The power of NFT groups

Transcript

cool all right let's get started so uh hey everyone how's it going um thank you guys for sticking around during lunch time i know that it's at 12 o'clock so um today we're going to talk about the the power of nft groups my name is stephen i'm one of the co-founders of castle and actually a pretty good segue if you stuck around for the last talk we're actually currently building on top of gnosis safe and are working really closely with the team so a bit more background on myself and what we're building at castle uh basically we're starting out right now uh with a interface on top of gnosis safe uh built as a smart contract wallet specifically for nft collectors so we have direct integrations with a lot of marketplaces such as openc genie and gem as well as a native portfolio tracker to make it

really easy for both groups as well as individuals who want to leverage smart contract wallets for collecting nfts and for greater security um so jumping in to sort of just the topic of nft groups um you know a background on why groups and squads are really powerful i'm sure a lot of you guys have heard of the squad wealth article by the other internet but one of my favorite excerpts is that some people believe new software can liberate individual creators but this kind of thinking eventually leads to uberized platform-mediated wage labor and we want to liberate squads the group is the basic user class for the tools we need today as a society yet few pieces of software allow the squad as a whole to produce cooperatively and generate wealth together

and i think this is really interesting where crypto and web 3 are really right now at the intersection of financial and social products especially with the emergence of dows and nfts and i think this could lead to a world where a lot of people have greater access and be able to win together as a group as well as share a lot of the positive vibes with those around them so sorry to jump into the different types of nft groups and just went through groups out there starting out with collector groups these are probably the most prominent types of groups today so collector dao's is the one of the biggest and sort of fastest rising category of dows out there a lot of notable names such as flamingo dow fingerprints and other folks there nft funds is also something that's

extremely popular and rising so these are generally groups that are focused on acquiring culturable cultural collectibles as an investment vehicle and they're generally structured just as a standard fund with lps gaming guilds is obviously another big category that we saw rise with axe infinity and they actually range from a variety of different sizes from like very large guilds such as ygg all the way down to smaller guilds with just like groups of friends who are coming together and they're generally focused on acquiring gaming nfts or assets as an investment vehicle or a revenue generating asset so whether it's like nft land as an investment or you know actual like axiom affinity nfts that they're lending out to scholars um

you know they're they're setting up as a group and really forming a large guild to be able to operate this profitably and they're oftentimes either structured as a standard dow as a fund or fairly unstructured if it's just like a group of friends coming together to collect these nfts project dowse is something that i'll dive deeper into uh this can kind of be structured in a bunch of different ways uh but there's a few main types that i'll talk about today uh the first one is just like generally focused on acquiring nfts from a specific type of project to either gain influence within the community or just to help grow the community itself uh some notable ones include like moon birds moon birds uh board api club azuki they all have sort of like subgroups within

their communities that are forming up to collect a lot of those assets and then a lot of times today we're also seeing nft projects themselves uh setting up formally as a dow and representing ownership of the community or the project via the nft and then lastly uh friend groups is one that really holds uh dear to sort of like what we work on here at castle which is really just helping more people get started with nfts and be able to collect nfts by pooling money together with friends and family i'm sure everyone here has been in some sort of alpha chat where people talk about like hey there's this new project minting or there's this new thing that you want to get into and so being able to pull money together to gain exposure to those digital assets while also reducing

individual risk and kind of just having fun with your friends is something that we're seeing a lot more happen especially in the collective ownership space and these are generally very unstructured and either set up just sort of casually or as like a syndicate fund and the back story of really how we started with castle is that we were just like you know collecting nfts with a bunch of friends uh we've heard about people sharing like metamask seed phrases uh or like you know we were just like collecting assets and using a google sheet to track them and we realized that this is something that quite a lot of people are doing out there today and you know using those safe or using various tools where you can actually leverage the smart contract technology to do this uh provides that greater access to more people so jumping into a couple of examples

