BIP-19: Follow-up for Treasury-Held Genesis Artworks

choobie

Summary

In light of the successful OTC with Moderats, BIP-18 requires a follow up on how we handle our treasury-owned Genesis Period artworks. With the BIP-18 Snapshot passing, the DAO must retain 6 Genesis artworks in the treasury until a future proposal removes the clause.

With more collectors having declared interest and with prior discussion already taking place throughout BIP-18, we should seek to have a final version of this BIP on Snapshot by Thursday, 19 January at 21:00UTC with the standard 3 day voting interval.

This BIP has five points to it:

Transfer treasury-owned artworks from Treasury to botto.eth
List 4 treasury-owned artworks on SuperRare at a 10ETH Reserve
Allow a collector to kickstart a 24 hour auction after meeting the 10ETH reserve for a remaining treasury-owned Genesis Artwork
Also allow a collector and the DAO to transact OTC for 15ETH buy now price without auction per remaining treasury-owned Genesis Artwork
100% goes to the treasury for now with later distribution occurring in the 3rd period according to the 3rd period’s revenue model (currently unspecified).

Rationale

In light of the successful OTC with ModeratsArt, BIP-18 requires a follow up on how we handle our treasury-owned Genesis Period artworks.

Four Artworks Remain

With the BIP-18 Snapshot passing, the DAO must retain 6 Genesis artworks in the treasury for an undetermined period. Naturally, this means there are four Genesis artworks that are available to prospective collectors.

Based on feedback from BIP-18, it is clear that the DAO is undecided on the immediate and long term valuations of these remaining four artworks, understandably disliking the idea of conducting future OTC transactions for a fixed sum of 10ETH. For additional context, this sum acted as our reserve price for Genesis Artworks in Botto’s First Period, highlighting the DAO’s conviction that we were in no desperate position to part ways with any of Botto’s Genesis creations. This stance is likely reinforced after the recent OTC transactions by Moderats.

Tackling A Visibility Issue

The availability of treasury-owned Genesis Artworks to collectors is currently obfuscated, with the artworks not having a listed price, no method to bring it to auction, and the owner being labelled as ‘anonymous’ directly on SuperRare’s Frontend.

A straightforward course of action to take would be to transfer these back to the botto.eth address (labelled @bottoproject on SuperRare) to clarify to prospects that these treasury-owned artworks are unsold and available. The benefits of this step would be obvious.

A second course of action that the DAO could take would be to list four of these artworks at random with a 10ETH 24h reserve auction, directly on SuperRare. Every two weeks, four different artworks would be listed, with the original four listings removed. This ensures that the DAO can never be ‘frontrun’ and exposed to retaining less than 6 Botto Genesis Period artworks at any given time, and gives stronger visibility to the availability of Botto’s Genesis Artworks.

A collector bidding 10ETH in this instance would result in the kickstart of a 24 hour reserve auction, allowing the collector to conduct business with the DAO swiftly and without drawn out negotiations. This benefits collector experience and allows the DAO to conduct price discovery for artworks.

The rationale behind maintaining the 10ETH reserve for remaining Genesis artworks is twofold. First, the reserve had been set in the Genesis Period which all prospective collectors were required to follow during auction. Second, this 10ETH reserve does not misalign with existing Genesis collectors.

Finally, in the event that a collector wishes to acquire one or more Genesis Period artworks that are currently unlisted, this can be accommodated in a swift manner by removing the equivalent amount of currently listed artworks.

Allowing for OTC at a Premium

Collector conviction is an important momentum driver for Botto. A lot of collectors, today, are in some way connected with another. There is a network effect here that cannot be understated - ensuring growth of Botto’s collector base should always be top of mind. For this reason, it is proposed that we do not discard the idea of future OTC transactions.

Instead, it is proposed that the DAO may OTC at a 50% premium to the 10ETH reserve we have used in the past. This means any collector can acquire one (or more) of the Botto 1/1s at 15ETH, without having to enact a BIP and wait for the DAO to go through a voting process.

Rewards

Rightfully mentioned by one DAO member, staker and VP spending ‘tourism’ may be problematic when dispersing auction proceeds as active rewards. To mitigate this and discourage misaligned incentives, subsequent sales proceeds from the four Genesis Period artworks would be placed in the treasury, eyeing a distribution method that would be determined by Botto’s revenue model in the 3rd period (to be discussed).

Proposal Specification

Transfer treasury-owned artworks from Treasury to botto.eth
List 4 treasury-owned artworks on SuperRare for a 10ETH Reserve Auction
Rotate between 4 treasury-owned artworks per month for visibility purposes
If an artwork with declared interest is unlisted, allow the DAO to replace one of the existing Reserve Auction listings with the artwork with interest
Also allow a collector and the DAO to transact OTC for 15ETH per remaining treasury-owned Genesis Artwork
100% of proceeds from these four artworks would go to the treasury for now, with later distribution occurring in the 3rd period according to the 3rd period’s revenue model (currently unspecified).

