Christie’s has revealed that it made nearly $150 million in revenue from NFT sales this year.
The auction house’s total global sales this year were strong at $7.1 billion.
Christie’s foray into the world of NFTs likely contributed to the wave of enthusiasm around NFTs in 2021.
Share this article
URL Copied
World-famous auction house Christie’s has made nearly $150 million in revenue this year from NFTs alone.
A Novel Moneymaker
Christie’s, the British auction house founded in 1766,announcedtoday that it had sold close to $150 million worth of NFTs in 2021 “after launching this new market first on the global auction stage.”
This represents a rather small portion of Christie’s total sales this year, which itprojectsto be $7.1 billion globally; total sales for the auction house were roughly 54% higher than they were last year. These are Christie’s highest numbers in the last five years.
Traditional art still dominated Christie’s sales this year: two of the mostvaluable workssold at auction in 2021 were a Picasso at $103.4 million and a Basquiat for $93.1 million. However, the same May evening that the Basquiat sold, nine CryptoPunks—arguably the most famous NFT collection in the world—soldat auction for a total of $16.9 million.
Beeple was easily the most valuable NFT artist represented in the auction house’s catalog this year. In March, he sold his “Everydays: The First 5,000 Days” NFT at Christie’s for $69.34 million. This sale arguably kicked off the NFT craze that characterized this year.
In November, Christie’s sold another one of Beeple’s works, called “HUMAN ONE,” a 7-foot-tall astronaut sculpture that was paired with an NFT, for just under $29 million. That same month, Christie’s and OpenSea partnered to sell a whole collection of NFTs.
Total sales volume for the entire NFT market has beenestimatedat $12 billion in 2021, which might make the $150 million done at Christie’s seem rather small in comparison. However, it seems likely that Christie’s entrenched position in the traditional art world helped to elevate NFT art to new level of respectability.
Disclosure: At the time of writing, the author of this piece owned ETH and several other cryptocurrencies.
Share this article
URL Copied
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
Beeple’s NFT-Paired Astronaut Sculpture Sells for $29M at Christ…
Towards the end of the auction, six-figure bids started to feel boring and tame. Beeple Gets Real Last night, one of the most valuable living artists in art auction history,…
Beeple NFT Now World’s 3rd Most Expensive Auctioned Piece by Living …
Digital art superstar: Beeple’s “Everydays: The First 5,000 Days” has sold for $69.34 million in a landmark moment for the NFT space. Christie’s Hosts Landmark NFT Auction Beeple’s “Everydays: The…
Metapurse Founder Bought Beeple’s $69.34 Million NFT
The founder of the world’s biggest NFT fund bought Beeple’s landmark piece. They paid 42,329 ETH for the sale. MetaKovan Wins Beeple Bidding War MetaKovan, the pseudonymous founder of the…
What is a Crypto Airdrop: Why Projects Airdrop Crypto
Crypto airdrops occur when new tokens are freely distributed to different wallets in order to drive initial growth and build a community. They represent a popular marketing tactic that new projects use to spread…
Mobile phone telecommunications network services provider Vodafone is making its entry into the Non-Fungible Token (NFT) ecosystem by auctioning the world’s first Short Message Service (SMS), which reads, “Merry Christmas.”
Romanian news agency Ziarul Financiar reported that the first SMS was sent some 29 years ago, on December 3, 1992. It will be up for sale on December 21 at the Aguttes auction house in France.
The 15-characters SMS will be sold as a standalone piece marked one of the most important milestone innovations in the world and seven years after this first message was delivered to Vodafone employee, Richard Jarvis at the company’s Christmas party, SMS expanded to other networks beyond the Vodafone network.
The successful buyer can make payments using Ethereum (ETH) and gain access to a detailed and unique replica of the original communication protocol that sent the world’s first SMS. Per the report, proceeds from the auction will be donated to the United Nations High Commissioner for Refugees (UNHCR), a gesture that is aimed at supporting the forcibly displaced persons.
The growth of NFTs in the past year has stunned many in terms of numbers and the global brands that are now wading into the space. While the most expensive NFT sale to date remains Beeple’s ‘Everydays: The First 5000 Days’ collage which sold for $69.3 million in ETH, a number of expensive standalone pieces have been sold in the past year.
A common trend in the space is the launch of NFT collections with Bored Ape Yacht Club (BAYC), arguably the most iconic that was introduced into the space this year. Beyond the hype that NFTs have gathered in recent times, many advocates of this new technology believe the use cases are yet to be deciphered and express optimism for the future of the technology.
Mobile phone telecommunications network services provider Vodafone is making its entry into the Non-Fungible Token (NFT) ecosystem by auctioning the world’s first Short Message Service (SMS), which reads, “Merry Christmas.”