more deeply collector dials obviously is again a very notable one where they're focusing on acquiring cultural collectibles for their community and distributing the ownership of various high ticket digital assets amongst all community members and oftentimes these collector dials are tokenized and they operate like a standard dow so some of the notable examples out there include pleaser dao flamingo dao who i have some of their nfts shown up here fingerprints dao and crysis dao which is uh one of the dallas that we work with over at castle um and i think uh some of you guys may or may not know the back stories of these flaming uh pleaser dao is like a really interesting one where uh initially it started as just a bunch of people uh trying to come together to bid on one of people pleasers uh initial

nfts and then they just like got a bunch of people to pool a ton of eath really quickly on the internet some of them knew each other some of them didn't and then they formed as a dao and now their main mission is to basically collect extremely highly culturally relevant items and then fractionalize them to the public so most notably they purchased uh things such as like the doge nft and they fractionalized that uh they purchased the wu-tang clan album and fractionalized that as well um and then yeah a couple other examples of like fingerprints flamingo and crisis are more uh just like general nft collector daos where they collect just a lot of like blue chip nfts uh and then they have like proposals and investments that they make together as a group um another interesting example that uh

some of you guys may or may not know about is this dao called ape dao which was actually started by someone that goes by the name of kylo ren nft and he initially created this to fractionalize 49 of his board apes plus one of his crypto punks and form this ape dow and the initial sale was raised in eth uh in exchange for the ape dow token uh which was then used to acquire additional boarded bjoc club assets uh and in january the the dow eventually started holding 81 board apes 81 mutant apes and 34 uh kennel clubs along with a bunch of other types of nfts and they were actually the third largest board ape holder uh and what's really interesting about this group is uh they actually have implemented a lot of really unique

uh systems for providing value and exiting out of the dow so they implemented a buyback program as well as a burn system for their ape token and earlier this year they actually began listing and selling their own assets uh via like a bidding purchasing website that they built and this was done using their ape token and all of the profits from exiting out of their ape assets was eventually returned and allowed the dow members to actually exit for profit and what's really interesting about this is that if you kind of go back to the last slide you can see that their ape token was trading at a 50 discount to its underlying book value um and when they actually started uh

selling these assets they actually got quite a lot of liquidity that they actually allowed the existing holders to claim in eth and it was actually like real tangible value that they were returning back to all the dial holders and so if you see kind of like from the initial launch of the token um all the way through basically like it held very flat um despite being in like november december we were going through like a peak in the tokens and then in february when they actually announced that they were going to sell their ape assets and allow ape holders uh ape token holders to claim that for eep people realized that they were like very severely undervalued i think it was like 50 below the book value of all of the

assets they were holding mostly due to just like liquidity and awareness of this dow but then once people heard about this uh they actually started buying the ape tokens and it spiked quite a lot in value and it started trading at the fair value of all of those assets and so they started selling out all of the different eight assets that they had and then they put that ape um sorry they put that eth into a liquidity pool and they actually allowed people to exit for a profit in eth so shifting over a little bit to talking about the different types of tools in the dao space or in the nft and dao space i borrowed some of these next two slides from 1kx didn't feel like making a whole brand new dow landscape slide

but overall some of the most notable ones uh is like for formation and legal i think syndicates open law and tribute have done a really great job for helping these folks set up and and have the right proper frameworks uh for funding mirror and juice box as well as you know a little bit of what we do at castle is really great for that treasury management um obviously who just presented before uh me as well as castle prism and a few other uh sort of multi-sig providers really help with treasury management payroll and fans financing is obviously done through utopia parcel multis and they've really gotten a lot of support there and then governance can be done on tally compound and marketing community is

obviously done through discord telegram twitter and things like that and then on the nft side obviously like you know a lot of folks are just minting or going through some of the existing marketplaces like openc as well as gym fractionalizing using tools like fractional or providing liquidity and nftx and nft phy and analytics and portfolio management is also another big category where people are using a lot of tools like nansen wegme.io and things like that so jumping over to a couple of other types of nft groups obviously collector dows is one category but there's a bunch of different groups that i you know can't go uh through this presentation without mentioning um some of the most interesting projects that i kind of want to call out are like cco