Budget

n/a

Advantages

Having a streamlined manner of handling incoming offers on behalf of the DAO
A positive collector experience upon approaching the DAO
Offering a collector two routes to acquiring Botto Genesis artworks
BottoDAO still holds a minimum amount of Botto’s Genesis Period collection
Reward revenue can be determined at a later date by the DAO to mitigate bad actors

Disadvantages

While the DAO would still hold 6 more Genesis Period artworks in its treasury, potential price appreciation in the four remaining Genesis artworks is the opportunity cost

CooperDaYungOG

I love most of the proposal.

I do not agree with the 15 ETH OTC implementation at this time. I don't think there needs to be any rush to move Genesis pieces from the treasury and a 50% premium for OTC removes the ability for new price discovery. This proposal should be used solely to achieve price discovery for Genesis works and to increase visibility and propagate Botto artwork into new hands. In this same vein, I would prefer that we restrict Genesis artworks to be auctioned one at a time for most efficient price discovery. Multiple artworks on auction at the same time would make it difficult for potential collectors to keep track and could risk extracting too much ETH in too short a time from potential collectors.

Successful artists spread out the sales of their 1/1 pieces - especially the monumental ones that bring acclaim, new price discovery and attention to the catalog of works. I believe Botto should be doing the same. Perhaps 4 Genesis artworks can be transferred to botto.eth at a time, but I believe that as soon as one has met the reserve for auction, the others should be unlisted to give ample time between auctions.

Happy to discuss this further at any time.

hudsonsims

thomahawk69 CooperDaYungOG

I don’t fully disagree with these points, but I think they need to be balanced out with some other perspectives.

As mentioned in the previous BIP discussion, these are works that went previously unsold just a few weeks ago. There is momentum right now, validated by explicit interest from several collectors for some of the unsold fragments. This interest is around the stated prices above, for specific pieces, and some are open to the auction process.

I understand that there’s a risk of saturation having 4 works up at once, and possibly missed price discovery/ETH down the road. However, I’m confident in a few things: these will sell fast, and there will be some auction action to allow for price discovery.

This gives us a few things: a big sale of Botto pieces means another momentum boost in volume that is VERY hard to achieve with the current output rate from Botto. This can translate into hotter interest for the new pieces coming out, which are of an incredible quality and achieve prices not far off from Genesis, which will also be helped by the price discovery we do get.

Spreading it out and increasing prices has its own risks. First is that this run up is not very well established, we could see market tank tomorrow and momentum dry up. Getting the momentum of these sales would not only lock in this revenue, but also buffer us against another market dip (in collector interest and cash for the year). Second, upping the prices over time is tempting, but I think ultimately comes off as taking an extractive stance with collectors, which isn't a great look vs. the significant benefit from the signal and support of more collectors with conviction.

TLDR for me:

15 is a good premium over what we just did with Moderats,
we will very likely get some auction action for price discovery,
we lock in revenue that can translate to greater momentum for new pieces or at least a buffer against a future dip,
we will still have 6 left in the treasury. If momentum continues, we could do a single special auction between periods when no other sale is happening and see the dividends of this move down the road.

thomahawk69

Agree on every point of this proposal except the 15ETH "Buy Now" price. Instead of listing it right way - can the DAO keep it open ended? So that if someone is indeed interested in buying at 15ETH in the future - certain scenarios must be met based on a predetermined schedule? Like if the 4 remaining pieces are unsold - the first person to offer 15 ETH (via private message to the Botto team) will automatically get accepted and buy pass the potential 24 hour auction if offered only for 10ETH. And when there's only 3 pieces left, the "Buy Now" price is now 17 ETH (or something). And when there's 2 pieces left (20 ETH) and with 1 piece left, the "Buy Now" price can now be set at 25 ETH.

This way it's more dynamic and allows for price discovery in the future as the remaining unsold Genesis supply gets smaller.

choobie

hudsonsims This gives us a few things: a big sale of Botto pieces means another momentum boost in volume that is VERY hard to achieve with the current output rate from Botto.

hudsonsims Spreading it out and increasing prices has its own risks. First is that this run up is not very well established, we could see market tank tomorrow and momentum dry up.

hudsonsims Second, upping the prices over time is tempting, but I think ultimately comes off as taking an extractive stance with collectors, which isn't a great look

+1, I share this stance as well.

Also need to add that a lot of momentum of Botto in the past has been through existing collectors. I think while we value these artworks, expanding our collector base now rather than waiting down the line is a good move. We'll still have 6 treasury-held artworks to do that with, assuming the four we'd list do sell in the near future.

choobie

This was moved to Snapshot: https://snapshot.org/#/botto.eth/proposal/0xa93c096758f9114738c7fa4f540bd25044375c511aa5998a828c64d8b872beff