Romanian news agency Ziarul Financiar reported that the first SMS was sent some 29 years ago, on December 3, 1992. It will be up for sale on December 21 at the Aguttes auction house in France.
The 15-characters SMS will be sold as a standalone piece marked one of the most important milestone innovations in the world and seven years after this first message was delivered to Vodafone employee, Richard Jarvis at the company’s Christmas party, SMS expanded to other networks beyond the Vodafone network.
The successful buyer can make payments using Ethereum (ETH) and gain access to a detailed and unique replica of the original communication protocol that sent the world’s first SMS. Per the report, proceeds from the auction will be donated to the United Nations High Commissioner for Refugees (UNHCR), a gesture that is aimed at supporting the forcibly displaced persons.
The growth of NFTs in the past year has stunned many in terms of numbers and the global brands that are now wading into the space. While the most expensive NFT sale to date remains Beeple’s ‘Everydays: The First 5000 Days’ collage which sold for $69.3 million in ETH, a number of expensive standalone pieces have been sold in the past year.
A common trend in the space is the launch of NFT collections with Bored Ape Yacht Club (BAYC), arguably the most iconic that was introduced into the space this year. Beyond the hype that NFTs have gathered in recent times, many advocates of this new technology believe the use cases are yet to be deciphered and express optimism for the future of the technology.
British telco giant Vodafone has reportedly plans to auction the world’s first Short Message Service (SMS) in the form of a nonfungible token (NFT) on Dec. 21. The SMS, that reads “Merry Christmas”, was sent 29 years ago over the Vodafone network on Dec 3, 1992, and was received by Richard Jarvis, an employee at the time.
The historic 15 character-long SMS will be auctioned off as an NFT in a one-off sale conducted by the Aguttes Auction House in France, according to Romanian news outlet Ziarul Financiar.
By auctioning off the world’s first SMS in the form of NFT, Vodafone intends to redirect the earnings to the United Nations High Commissioner for Refugees (the UN Refugee Agency) for helping the forcibly displaced people.
Source: Ziarul Financiar
The advertisement banner above translates to “Merry Christmas. The world’s first SMS auctioned for charity as NFT”. Vodafone’s SMS NFT sale will take place this Tuesday on Dec. 21 via an online auction wherein the participants can place bids using Ethereum (ETH). The highest bidder will own exclusive ownership of the communication protocol that was used to transmit the world’s first SMS.
Adding to the SMS’ glory, it took nine years for other networks to have Vodafone’s ability to transmit and receive SMS. This move of minting the world’s first SMS is another example of NFT’s ability to tokenize and digitally preserve history.
Related:Adidas Originals to launch debut NFT collection
The NFT ecosystem has catalysed crypto’s mainstream adoption as corporations find its use cases within their existing business models. Just last week, sportswear manufacturer Adidas announced the launch of an “Into the Metaverse” NFT collection.
As Cointelegraph reported, the Adidas Originals NFT sale will be hosted on the company’s official website on Dec. 17 at a price of 0.2 ETH, approximately worth $810 at the time of writing.
Just days before Adidas’ entry, Nike too acquired a virtual sneakers and collectibles brand RTFKT, signaling a strong interest in the metaverse.
After celebrating its 20th anniversary in January, the free Internet encyclopedia Wikipedia continues making history by selling its first nonfungible token (NFT) via auction giant Christie’s.
On Dec. 15, Christie’s completed an auction of two Wikipedia-related objects directly from Wikipedia co-founder Jimmy Wales.
Titled The Birth of Wikipedia, the online sale included two lots, an NFT of Wikipedia’s first edit, which sold for $750,000, and a Strawberry iMac used by Wales to create Wikipedia, sold for $187,500.
Source: Christie’s
The NFT lot features the first message posted on Wikipedia by the site’s co-founder back in 2001, marking a unique moment in the history of the internet: Wales typed the words “Hello, World!” after launching the site on Jan. 15, 2001.
The NFT preserves the layout of the Wikipedia home page in 2001, based on the earliest surviving source code. The NFT also has a feature that allows the owner to edit the page, which can be reset with a timer to revert to its original state.
Christie’s senior specialist Peter Klarnet said that the auction’s result “underscores the burgeoning interest in the history of the internet among collectors.” According to the auction house, Wikipedia will use a part of the sale proceeds to support Wales’ alternative social media network pilot project WT.Social.
Related:Sotheby’s Metaverse announces latest and largest NFT charity auction
One of the world’s largest auction houses, Christie’s moved into the NFT industry in early 2021, announcing the auction of its first-ever “purely digital work of art” by digital artist Beeple in February. Beeple’s NFT piece “Everydays: The First 5000 Days” sold for more than $69 million in March, emerging as one of the world’s most expensive NFTs.
