. We're all just kind of waiting for that to happen. Really excited for it to calm down a little bit. And I promise you that there will be the ability to mint things on Art Blocks and other NFT platforms for 50 bucks, a hundred bucks in the next few months.
Noah Davis: (57:15)
Well you guys are also addressing this in real time too with like the Dutch auction style that you've rolled out more recently. So I mean that's the...
Snowfro: (57:24)
It's completely crazy. Oh I would disagree. I think it's very much doing what it's especially when there's not too much oversubscription. So last week both the attractions ended up with the very base price. That's exactly what we need. And I'm pretty. Not on the curated, but they also didn't drop. They didn't sell for $30,000 a piece either. But yeah no, I think we're on the right track and there's just a lot going on and a lot of things to address.
Noah Davis: (57:51)
And if the gas fees are high, it means that people want to use the network. So I think it's a good problem to have. It's the best problem you can have because it means there are tons of people knocking at the door.
Snowfro: (58:02)
For now but there was four months where it was not. So that's the thing. We just have to kind of be patient. A lot of people are coming in and be like, I can't participate. And I'm like, just wait a little bit because it is, you're right. Right now I don't introduce anybody new to Art Blocks right now. Whereas for four months I literally, anytime I was like check this out, for 200 bucks you can have this piece. I don't do it. I'm the founder so I'm not buying at these prices and I'm the founder. So we just kind of have to take a step back and understand that it is going to go back to normalcy. And if it doesn't then we're onto something really, really, really crazy here too.
Les Borsai: (58:35)
But it think that's also one of the cool things is I'm an advisor to an NFT thing. You guys are all owners of companies. And when a drop happens, often we don't get anything. There's been plenty of times where we couldn't get it. On the gas fees it's like there's enough demand with a lot of the hotter projects that the gas fees don't even matter. People are like pumping the gas to get the art.
G Money: (59:04)
Yeah I think with regards to user adoption it's like you just need a more consumer friendly thing. If you take a look at probably some of the more successful stuff in the space that brought in let's say normal people. You're looking at NBA Top Shot, Nifty Gateway. What do they have? They have a great user experience. Just because we don't have that just yet doesn't mean we won't get there. The beautiful thing is we're going to get there.
Snowfro: (59:29)
We will get there.
Les Borsai: (59:31)
I think we're going to have to wrap it up. But we want to thank SALT and the panel. Go ahead, Justin. Sorry.
Justin Aversano: (59:35)
Before we wrap it up I do want to say something and then we can clap. I think it is important what you said about assessability and education and onboarding. I think we're so locked up in our echo chambers it's like second nature at this point. But to step back into the place of how do we create accessibility for people who can't afford a thousand dollars Yesware. I think the way to do that is to create experiences and proof of attendance. Things one of us should have created a proof of attendance token and gave everyone here in NFT like the Los Robbie's. And I think that's a great start in getting people a wealth redistribution of some sort through NFTs. And I think as we keep having conferences and events and whatnot, we'll have those NFTs to be given out.
Justin Aversano: (01:00:26)
And I think that's where you could start. And maybe it's our responsibility to onboard and educate you all as well as creating the dialogue of what your feedback is like. Hey, how do we get involved and we want to. And I think it's how do we make it more accessible where the price isn't only for the 1%? And on top of that, I think I would love to end this conference with a positive note in saying I think NFTs and having a non-profit organization will create a huge disruption in how nonprofits will start fundraisings as an NFT as a tool. Just from my own experience with SaveArtSpace and seeing how we could raise like $500,000 in three days when it took us the past five years even accomplished that is a testament to what NFTs can achieve. If you have the right audience that will back you and we don't have to rely on donors anymore but just projects we create that create sustainable in perpetuity value. I think we'll start seeing a lot more nonprofits creating a wallet so they could take our crypto money.
Les Borsai: (01:01:33)
I want to thank SALT, Anthony and John for letting us do this. And thank the panelists.