Buidler DAO Locust Picks: Must-Read Articles on AIGC and NFT Royalties

Article: @Buidler DAO

Editor: @Wenshuang

Typesetting: @Coucou

Deep selection is our recommended must-read articles under this week's hot market discussion topics, sourced from the daily push of the Buidler DAO Cognition Locust Plan; here, senior readers of Web3 Native will extract the core content of high-quality articles and personal deep thoughts from the complex information sources.

As major mainstream NFT trading platforms successively launch their own royalty strategies, people seem to sense a path for breakthroughs in business models during the bear market. From attempting to provide fair value distribution to creators, to balancing buyer interests; from the execution of strategies across platforms to the judgment of the reasonableness of ratio settings; this issue covers discussions related to the intensifying competition over NFT royalties. Meanwhile, the AIGC track is leading us towards a path of human-machine symbiotic creation, and this issue outputs recent hot thoughts on AIGC creation. Read on to understand the core points.

The full text is 6000 words, with an estimated reading time of 15 minutes.

Article Overview:

01/ NFT royalty competition intensifies, platforms engage in subsidy wars @CatBoss

02/ Ultimate Guide to NFTFi: A look at noteworthy projects in lending, leasing, fragmentation, and more @Scallion Fred

03/ AI Art: Moving towards a path of human-machine symbiosis in creation (1) @shuang^

04/ AI Art: Moving towards a path of human-machine symbiosis in creation (3) --- NFT, future art economy, and machine ethics @shuang^

05/ Opensea's on-chain royalty tool sparks controversy, is it monopolizing in the name of royalties? @Fourteen

06/ Understanding Opensea's new royalty policy and reactions from various parties @CatBoss

07/ Crypto tokens, the ordinary person's collapsing future attention black hole! @SpinachSpinach

08/ 7 O'Clock Capital: The billion-dollar fan track of rights and brand securitization @CatBoss In the NFT field, royalties have become an unavoidable hot topic. This article sorts out the royalty execution strategies of various NFT exchanges, considering both creators and buyers. From the creator's perspective, royalties are an important part of Web3, ensuring fair value distribution to creators. By retaining copyright, creators can better monetize their NFT creations. From the buyer's perspective, many projects' royalties are deemed excessively high and unreasonable. In the context of a bear market, many NFTs are caught in a "Soft rug" situation, and charging high royalties further harms buyer interests.

From the current results, no NFT market royalty strategy can satisfy both parties. In fact, when formulating strategies, each party has not adopted a one-size-fits-all approach, but has, to some extent, provided certain subsidies or additional profit-making methods to the other side. The divisions are as follows:

• Starting from transaction fees/service charges: Sudoswap, LooksRare

• Launching additional NFT customization markets: Magic Eden

• Focusing on token incentive measures: Blur, Rarible

• There are also those focusing on creator royalties, not joining this subsidy war, such as Opensea.

Thoughts The reason why the competition over NFT royalties is so intense is entirely due to the NFT trading market's competition for user traffic. The NFT trading market does not have a high technical threshold, and products are largely similar. Once these barriers are crossed, traditional Web2 operational methods must be relied upon. Currently, as long as no one emerges to stabilize and dominate the "territory" (or if several fall in a bear market), various traffic operation methods will continue, perhaps currently through NFT royalties, and later through other traffic-grabbing strategies. As users, whether creators or buyers, in a market that is still unstable and lacks a completely dominant player, they are certainly in high demand. The first part of the article defines NFTFi: it essentially applies DeFi to NFTs. It makes the trading forms of NFTs more efficient—from swapping, hedging, fragmentation, and evaluation to leasing.

The second part (the main part) briefly analyzes five sub-tracks of NFTFi: lending, buy now pay later, leasing, derivatives, evaluation, and fragmentation. Thoughts As a recently popular project, many builders are focusing on NFTFi, anticipating the arrival of its summer. However, the current gameplay of NFTFi is mostly borrowing from DeFi, with few unique approaches. It may be worth considering high-frequency trading of Gamefi items as a starting point, or combining with prediction markets for potential breakthroughs. Overall, from the analysis of various sub-tracks of NFTFi, the development of various NFTFi projects is highly dependent on NFT pricing and valuation, which can be called the cornerstone of NFTFi. However, NFT pricing and valuation are still in a relatively early stage, which affects and limits the overall development of the industry.