After announcing the launch of his “Genesis Collection” NFT auction, Ross Ulbricht, alleged founder of dark web marketplace Silk Road, has sold his first NFT for $6.2 million or 1,446 ETH at auction.
The auction kicked off at Art Basel Miami via the SuperRare platform. FreeRossDAO, the decentralized autonomous organization set up to help free Ulbricht from imprisonment, placed the winning bid. The FreeRossDAO website states that the DAO aims to “advance prison reform” and to “share Ross’s work with the world and give everyone a unique opportunity to own a piece of it.”
Ross Ulbricht’s “Perspective” $6.2M drawing from the “Ross Ulbricht Genesis Collection” of NFTs.
The first NFT sold, called “Perspective,” was drawn in prison using graphite pencil and is part of a 10-piece collection of writings and artworks made by Ulbrict throughout his life. The collection also includes an animated video made by audiovisual artist Levitate and with a voiceover by Ulbricht about his time in prison.
All proceeds raised from the “Genesis Collection” will go towards the Art4Giving fund, a donor-advised trust created by the FreeRossDao as a legal entity to fund new legal proceedings and raise awareness, according to the organization.
FreeRossDAO plans to fractionalize the NFT into ROSS governance tokens and distribute them pro-rata in return for donor contributions. ROSS holders will be able to vote on proposals and participate in the guidance of FreeRossDAO.
Ulbricht’s NFT ranks among the largest sales within the last 7 days, as recorded by NonFungible.
FreeRossDAO has won the auction for Ross Ulbricht’s first NFT collection with a $6.2 million bid.
The DAO hopes to free Ross Ulbricht, advance prison reform, and provide fractionalized ownership of Ulbricht’s work to the world.
Ulbricht is currently serving a double life plus 40 years prison sentence for creating the darknet marketplace Silk Road.
Share this article
URL Copied
The funds will be used to support the Free Ross campaign and help prisoners meet their families.
Ulbricht NFT Raises $6.2 Million
Ross Ulbricht just sold his first NFT collection for $6.2 million.
FreeRossDAO, an organization launched to acquire the digital collectibles, placed the winning bid after launching last week. Similar toConstitution DAO, which recently came close to acquiring a copy of the U.S. Constitution in a Sotheby’s auction, FreeRossDAO took contributions in ETH and pooled them in an effort to win the auction. FreeRossDAO’s mission was three-pronged: to free Ross Ulbricht, to “advance prison reform,” and to share Ulbricht’s work with the world while giving people an opportunity to own part of the work by fractionalizing the collection.
Ross Ulbricht gained notoriety for operating a darknet marketplace called Silk Road, which was primarily used for the sale of illegal drugs. Silk Road vendors routinely mailed drugs to customers in exchange for Bitcoin. The marketplace became hugely popular, generating9,519,664 Bitcoinin sales. Ulbricht, who operated under the alias “Dread Pirate Roberts,” launched Silk Road in 2011 at the age of 26 and oversaw the operation until it was shut down by the FBI in 2013. Ulbricht wasthen sentencedto a double life and 40-year sentence without possibility of parole.
Contributors to FreeRossDAO were promised ROSS tokens, which were planned to represent both governance rights and fractionalized ownership in the NFT collection. FreeRossDAO raised 1446 ETH and had 1390 ETH remaining after winning the auction; the remaining contributions will be sent to the FreeRossDAO treasury, which will be governed by contributors.
Notable contributors to FreeRossDAO included personal friends of Ulbricht and PleasrDAO, which seeded 240 ETH and vowed to continue contributing if FreeRossDAO was outbid in the auction.
Ulbricht expressed gratitude to those who had supported his NFT collection throughout the auction. “I’m so moved by what is going right now with the NFT auction,” hewrotein a Dec. 6 tweet. “I feel…acceptance, love, validation, many things. You humble me.”
Disclosure: At the time of writing, the author of this piece held ETH and several other cryptocurrencies.
Share this article
URL Copied
The information on or accessed through this website is obtained from independent sources we believe to be accurate and reliable, but Decentral Media, Inc. makes no representation or warranty as to the timeliness, completeness, or accuracy of any information on or accessed through this website. Decentral Media, Inc. is not an investment advisor. We do not give personalized investment advice or other financial advice. The information on this website is subject to change without notice. Some or all of the information on this website may become outdated, or it may be or become incomplete or inaccurate. We may, but are not obligated to, update any outdated, incomplete, or inaccurate information.
You should never make an investment decision on an ICO, IEO, or other investment based on the information on this website, and you should never interpret or otherwise rely on any of the information on this website as investment advice. We strongly recommend that you consult a licensed investment advisor or other qualified financial professional if you are seeking investment advice on an ICO, IEO, or other investment. We do not accept compensation in any form for analyzing or reporting on any ICO, IEO, cryptocurrency, currency, tokenized sales, securities, or commodities.