projects such as nouns um decentralized projects like loop uh are extremely interesting where they actually have put out like a great initial concept and have spawned a really awesome community of builders uh who are really trying to make the project work and building on top of this decentralized idea and then nfc projects and communities themselves such as like proof collective are another great example of nft groups and today a lot of dows and communities are also forming uh using nfts as a new method of access and like water and music is a great example where cherie had a really great like music uh article and blog and community and actually like when nft started booming um you know she joined c club and now has issued nfts

for her music community and is sort of more web three based and so kind of jumping into some of the projects obviously i'm sure you guys are all familiar with nouns but this one i think is probably one of the more interesting ones and actually kind of paved the way for a lot of the projects today where many new nft projects are forming as a dow or collective community group whatever you want to call it where all the members actively participate contribute and or govern the treasury and nouns was one of the first projects that really pushed this uh where you know all of the eth raised from the sale of the nouns go into a massive treasury where all the noun community holders get to vote on what they do with it and they use this generally to drive and push forward the goal of the dow

and then lastly a couple of emerging types of nft groups that i think are really interesting that we'll start to see pan out over the next couple of years is music film galleries and museums and enterprise so with music i think this is actually extremely interesting song camp and chaos i'm not sure if you're familiar with them uh but they're a great example where they've actually formed a collective of over 70 musicians to release music nft packs together uh and chaos packs is something that came out fairly recently uh and you can sort of like purchase it almost like nba top shot style and there's a strong use case also for like new age music labels um some of my friends are like founders uh over at catalog and they mentioned that there's a couple of uh record labels that are popping up and

you can kind of think about this as a way where you know a few people start to collect different types of music nfts or start to work with web three native artists uh and they can actually start to really decentralize the way that a music label operates uh not only from the sort of label side but also from the community and the marketing side of things film is also another really interesting category as well as other media types as a whole but i think music and film are sort of the two most notable ones that are starting to gain a little bit of traction one of the groups that we work with at castle is called next hollywood where they're an example of a film collective and they're currently going out there and minting and collecting various types of film nfts and you can kind of think

about a lot of different studio or sort of like production groups forming in the web 3 space around these different types of media opportunities uh galleries and museums is an interesting one that i actually kind of like bumped into a real life example for i'm not sure if any of you guys are from the netherlands but i was just in amsterdam uh last week before coming to ecc and i went to the moca museum which is a really like standard museum they have like a ton of banksy art and it was really cool being there and they had like an nft exhibition um you know i've seen a couple of these before but it was cool to see like an actual museum uh collect nfts themselves and put that on display and i think you know a lot of

people that i talk to are you know debating like all right what's the first nft that's going to actually start showing up in the louvre and all of that and then enterprise is extremely interesting as well um one that's maybe flying a little bit under the radar obviously there's like a lot of big companies getting into the nft space uh such as like nike with the acquisition of artifact and they're issuing nfts uh time magazine adidas they're all sort of like partnering or issuing nfts themselves uh but it's also interesting to see that there's quite a lot of enterprises out there starting to just collect nfts um if you you recall like last year or i think earlier this year visa acquired a crypto punk and we've also talked to a handful of like companies in the web3 space who are just like starting to buy up nfts and holding

it on their books and then just to put some visuals to it as i mentioned at the mocha museum you know on the on the right here or on the left here um they have like a couple of different nfts that they've purchased up themselves alongside you know banksy art cause and a lot of notable artists and yeah this was just a sort of fun example that i wanted to share because i just thought it was really cool that a massive uh gallery holding a ton of banksy art also had like an nft exhibition and it's really cool to kind of see that move forward so to sort of like wrap up a little bit um you know some of the top benefits of web3 groups today is really just like having new opportunities to create experiment and learn i think a lot of

these groups are really pushing forward like what it means to operate in the nft space and finding ways to really push the space forward and different things that they can actually do with nfts and providing utility beyond sort of like your standard nft roadmap the other great opportunity is that they're internet native and you can really form them with anyone and anywhere i think again pleaser dow is a really great example where it was just a bunch of people fairly random on the internet that sort of knew each other that started pinging all their friends to come together to purchase uh this one asset and it formed it to you know one of the largest collector dials today and then i think the other great thing