The article first introduces two reasons for promoting AI in art:

• It can enhance our understanding of the cognitive processes involved in creative behavior, expanding the boundaries of computer science;

• AI can be seen as a complement to the methods and tools available to human artists, allowing creators to produce their own expressions of a concept;

The article then introduces five levels of creative systems:

1. Generative systems: Require certain inputs to produce different outputs;

2. Appreciation systems: Systems that discern the quality of outputs, allowing aesthetic preferences to be encoded as a utility;

3. Art systems: Invent their own aesthetic fitness functions;

4. Symbiotic systems: An art system that can communicate with humans about aesthetic generation;

5. Real systems: Can detect human responses, record human appreciation experiences, and translate them into concepts reflected in generative processing and outputs;

Subsequently, the article is divided into: the first part provides a comprehensive review of the development of Turing artists. The second part discusses human-machine interaction issues in artistic creation. The third part describes a framework for building machine artists. The fourth part outlines an art economic model based on non-fungible tokens (NFTs). The fifth part discusses ethical issues related to future AI-based art generation systems. Thoughts AI's creative capabilities are worth noting for any industry. In the field of painting, under a certain human-defined aesthetic logic, the creations that AI can currently accomplish are astonishing. We seem to be standing at the threshold of an era of human-machine symbiotic co-creation. Evolving from passive learning systems to actively interactive systems, achieving a "Turing test" in art, further realizing human-machine "mutual understanding" (value/psychological state alignment). The "alignment" mentioned in the text relates to the future development and evolution of the metaverse.

Quoting a line from the text: "Art is a truth procedure, and this truth is always a sensory or perceptual truth, a truth of the sensory to the sensory."

Digital and multimodal art forms are fascinating, and the potential evolution of machine appreciation systems may generate a sci-fi world as they become an enhanced part of our "nervous" system. Such information keeps me living in the present, playfully imagining experiencing future time and space. Transcending information, experiencing imagination through imagination.

This article first introduces some concepts of NFTs from the perspective of assets and rights confirmation.

It then showcases representative NFT applications:

• Promoting the gaming industry: some blockchain games;

• Enhancing virtual events: introducing applications like NFT tickets;

• Protecting digital collectibles: some digital images, videos, virtual properties, and domain names;

• Supporting the metaverse: conducting commercial activities from the virtual economy supported by the metaverse;

The author then highlights the advantages of supporting the NFT digital art market, how it will affect stakeholders in the art ecosystem, and a series of issues that the industry currently needs to address, including energy, oracle, regulation, and trading.

The text later mentions that artificial intelligence technology brings unique ethical challenges, such as severe invasions of privacy by AI surveillance, manipulation of human behavior by recommendation systems or targeted advertising, and potential unfair treatment of individuals due to algorithmic classification and decision-making, leading to underrepresentation of marginalized groups. These issues need to be considered and resolved during the technological development process.

In addition to the above topics, current issues also include the authorship and ownership of AI-generated artworks, as well as the distribution of rights and benefits among contributors to artistic works.

The author proposes: Perhaps new technologies like smart contracts and NFTs can provide new insights and mechanisms for a solution. Considering the new paradigm of "computational copyright," in which the creativity of machines and human contributions can be quantified during the creative process, thus allowing for appropriate division of copyright and revenue for generated artworks. Thoughts This article presents a thought-provoking perspective: intentionalism, which also involves philosophy of mind and cognitive science.

The purpose of what an autonomous art system achieves in terms of artistic or aesthetic goals is not yet clear. Audiences cannot begin to attribute or decipher the intentions of the art system; therefore, an explainable or interpretable generative system would be very useful for other purposes.