See full terms and conditions.
Ross Ulbricht NFT Auction Hits 200 Ethereum on Opening Day
Silk Road founder Ross Ulbricht is releasing his first set of NFTs. Bidding is already close to $900,000 with six days remaining. Ulbricht NFT Auction Receives 200 ETH Bid Ross…
US President Trump May Pardon Silk Road Founder, Ross Ulbricht
U.S. President Trump is considering pardoning Ross Ulbricht, the founder of the darknet marketplace Silk Road. Trump to End #FreeRoss Campaign The Daily Beast reported the news last night. The…
“Silk Road” Crime Biopic Slated for February 2021
Lionsgate has acquired the rights to Silk Road, an upcoming film that tells the true story of Ross Ulbright, creator of what was once the world’s largest dark net marketplace….
Enter To Win A Free 1 Year Subscription To Pro BTC Trader
We’re doing this because we want to be better at picking advertisers for Cryptobriefing.com and explaining to them, “Who are our visitors? What do they care about?” Answer our questions…
Although Hong Kong’s art scene is already booming lucratively with galleries and auction houses showcasing world-class art pieces, the city is on its way to adding another milestone on its journey with non-fungible tokens (NFTs).
Hong Kong is known for hosting large-scale international art events. In an artprice.com report titled “Asia: the Art Market’s centre of gravity is heading East”, auction houses’ results in Hong Kong have been exceptional in 2021, with unsold rates at the lowest in the world: just 10% versus a global average of 30%.
The report also stated that in 2021 alone, the contribution, including China, Hong Kong and Taiwan to the contemporary global market (approximately $1 billion), represented 40% of its value.
According to a report by analytics platform DappRadar, NFT trading volume surged in the third quarter of 2021 to $10.67 billion, a 704% increase from the previous quarter. Still, the city seems to be yet unleashing itself for exhibiting digital art or NFTs.
An NFT is a unit of data that certifies the uniqueness, authenticity, and ownership of a digital asset stored on a digital ledger called a blockchain which benefits an artist’s authenticity and the asset’s owner. It can represent real-world objects like art, music, in-game items and videos.
Although NFTs are becoming an increasingly popular way to buy and sell digital artwork, the value of NFTs remains volatile since they are bought and sold online, frequently with cryptocurrency.
After a buyer purchases the original NFT, the buyer will also enjoy ownership of the digital artwork’s built-in authentication, which is proof of ownership. Collectors value those “digital bragging rights” almost more than the item itself.
NFTs have been around since 2014, but it only got its shot to fame this year following Christie’s first sale of a purely digital artwork of artist Beeple’s “Everydays: The First 5000 Days”, which fetched almost $70 million.
The financial hub breeds various crypto-driven firms
Hong Kong has showcased its attributes in becoming a fintech innovation hub by giving birth to “some of the most established and successful crypto companies to date, including the crypto exchange FTX and the digital asset platform Crypto.com, and HK-based Animoca Brands,”
Speaking in an emailed interview with Blockchain.News, Gary Liu, CEO of the South China Morning Post (SCMP), said he is optimistic towards the NFT market in the city :
“The future of NFTs is bright in Hong Kong as a centre for financial innovation and an emerging global arts and culture hub. A few trends give evidence to this based on how the Hong Kong arts community has embraced NFT and the city’s ambitions to grow its reputation as a major fintech hub,”
Liu added that “in recent years, the city has also been bolstering fintech bona fides and attracting startups, including leading NFT and digital asset players.”
NFT overturns traditional art market
Focusing on digital art in Hong Kong, the NFT scene is burgeoning with sporadic exhibitions and auctions.
Via such initiatives, local Hong Kong artists have begun to gain exposure to the world of digital assets where peer to peer transaction is simpler, cutting out the hassle of intermediaries.
For this year’s Operation Santa Claus, a fund-raising initiative organised by SCMP and RTHK since 1988, SCMP invited five Hong Kong artists to mint and auction NFT of their original artworks.
Within the first week of the auction, three out of 8 listed pieces were sold, and 4 out of 5 auction pieces have received bids. The artworks were on display at Start Art Gallery in Hong Kong’s K11 Musea until Nov 21.
The newspaper’s broader efforts to promote NFTs as a technology that facilitates dialogue is a significant step towards popularising NFTs among the masses in Hong Kong; other international gigs in the city are also educating the general public and inspiring artists.
When top-tier auction house Phillips sold artist Banksy’s “Laugh Now Panel A” in Hong Kong on June 2021 for HK$24,450,000 (£2.2million), it marked the first time a major auction house in Asia ever accepted Bitcoin or Ether as payment for physical artwork.