is that it enables greater access to resources i think for the overall narrative of collective ownership and you know what we're kind of seeing with nfts there's various options for fractionalization and buying nfts with friends but with nfcs itself it really created a bit more of this need for social and collective ownership because a lot of times if you want to get into blue chip nfts they are higher value assets where you know a lot of times not a single person would want to put up 100k 200k 300k themselves to own that blue chip asset and being able to split on that with friends and have a fairly significant stake in something that's also a little bit more of a social and fun asset uh is really awesome uh and for the sort of like operator side you know forming as a

group has quite a ton of benefits to being able to actually go out and build things market things uh and really start to operate within the space and then lastly some of the notable challenges uh with nft groups or just web 3 groups as a whole that we see is like one decision making mobilizing and managing a treasury is actually still quite difficult this is some of the stuff that we're trying to help support here at castle uh with treasury management specifically but we're seeing like with groups uh a lot of times coming up with an idea getting everyone to align on that idea and then actually going into whether you're a multi-sig wallet or like an eoa or hardware wallet and actually like making the trade and doing all the steps

takes quite a while especially with a larger group of people and it's something that is extremely difficult and sort of one of the counter arguments against groups because they inherently won't be able to move as fast as an individual who has just decided like hey i'm going to go out and buy a crypto punk or hey i'm going to go invest in axes and just like start to lend them out another big one is legal structure taxes and regulations i think this one obviously is a very hot topic but one that sometimes flies under the radar depending on the types of groups that you talk to again a lot of really great companies are working on this type of stuff such as like open law um syndicate and tribute and they've done you know quite a lot of quite a lot of legwork to really make

this compliant for everyone but a lot of times when we actually talk to some of the groups especially at the friend group level um you know they just decided hey i just want to buy some nfts with my friends and they're not really thinking about like what are the tax implications uh what is like the right structure to do this uh in advance and i think that this is a really big topic that's going to be super important to making sure that we do this in a way that people don't get in a lot of trouble down the line and then the last thing is actually really just like long-term sustainability revenue generation and like finding more things to do in the nft space or the web3 space as a whole with your group right now for you know friends or some of these dows a lot of times it's just

like collecting various types of nft assets or like you know issuing nfts themselves and i think that's kind of going to get us so far in terms of where we'll actually be able to see these groups sustain themselves you can't really just live on pure speculation forever and so being able to find alternative ways to actually like generate revenue or just like do things whether it's purely for fun entertainment or enjoyment purposes is going to be extremely important to making sure that more of these groups really thrive and continue to form and grow and work in the long run cool so that's basically it for my presentation thank you all for coming and listening to it

if you're interested in asking any questions feel free to ask right now you can contact me or us at castle on twitter and yeah i'll end it off there [Applause] yeah really quick so you mentioned like the the legal framework and uh with people that are like uh spread out globally and i know it's a like super vast question right but what

would be like a quick answer like if three people living in three different continents would would want to do a dow legally uh sorry could you repeat that last bit yeah sure if they if they would want to get nfts buy to get nfts together what would you recommend really quickly um for for like legal setup yeah yeah i think the the easiest one that we see in my opinion would be something like syndicate like obviously they have their whole like investment club structure and a lot of the legal stuff figured out and that's actually kind of like what we recommend to folks who want to have the proper structure with castle where like we help with treasury management we don't touch as much of the tokenization and like legal setup and so that one's sort of more easy to set up for anyone and we've seen just

like various groups of friends say hey we're gonna go set up on syndicate and then you know start using various other tools uh to be able to go and start collecting uh nfts as a group um if you are looking to do something a little bit more high touch i think you know i've had a couple conversations this week uh with folks and like i think tribute and like open law has done like a really great job where they only work with i think like 15 dows today but uh they they're like extremely high touch in terms of like being very opinionated and how you set up your dow and very forward thinking uh but those dials are a little bit more on the like higher end of like you know flamingo dials of the world where uh they need to go through and really think about like how is every

single investor in the dow going to be impacted how is this going to actually uh impact them from like their local tax situation depending on where they're situated in the world and you know how does the actual formation of the dow from a legal structure standpoint impact that thanks yeah cool um i guess if there's no other questions yeah thanks again for listening to my talk and hope everyone has a great day [Applause] you