This perspective is just one of the claims; another discussion emphasizes that "author identity is a social construct," highlighting that the human identity of the author becomes a necessary condition for their artistic intentions to be recognized, while tools are only recognized as 'non-autonomous entities.'

The discussion of the above reasons still revolves around the more realistic issue: the distribution of benefits from artistic works. As more and more people enter the era of autonomous artists, the potential paradigm of computational copyright is applied, thereby allowing for appropriate division of copyright and revenue for artistic works, which I believe is very worthy of practice. The democratization of art allows a broader range of people to benefit through distribution methods like NFTs, linking the creation and production processes fully, which is tech for the common good.

Opensea's on-chain enforcement of royalty tools stipulates that if NFT project parties want to collect royalties normally on Opensea, they must use Opensea's mandatory royalty contract, which will blacklist all platforms that launch custom royalties. If NFT project parties are unwilling to blacklist other trading platforms, Opensea will directly reduce all royalties generated by that project on Opensea to 0. Thoughts By reading the source code of this mandatory royalty tool, it is found that it will fully control the from trading party of NFT contracts. Due to the design of a unified blacklist, once truly popularized, it will not only harm the market itself but also likely serve as a tool for undermining decentralization and regulatory penetration. When NFTs stolen by hackers are blacklisted, even functions like transferring between one's own wallets will be restricted. Of course, facing a large number of NFT contracts that do not have upgrade designs, how to drive their updates will also be a challenge for the industry. Whether royalties should be collected should fundamentally depend on whether the project party is doing something, and there should be more reasonable ways to provide them with sustainable revenue rather than just profiting passively.

Understanding Opensea's new royalty policy

And reactions from various parties @CatBoss As market share continues to decline, Opensea introduced a mandatory royalty tool on November 6, allowing project parties to choose. If they want to receive royalties on Opensea, they need to use the mandatory royalty tool to block other NFT trading platforms with 0 royalties (X2Y2, Blur, Looksrare, Sudoswap).

Market reactions from trading platforms: Blur, X2Y2, and Element followed Opensea's royalty policy.

Reactions from project parties indicate that even in this bear market, they will still choose to collect royalties, opting to block 0 royalty platforms.

User-level reactions are mostly condemnation of Opensea for launching such a tool, leading to higher costs for buying and selling NFTs.

The essence of the royalty dispute among trading platforms is due to different market competition strategies.

In the overall bear market of the NFT market, with insufficient liquidity, should royalties be collected? Major trading markets and project parties have shown us the answer through their actions.

What I look forward to is whether there will be trading platforms or project parties that can establish corresponding standards for the cap mechanism of royalties and the distribution plan.

Additionally, whether there will be relevant industry standards for the value-bearing and pricing mechanisms of NFTs in the future is also a significant factor in whether the NFT industry can thrive. Thoughts Reflecting on the beginning and end of the royalty dispute, it is lamentable how fiercely the NFT market is fighting. With the introduction of Opensea's mandatory royalty policy, the daily active users of other NFT trading platforms have plummeted. At its core, it is still a struggle for interests; zero royalties have encroached on the project parties' cake, which, in the short term, pleases users. This tactic was effective when trading platforms were first established, but the users attracted may not be quality users, and they will naturally lose interest quickly. Currently, the NFT market is short on liquidity, and all trading platforms are fighting for existing users; in fact, we look forward to seeing innovations that can bring incremental growth.

The history of humanity is a history of how humans use subjective power to transform the objective world. Looking back over the past few thousand years, it is not difficult to find that the impact of ordinary people's subjective power on the objective world is minimal. Only when countless attentions are connected together, entangled into a kind of "black hole," can they significantly influence the course of history and collapse the future.