Although Banksy is a well-known artist, such auctions and exhibitions with blockchain technology aiding NFTs can help discover talented artists who have otherwise remained unseen in the traditional art market.
The use of NFTs has already started in various fields such as gaming as profitable digital assets. On the flip side, some initiatives brought forward by companies such as SCMP are creating NFTS to give back to causes such as the environment and local communities.
In October, the ImpactNFT Exhibition invited collectors and NFT enthusiasts to experience and purchase digital artworks with themes constructed around the 17 Sustainable Development Goals by the United Nations: including the fight against climate change, equality and equity in education, and gender equality.
While in October 2021, Digital Art Fair Asia became the first-ever art fair in Hong Kong to feature world-class NFT digital art and an immersive art experience, which lasted for 18 days.
The fair showcased over 200 digital and NFT artworks that allowed the public to understand more about NFTs, while art enthusiasts and collectors could hunt for items to add to their collection. Liu talked about the NFT market development of the city.
“Hong Kong’s role as a major financial hub and a burgeoning centre for contemporary art make it a strong contender as the crypto and NFT hub in Asia,”
Hong Kong enjoys Crypto-friendly facilities
According to a study by Crypto Head titled “The 2021 Crypto-Ready Index”, Hong Kong ranks fourth among 200 countries and territories worldwide in terms of “crypto-ready countries.” This result indicates that the public is well aware of the potential of cryptos.
The study also showed that Hong Kong’s annual online search for crypto increased by 102.1%, and the yearly crypto google searches were at 10,356 per 100,000 people. While the study also showed that there were 124 crypto ATMs or 60,276 people per ATM.
According to their websites, Blockchain Association of Hong Kong and Hong Kong NFT Association are backing to “advocate for the development of proportionate and effective regulation while attracting greater investment and talent into Hong Kong Blockchain Development,” and “improve the rules in the production, circulation, and transaction of products in the NFT field” in Hong Kong.
The artprice.com report also highlighted the importance of the Asian market as the world’s primary zone for exchanging Contemporary artworks, including NFTs, including artists from both the east and a growing number from the west.
Hong Kong’s role as a significant financial hub on a worldwide scale is already a well-established fact. Still, its burgeoning contemporary art also makes it a strong contender as a crypto and NFT hub in Asia and globally.
The city sees a potential future as a leading hub for annual NFT events similar to this year’s NFT.NYC, which hosted 5,500+ attendees, hundreds of leading speakers and the best projects in digital art.
“The city’s exhibition industry is robust, and its love for art, culture, and technology continues to expand. Art Basel, RISE, and HK Fintech Week are evidence that this city can absolutely host a globally impactful blockchain and NFT conference,” Liu said when asked about Hong Kong’s potential in hosting major NFT events.
Hong Kong is receiving more attention for NFT launches due to tight crypto regulations and crackdowns in mainland China, many Chinese celebrities are choosing to launch NFT collections in the city instead.
According to a report by SCMP in October, some of the biggest names in Hong Kong’s entertainment world – including Wong Kar-wai, Gigi Yim and Hins Cheung – have unveiled respective NFT projects.
These projects further indicate that these once-niche digital tokens might be on their way to wider acceptance among the general public, collectors and art enthusiasts.
The future of NFT?
Although the hype around NFTs have made people believe this form of digital assets will change how people invest, some sceptics believe that these could be a bubble similar to the dot-com craze.
According to a March report by The New York Times (NYT), NFT fractional ownership ventures – in which tradable tokens at affordable price points, pegged to the value of desirable digital assets, are divided among a group of buyers – is particularly seen as “disturbing”.
The main index of Mei-Moses, a database of auction sales, now owned by Sotheby’s, shows that during the past decade, the overall value of the many thousands of artworks resold at auction has not increased.
In an interview with NYT, Mei-Moses’ founder Michael Moses said, “how do you value what’s being fractionalised? Value is something incorporated over time, not added in an instant”. Cutting up expensive digital items into tradable tokens made the market “fraught with volatility,” he added. “Basically, it’s gambling. You have no idea of the true value of the work.”
Sceptics state that people should be aware of their investments since the speculations in digital assets such as NFTs that have no physical existence flourished during the COVID-19 pandemic when people spent a lot of time indoors.
A crowd loan is a Polkadot (DOT) crowdsourcing event in Polkadot that allows the community to support project bids in upcoming parachain slot auctions. Users contribute DOT, receive rewards in project tokens and get their DOT back in two years (a standard slot lease duration). This mechanic helps projects raise substantial capital in DOT tokens that may even exceed a few hundred million in dollar notion value.
The obvious downside for users is the need to lock their DOT for two years where they don’t have access to their liquidity during this lockup period.
