Could Decentralization Transform the Art Market?

Netta Korin
Netta Korin

|

a year ago

blog

In the past, esteemed works of art were considered a unique investment opportunity only to wealthy individuals or corporations. One could not have parcelled out a Rembrandt to share with friends. However, it could be that what we recently witnessed with the latest bid for the US Constitution changed all that.

ConstitutionDAO is a decentralized autonomous organization (DAO) formed in November 2021 to purchase an incredibly rare copy of the United States Constitution. The group raised $47 million in Ether but eventually lost to hedge fund billionaire Ken Griffin’s bid of $43.2 million in the Sotheby's auction, under its organizers' belief that ConstitutionDAO group would have insufficient funding to protect, insure, and move the artifact with a higher bid.

Austin Cain and Graham Novak, first initiated a Discord channel discussion to pursue the effort to collectively bid on an early and unique copy of the U.S. constitution, with the purpose to have the contributors decentrally control it. The channel rapidly grew to more than 8,000 members. In just a week from launching, the Constitution DAO raised over $40 million worth of ETH on Juicebox.money, an early stage DAO platform.

The collective initiative of the Constitution DAO group showcased the true power of decentralized platforms (e.g.,DAO), proving they have the fundamental instruments to change the entire art market as well as rare historical collectables, allowing ordinary people who have never dealt with crypto or owned a masterpiece before to officially acquire a piece of rare items, thus paving the way for the masses to engage in new markets they could not have reached before due to their high entry barrier. This way, art will no longer belong only to the top 1%, who can afford buying the entire piece.

According to Bloomberg, had the group won the auction, contributors would have received a governance token depending on their share of the investment, which would have enabled them to vote on decisions such where the copy would be displayed or how it should be exhibited.

The Constitution DAO effort, which came to life on Twitter and Discord, demonstrates how empowering a decentralized platform can be, even to a spontaneous community effort, whose shared ownership and transparency are guiding principles. Buying and owning such a rare historic document, or eventually a masterwork of art has with the help of decentralization become feasible for the masses and not just for the wealthy. This historic effort brought over seventeen thousand people together, hundreds of whom entered the crypto ecosystem for the first time. Blockchain enables large groups of people from all over the world to collaborate in order to reach a collective goal and potentially achieve incredible results.

This time it was the Constitution. Perhaps next time it will be a Picasso.

It should be also noted that today there are quite a few projects bold enough to pursue a fractionalized way of buying, collecting and preserving pieces of art. Indeed, such projects haven’t gained traction yet and are currently more focused on digital rather than physical art. However, anyone familiar with NFTs hype would argue that NFTs enable a new and exciting way of creating art that will no longer be a victim of time, decay and unaffordable prices.

For instance, Fractional, is a good example of a project that aims to bolster the idea of fractionalized non-fungible tokens, asserting that fractionalization can also help with price discovery. “Fractionalizing the item and selling 20% of it on the market can be a valuable tool to help understand how the market values the NFT,” claim Fractional project creators. Another project that is also fractionalizing non-fungible tokens is a protocol called Daofi which breaks NFTs down into fungible ERC20 tokens. Daofi also attempts to explain how the fractionalization process works.

We use cookies to ensure that we give you the best experience on our website. By continuing to use our site, you accept our cookie policy.