We call this "black hole" the "attention black hole." The development of technology has greatly enhanced productivity, liberating ordinary people's free attention from mechanical manual labor. As the population base of those working with subjective initiative increases, the overall energy gathered in the "attention black hole" continues to grow, and various "new black holes" emerge, with their core carriers constantly evolving: from "royal authority religion" to "commercial economy," from "traffic content" to "crypto tokens," ordinary people's attention has transformed from initially "optional" to now being the "key force" in collapsing the future. Thoughts In the era of crypto, a new type of black hole has emerged, centered on "consensus" and carried by "tokens," while also evolving a new economic system based on "tokens." Within this system, users' attention contributions can yield direct "economic returns." The maturity of blockchain technology has allowed for a fairer distribution of returns for users' attention contributions, and compared to the information age, the return cycle has also been greatly shortened.

The "X2Earn" paradigm based on Web3.0 has greatly stimulated individual creativity and innovation; the emergence of "tokens" has captured countless dispersed individual attentions and facilitated their connection and interaction; the faith in "meme" directly empowers individuals and DAOs, helping them build social recognition and consolidate "consensus," becoming evangelists of the industry, thereby further expanding their influence to attract more attention energy. Thus, small attention black holes based on "consensus" and "tokens" have formed, ordinary people's subjective power has woven a tremendous capacity to transform the objective world. In the ecology of this black hole of "tokens," the world has entered a development stage measured in "months."

If the "Renaissance" was the awakening of human "self-awareness," then "crypto tokens" undoubtedly sparked a "great movement of ordinary people transforming the world through subjective power." It has created an entirely new system that encourages everyone to break free from the cognitive ignorance of "sticking to conventions," not to passively "participate" in the future, but to actively "collapse" the future. It has changed the current social environment, and the awareness of "mass entrepreneurship and innovation" has begun to awaken on a large scale, ushering human civilization into a new era.

In the future, everyone can become their own "Jobs" and "Musk," using their subjective power to "make the world a better place." The operation of future society will also be built on various attention black holes based on "tokens," driven by the subjective power of the masses.

Today, humanity has only just pushed open a narrow crack in this door. If you are willing to step through this door, you will see a completely different future. In the past three months, with the start of the Champions League and the warming up for the World Cup, Binance's incubated club tokens have seen a maximum increase of nearly 400%, standing out in a sluggish market, prompting a rethinking of the value of fan tokens. This article explores why early star NFTs and tokens, such as NBA Topshot and Chiliz, have gained popularity, the magic of sports, and the future of fan tokens and SocialFi.

In the Web3 model, the participants in the fan economy are: fans, stars, and platforms. Fans are both consumers and investors, purchasing star tokens to interact with them and gain from price fluctuations; stars serve as the supporting entities behind the tokens, with prices fluctuating based on their achievements; platforms are the issuers, helping stars manage fan groups and activities, earning fees and token dividends.

Successful fan tokens need to possess five characteristics: strong binding: the token must be a primary source of fan interaction; effective benefits: there are practical scenarios and actual rights, with increasing benefits as investment grows; low threshold: low entry barriers, more inclusivity; strong consensus: the fan group's stickiness is strong, with a sufficient number of members and liquidity; sustainability: must have individuals or groups managing it full-time to ensure operations.

Based on this logic, the most successful series today is Dapper Labs' NBA Topshot series and Chiliz's football fan tokens. What truly transcends race, nationality, and belief is sports. Among sports, basketball and football have the largest fan bases, and based on these two massive groups, the most successful fan token series, NBA Top Shot and football fan tokens, have emerged.

What we currently see may not be the final form of fan tokens; the SocialFi projects on the market are also undergoing constant elimination and iteration. Fan tokens must first have fans before having tokens, emphasizing that this should be a naturally driven result, rather than an inverted behavior. Thoughts Fan tokens are quite operationally intensive; without good post-launch management, they are likely to fail. Therefore, many stars, whether in sports or music, are choosing to issue NFTs more. With the start of the World Cup, fan tokens may "harvest another wave." From the platform's perspective, the current development of fan tokens and SocialFi still has many drawbacks and needs time to settle, requiring more innovation. From the user's perspective, if the purpose is merely to collect out of love, participation can be considered based on the situation, but if the purpose is investment speculation, it should be approached with caution.