In mainstream finance, there are private companies and initial public offering (IPO) lockup agreements. The lockup agreements prohibit company insiders — including employees, their friends, family and venture capitalists — from selling their shares for a set period of time. These shares are “locked up” to ensure that their owners don’t enter the public market too soon after the public offering.
To work around restrictions on lockup stocks, people could enter arrangements where they lock in their gains or even get some money in advance toward the day they can sell their holdings. Corporate lawyers started prohibiting these arrangements because they would create unnecessary market pressure and, in some cases, introduce the legal risks that lockups intend to avoid.
The concept of liquid staking
Fortunately, this scrutiny has nothing to do with the blockchain realm that is not restricted by the concerns of private lawyers. We may very well create claim rights on the locked assets by issuing a special type of derivative tokens that represent these rights on the underlying principal assets.
Derivative tokens are usually minted at a 1-to-1 ratio for the locked tokens. They can be issued by a liquid staking provider if users send initial assets to their custodian address or the target staking protocol may send derivative tokens directly to every depositor to simplify accounting. The latter mechanism is widely used in Ethereum-based automated market makers (AMMs) and pooled lending protocols that issue liquidity pool tokens — e.g., AAVE, Compound, or Curve.
In any case, there is always a clear arbitrage between the market and the eventual custodian. Every user can claim underlying at some point by submitting derivative tokens back to the staking protocol. If the arbitrage is immediate, the ratio between derivative tokens and locked assets nears 1-to-1. Otherwise, it may deviate depending on how fast the underlying can be unlocked.
This concept opens up an emergent market for many decentralized finance (DeFi) projects. You may already see quite a few of them bringing liquidity for various types of collateral, active stakes in proof-of-stake (PoS) protocols and other non-fluid assets. For instance, Lido has absorbed over $6.7 billion worth Ether (ETH) staked in Ethereum 2.0 (which is almost 19% of all ETH staked in Ethereum 2.0 deposit contract). Marinade Finance managed to get over $1.6 billion worth of Solana’s SOL locked via its protocol on Solana.
The success of liquid staking providers is highly dependent on the potential size of locked assets and the activeness of investors they target.
Liquid staking and crowdloans on Polkadot
The design of Polkadot crowdloans quite naturally marries with liquid staking too. The anticipated volume of liquidity to be locked in crowdloans may reach 20% of the DOT supply (which comes to an impressive eight billion U.S. dollars). Secondly, crowdloan participants are usually the most active investors who always look for maximizing their gains. Liquid staking seems to be an attractive opportunity for them.
Certainly, the most advanced DeFi teams of Polkadot are already leveraging this use case. Each of them has introduced its version of liquid DOT that is minted on their chains at a 1-to-1 ratio for initial DOT locked via their platforms. This is what these projects are currently offering for their users:
Liquid staking is pretty much an excellent opportunity for Polkadot-based DeFi projects to boost their total value locked (TVL) significantly from the get-go. Liquid DOT will be the liquidity that sticks with them for the whole parachain lease period of two years.
Major market players could not miss this opportunity as well. For instance, there is a liquid DOT introduced by Binance, called BDOT, and the exchange plans to make use of that liquidity both in trading and speculation. But, we will be considering only liquid staking by ecosystem projects, so Binance USD (BUSD) and wrappers on other exchanges will be out of our today’s scope.
Liquid DOT’s traction so far
Before we delve into the actual mechanics behind each setup, let’s consider some numbers we’ve gathered as of November 15 at 9:00 pm UTC:
As we can see, definite leaders here are Parallel and Acala. Acala handles this huge amount thanks to its primary positioning as a top project in the ecosystem. Parallel managed to get a good head start by offering to DOT contributors bonuses in Parallel’s native token PARA, as well as special bonuses from supported projects.
Equilibrium has also announced additional bonuses in its native token EQ on every DOT locked via its xDOT platform. Besides bonuses, the project has launched a referral program that allows earning EQ on every stake to xDOT via referral links.
As such, crowd loan investors can enjoy an exclusive opportunity to earn regular crowd loan rewards while keeping their DOT liquid and get extra rewards from liquid staking on top. Seems like these pleasant additional benefits may even increase over time as competition between liquid staking providers is heating up.
Now that we looked at the landscape, let’s have a look at each project in greater detail.
Acala
Users will contribute DOT using Acala’s Liquid Crowdloan DOT (lcDOT) option in Acala’s crowd loan. Contributions go to the Acala proxy account managed by the Acala Foundation. Users receive 1 lcDOT for every 1 DOT locked. Users will also receive Cardano (ACA), though it’s not clear if those will be attributed to initial DOT contributors or lcDOT holders. For now, lcDOT supports contributions only for one project, Acala.
lcDOT can be used as collateral for minting the Acala dollar decentralized stablecoin (aUSD). Also, it will likely be listed on their Uniswap-like AMM for pairs with DOT and Liquid DOT (LDOT).
