Pustota Manifesto

“Our identities have no bodies, so, unlike you, we cannot obtain order by physical coercion. We believe that from ethics, enlightened self-interest, and the commonweal, our governance will emerge. Our identities may be distributed across many of your jurisdictions. The only law that all our constituent cultures would generally recognize is the Golden Rule. We hope we will be able to build our particular solutions on that basis. But we cannot accept the solutions you are attempting to impose.” — A Declaration of the Independence of Cyberspace by John Perry Barlow

Intro

The spring of 2021 had everyone talking about the wonderful new world where everything is NFT’fied with combined sales of major Cryptoart platforms reaching USD 200M in March. These numbers would later plunge down to below USD 10M by June, leaving the Art community with a feeling of disappointment and making the mainstream media scream about how it all was just another asset bubble at best or a scam at worst. Yet, other implementations of NFT tokens such as collectible sports cards and the like have not shown a similar decline, and major art auction houses are still adopting the tech in their sales model.

One of the biggest questions that the short-lived gold rush has raised is simple: why would anyone spend thousands of dollars for a digital media file created by some artist you most likely never heard of? In a broader sense, it is this disproportion of the artworks’ price and their perceived value that finally led to the microbubble burst in late May. The specifics of different approaches to art valuation are out of the scope of this article, but it is not the fact of being available in the form of NFT that makes an artwork gain value. Or is it? Of the many factors involved, authenticity, rarity, and provenance are definitely the important ones, and it is exactly where NFT tech shines.

In this manifesto, we present our vision for the platform which addresses this situation in the digital art market, as we truly believe that current NFTs are the first-class objects to enable future-proof property rights and values-based community management. We believe the time has come to engineer our markets to prioritize the public good of the community over short-term profits which are driven by pure greed and a simplistic egocentric worldview. In the next parts, we elaborate on our perception of the current situation and give a vision for the platform’s future. We are glad to see you in the future among our ranks should you like our way and values.

Live long and prosper! Have a nice read.

The Problem

The architecture of existing platforms is mostly focused on the artist as the content producer and customer value generator. The idea of cutting the middlemen in between the content producer and consumer seemed like an obvious choice, and this is precisely what had been done by the first wave of NFT marketplaces. The resulting value chain is in many ways similar to a standard online marketplace model that has seen so many implementations in recent years with only two user roles: The Creator, and The Collector. To make things a tad more interesting for the Creator, the smart contracts in use by most platforms add a profit share to be earned by the creator from every secondary sale of the artwork, a thing never heard of in the real-world art market in the olden times.

The biggest issue we see with that system is that it does not reflect the existing relationships in the art community with such roles as the Curators and the Gallerists are left out of the market. Traditionally it was the Gallerist’s mission to attract sales and the Curators were responsible for building up the exhibited content. Both of these value-adding activities are currently executed internally by the marketplaces with results getting a mixed impression from the community.

Furthermore, after several months of active sales, approximately 200k artworks were sold, thus forming new strata of NFT owners, that are massively underrepresented under current market rules. The front page of most platforms shows the latest art that is acquired by the platform (the so-called ‘drops’) as well as some top-sellers and selected promotions. This paradigm when combined with a business model that makes the platform earn several times more money from primary sales over secondary sales, leads to an iceberg like phenomena, with most of the artworks that were sold are now hidden below the surface with no chance of getting attention from potential secondary buyers.

The Solution

With the advent of modern technology, specifically public-key cryptography and distributed consensus-driven databases, which laid out a foundation for the web3.0 and decentralized organizations, it’s becoming possible to create new enabling business models and software with fewer transaction costs and trust requirements. Currently, authorship and property rights in our societies are implemented at the level of legal systems, as well as any custom agreement (e.g. between gallerist and an artist), which brings additional hassle to every interaction on the market.

Smart contracts can be perceived as enabling technology that allows us and our users to commit, audit, and enforce agreements without ever spending on the legal part. We are also very much concerned with market legitimacy (e.g. bubble bursts are ruining it for everyone), so we are considering innovative approaches to our economy, inspired by recent research in the fields of game theory and mechanism design. In our mind, the platform will unlock such things as basic income shared among members, collective organization of real-life events, or crowdfunding.

We see a carefully designed reputation system and governance protocol as the key for the successful alignment of multiple actors’ actions on the platform. To do that we are going to gradually introduce on-chain mechanisms codifying existing rules of trade and industry best practices. Consequently, we plan to let go of centralized control at all, so that a community of reputable people and/or organizations can govern Pustota. Maximizing public good should be placed before profits in our community if we want to stay credible and sustainably develop our business into the future.

For the benefit of our community and ecosystem, we are introducing blockchain agnostic architecture so every person on the platform would be able to store her digital assets on the network which has specific tradeoffs aligned with one’s needs and values. Our focus is on building corresponding interfaces and tooling to make it possible to track provenance across different blockchains. For example, PoS / PoW choices can be made, based on users’ judgment (e.g. if you don’t believe PoW is sustainable tech). And in the near future once Polkadot binds all the blockchain ecosystem together all the chains will become interoperable and our software will evolve according to this trend.

Our immediate roadmap includes some major upgrades to the platform:

• While we wait for Ethereum 2.0 to be production-ready, we will introduce another PoS blockchain to our platform, with the ability to control and mint your assets on the network of your choice. Keeping track of provenance even if you transfer your digital goods between chains.
• We look forward to giving people more control over their data by switching from a centralized storage solution currently based in Google Cloud to decentralized storage (e.g. Filecoin or Swarm). Thus reducing our liability as a software provider, removing a single point of failure in a data management subsystem.
• We are going to introduce the first version of the reputation system and develop an incentive structure according to our vision, experience with clients, and values. In the near future, we plan to implement some form of Harbinger taxation and/or reward methodology to prevent assets from overvaluation and promote healthy activity on the platform in general.

Outro

Looking into the future we have chosen the Art/creative industry as our first point of focus as it’s mostly composed of people already living on the fringe of society and bringing novel ideas to our world. We want to thank all the artists, curators, institutions and cypherpunks, who share our vision and want to participate in our quest for more egalitarian and sustainable markets, driven by community values and not by greed or lust for power.

P.S. Thanks to Pustota Team and all the people who joined along the way. If you feel like you want to cooperate or know more please reach us at https://pustota.io or through any of social media.