At first, Acala will be collecting DOT on a proxy account controlled by a multisignature wallet from the Acala Foundation. When the Acala parachain is live, the ownership of the proxy account will be transferred from the multisig to the Acala parachain account that is fully trustless and controlled by Acala’s on-chain governance.
Despite a substantial 80%+ share of whales and institutions, that confirms the Pareto rule once again, we see an impressive number of contributions from retail users. Furthermore, there is no other option to contribute to Alcala’s crowd loan on its website, rather than lcDOT. Given the outrageous 27 million DOT collected during its crowd loan, this retail activity is quite expectable.
Parallel
Users will contribute DOT using Parallel’s cDOT mechanics. Parallel supports multiple projects and offers extra bonuses both in PARA tokens and from their “partner” projects to users participating in crowdloans via cDOT.
Parallel’s cDOT tokens will be launched when Parallel secures a parachain slot. These tokens will be used inside Parallel’s DeFi system as collateral to borrow stuff or as a lending asset on their compound-like money market protocol.
The technical setup is similar to all of the above where initially, there will be a multisig custody of user contributions that will vote for other projects collectively. There is no open information on the multisig participants at the time of writing.
It is quite predictable that most of DOT are staked for Parallel. Their website doesn’t offer any other options to participate in their crowdloan but cDOT.
It remains unclear how Parallel is going to support Moonbeam crowdloan purely from a technical perspective, as Moonbeam’s parachain doesn’t include a multisignature pallet for now. It may be even impossible to distribute Moonbeam’s crowdloan rewards in GIMR, Moonbeam native token, that will arrive at Parallel’s address managed under multisignature permissions. Despite that, the amount of DOT they collected for Moonbeam is impressive.
Interestingly enough, the picture is very similar to Acala’s. Parallel even has one single mega-contribution of 1.5 million DOT from a single address that pledged DOT for Astar, Clover, Moonbeam and Parallel.
Bifrost
Users will contribute DOT using Bifrost’s SALP protocol. SALP supports several projects which are technically suitable for handling multisig transactions. Bifrost offers its users two types of tokens: vsBond and vsToken. vsBonds are tied to particular projects and allow to collect crowd loan rewards.
They are tradeable on the “buy-in-price” pending orders exchange. vsTokens, on the other hand, are not tied to any particular project and allow users to redeem DOT at the end of the lease period when combined with corresponding vsBonds. vsTokens trade in a Bancor and 1-to-1 peg pool at maturity. vsBond and vsTokens may also be used inside Bifrost’s DeFi ecosystem.
Technically, the solution is similar to Acala’s. Initially, until Bifrost is not a parachain, they will use a multisig address controlled by Bifrost. After the project wins a parachain slot, the multisig control will be passed over to the parachain account. A prerequisite for that is the flawless functioning of Polkadot’s XCM protocol.
Astar is the clear beneficiary here specifically thanks to the single fat stake of 300,000 DOT. This money comes from DFG, a venture capitalist (VC) firm that contributed to Astar’s crowd loan via Bifrost’s liquid DOT solution.
Similar to Acala and Parallel, the Pareto rule perfectly works here as well, as the share of institutions hovers around 80% of the total DOT stake. Though in the Bifrost case, whales largely dominate over retail and average investors compared to the first two projects.
Equilibrium
Users contribute DOT via Equilibrium using its xDOT. Equilibrium supports projects that are technically capable of handling multisig transactions. Equilibrium also reportedly offers Ledger support for users who will contribute to Equilibrium via the xDOT platform.
There will be one xDOT token for different projects available while Equilibrium will be handling xDOT and project tokens separately. Equilibrium will price xDOT on a special purpose-yield AMM and promises to issue these tokens first in Genshiro (their Kusama-based canary network). Then, xDOT will be launched in Equilibrium once the project obtains a parchain slot on Polkadot. xDOT use cases on Genshiro include borrowing, lending and using them as margin to trade.
Equilibrium’s technical solution uses a multisignature wallet as well. It’s noteworthy that keys of this multisig are held by known VCs including Signum Capital, DFG, Genesis Block Ventures and PNYX.
It is quite expectable that the stake for Equilibrium as an xDOT originator overtakes most others. Like in Bifrost, Astar keeps a leading position and this most likely testifies the efficiency of Astar’s business development efforts and its partnership bonuses.
Opposed to Bifrost, the activity of retail users in xDOT prevails over other groups of investors. The project has yet to onboard as many institutions, based on the numbers above. However, Equilibrium’s bonus program that accrues extra EQ tokens on DOT contributed via xDOT may become quite attractive to large stakeholders.
Is liquid DOT staking bulletproof?
Now that we’ve looked into each project in greater detail, we might still want to clarify some other questions. The first natural one is what additional utility projects are offered on their liquid DOT, as users may essentially want to do something with their liquidity. Otherwise, what’s the real use of it?
Related:The evolution of DeFi and its unique token distribution mechanics
This largely depends on the feature set of the underlying projects. Another aspect is how fast they will be able to interconnect with other projects that might be willing to support those tokens. We can judge initial use cases on a project-by-project basis from the information we acquired above.
It looks like there are potential use cases for liquid DOT, and its further acceptance across the ecosystem will largely depend on the success of business development efforts. The one who manages to persuade other ecosystem participants to use their liquid DOT will benefit the most in the long run.
The next question is related to the redistribution of bonuses. If users contribute via liquid DOT mechanics, will they be entitled to the bonuses projects offer for “classical” trustless contributions?
There is not much info circulating about this right now, but from what we know, Acala will offer all of the bonuses it offers to its regular participants. Parallel has talked at least with two projects to offer extra crowd loan bonuses while Equilibrium and Bifrost will most likely be able to support the common bonus structure of crowd loans. However, this can drastically change further as nothing prevents Equilibrium or Bifrost from making similar arrangements with projects running their campaigns.
Last but not least, how secure is the technical setup? Given the number of hacks in DeFi, this question becomes crucially important.
The approach here is similar across the board: a custodian address for DOT managed under multisignature permissions at the start. And, it’s a reasonable solution, as multisigs have become a golden industry standard for secure asset storage. Once the project issuing liquid DOT becomes a parachain, the setup will become fully trustless.
Related:How much intrigue is behind Kusama’s parachain auctions?
The bottom line
Liquid DOT is a beautiful mechanism to unleash the liquidity of locked-up DOT that has attracted the attention of multiple projects in the ecosystem. However, all of them offer somewhat similar technical solutions.
The extent to which these different liquid DOT variations (lcDOT, cDOT, vsBond, or xDOT) will successfully mature largely depends on the business strategies those projects will undergo and how much utility they can provide to their DOT derivatives.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Alex Melikhov is the CEO and founder of Equilibrium, an interoperable DeFi conglomerate on Polkadot comprised of a cross-chain lending platform and order book-based decentralized exchange. With over 14 years of entrepreneurial and fintech experience, Alex has been involved in the cryptocurrency world since 2013. His current project, Equilibrium, aims to solve the problem of liquidity fragmentation in DeFi.
On Thursday, the decentralised autonomous organisation ConstitutionDAO lost ownership by failing to win the bid for the printed copy of the U.S. Constitution at a Sotheby’s public auction. The Lot finally sold for $43.2 million by an autonomous bidder.
The unique U.S. Constitution at this auction is the first edition printed copy of one of the 13 remaining constitutions copies.
Prior to the Sotheby’s public auction, the ConstitutionDAO community, a decentralised autonomous organisation, raised more than $40 million in Ethereum in a week through the discord social platform. Precisely, the organisation has raised a total of $47 million worth of Ether from more than 17,000 Ethereum wallets. The organisation claimed they “broke records for the most money crowdfunded in less than 72 hours.”
source: ConstitutionDAO
However, ConstitutionDAO failed to win the Lot and stopped the pace of additional funding when an unidentified bidder won the Lot with an estimated $41 million.
According to an organiser in the Discord server of the organisation, the main reason for losing the bid is that the organisation do not have enough capital to pay for the “proper maintenance and upkeep” required to keep the constitution.
In the official Discord announcement, a leader of the organisation, Julian Weisser, pointed out that although this is not the result they hope, this is “we still made history tonight with ConstitutionDAO. This is the largest crowdfund for a physical object that we are aware of — crypto or fiat.”
DAO is known as the digital decentralised autonomous organisation (DAO). The DAO served as a form of investor-directed venture capital fund that seeks to provide the enterprise with new decentralised business models built on the Ethereum blockchain.
This auction is the best example of the first crypto community to demonstrate its purchasing power in the real world. Although it was unsuccessful, it also allowed more people to see the potential of cryptocurrency in real life.
FTX.US crypto exchange President Brett Harrison expressed his thoughts on this auction:
“I think seeing how powerful a DAO can become in a real-world transaction such as this, I think will show people that there’s a lot of potentials that people have only dreamed of for these kinds of organizations to be a model for future governance. “
At present, there is no specific plan on how the funds will be used or returned, possibly could be used as the funding for future auctions. DAO is managed by smart contracts that exist on the blockchain to execute agreements with no centralised authority automatically.
