only a sith deals in absolutes

“lol bro just buy it back”

Shinjurou, have you ever heard the tragedy of DickButt_Futax69? I thought not, it’s not a story the influencers would tell you. It’s a shitposter’s legend. DickButt_Futax69 was a verified collector on Twitter, so powerful and so rich he could use a tweet to influence the artists to mint meme art on Foundation… He had such a knowledge of memeology & market cycles that he could even pump or dump NFTs he’d never even touched.

The blue checkmark of the Influencer is a pathway to many abilities some consider to be unnatural.

He became so powerful… the only thing he was afraid of was losing his engagement, which eventually, of course, he did. Unfortunately, he taught the artists everything he knew, then his followers cancelled him in his sleep.

Ironic. He could save others from poverty, but not himself.

I mentioned in my last article I wanted to host a panel called “no one knows shit about anything”. So, we’ll continue the theme here because I have the privilege of being able to preach from a self-determined position of knowing nothing while being forced to contend with the obvious ego that comes from spitting out 3,000 words that comes with delivering a sermon.

Ego is a giant pain in the ass. It creeps into everything the larger it grows. It may make me a bit more irritable when sitting in traffic or leave me completely flabbergasted by a pundit’s ranting on a talk show. It’s hard to remove yourself from it. Social media only serves to validate your ego’s desire and each time that little number ticks up on your follower account, it’s easy to feel emboldened and declare yourself an expert in whatever thing you’re currently on a tear about.

An ego can drive artists to ask why a collector has listed a piece of their work incredibly low or drive a collector to validate their decision by creating a ‘new rule’ in a space where rules are clearly ill-defined. Let’s talk about this because when we are making up rules on the fly, there are going to be a lot of confused people who mean well that may adopt the wrong protocols for themselves that will inflict massive psychic damage on them over time.

The Tragedy of the Collector Hot Tub

Shinjurou, there once was a party held for the many collectors that exist within the metaverse. A large pool was rented out by the king of the metaverse. The king wanted to see it filled with a large volume of liquid assets and hoped to tax the invited collectors through the platform he offered them to display their wealth and wisdom. The king invited artists from around the realm to watch this party take place and spent months constructing an elaborate stadium around the pool from which the artists could watch the collectors share their insight.

However, the day before the party, only 25 collectors arrived. Furious, the king asked where the rest of the collectors were and demanded their presence lest they forfeit their lives.

“More collectors?” DickButt_Futax69 calmly replied. “This is all of us.”

After considering things for a moment, the king relented. It must be true. These 25 collectors are the only ones he could recall having ever been present during his travels and so a hasty solution was constructed. Instead of using the large pool, the king put all the collectors in the hot tub.

This seemed to be a decent solution. The stadium seats were very quickly pushed back several miles and when the artists arrived to witness the party, they could see the silhouettes of the collectors completely filling what appeared to be the promised large pool. In truth, it was the hot tub and being pressed so tightly together, the collectors became very heated.

“By the king’s decree, what is it the collectors demand to see!”, the royal social media manager tweeted through their megaphone.

“Draw a frog!”, one said.

“Draw a cube”, said another.

“A waifu, a waifu! We demand a waifu”, replied a handsome, red-haired vagabond.

“I would like to see more 3D rendered bald spacemen staring off into an infinite abyss from a space station”, the Irish one pronounced.

After each reply the crowd would burst into a round of applause. The collectors who received the loudest applause felt emboldened and a few promised large returns to those who immediately acted upon their requests.

The crowd quickly dispersed to accommodate the famed collectors and what remained were only a few, semi-bored artists drawing cats who weren’t paying attention to begin with and were only there because the king said they had to be.

As the artists got to work, presenting their work to the collectors - a few of them saw massive financial rewards. However, after a short time - the only returns others saw were “looks great”. As the final hour approached, a mysterious stranger entered the hot tub.

“I have 400eth and am looking to buy cats”. And so they bought all the cats from the artists doodling them in the nosebleed bleachers while everyone else was left with their rendered bald spacemen and frogs.

I’m afraid the cat markets will be fully operational when the other collectors arrive.

Do you know what happened next, Shinjurou?

A lot of confusion.

The moral of this story is that there is a small number of collectors dictating the direction of the space and the entrance of a new collector can force a complete reversal of the expected rules.

Droll December

December is a joyful season. A season which forces people to liquidate all their speculative assets in the pursuit of gift-giving and tax harvesting. A season of vibrant shades of red and green -- but mostly red candles. The season the Christmas bear comes down your chimney and beats the shit out of your portfolio because you’ve been a very naughty child flipping shitcoins and jpegs on the internet.

When you’ve been crabbing through the holidays, emotions can flare up hotter than a Joe Pesci Yule-log.

What do you want for the holidays? Perhaps a beautiful Adidas ad in your wallet or maybe a nice derivative of a Nike-acquired product that definitely wasn’t planned to be acquired by Nike from before the very announcement of the product line. But dang, you’ve spent the past 6 months slamming that high gas tx button that your liquidity is running lower than a carton of eggnog someone shoved to the back of your refrigerator in December 2017. How do you squeeze out enough magical internet money to make sure you aren’t missing out on this seasons holiday offerings?

If you’re a popular artist, you get busy. Your supply comes from you and if you can grind for a few days, you can offer some nice holiday sales on a higher volume of pieces created specifically for the collector looking for some last minute holiday presents.

If you’re a prolific collector, you min-list 75% of your collection at prices 500% below floor in the hope that some less financially depressed collector comes in to relieve you of your tax burden and speculative artwork that you weren’t even sure why you collected since you “don’t really understand art” to begin with.

What happens when this collector brings this holiday cheer to this popular artist? We get to witness the beginning of a festive celebration of ego!

The floor is imaginary. - shiomu.eth probably

The reality is that most artists that are participating in NFT space aren’t pulling in a massive amount of capital from sales. A majority (if they have even made a sale) are pulling in a modest amount from small collectors that focus on a niche they like or who are copy trading high-profile collectors hoping to resell a piece they’ve collected to that whale.

In my last piece, I wrote about how 1ETH=1ETH is probably a terrible rule to practice for new entrants to this space. People should work to become crypto-native over time but to demand an artist list each new piece at a higher and higher price will usually cause a stagnation in sales. 1ETH = 1ETH is one of those things that collectors like to push because it helps secure the value of their investment. There are a lot of things artists should consider when releasing work. I previously argued that consistency is more important than laddering and I still stand by this argument. However, an artist with a high volume of mints over time is likely to inflate their supply on the primary market and will make it difficult for a collector to sell on secondary for more than primary list price if there is a sea of unsold primary listings (with more coming every day). Consistency allows collectors to account for release frequency when viewing an artists profile and make a decision based off of all available transparent information. A shift in consistency creates new unknowns that can burn previous collectors.

That being said, the longevity of this space and the value of these assets are still a major unknown. A whale selling to a whale isn’t always done in a vacuum and a large sale gives the perception of an increase in value and can cause a mad dash from small collectors to scoop the floor on an artist who recently had a big sale. If that floor is majority held by one of the whales involved in the sale then they can make up for the purchase on either side. If the artist hasn’t lowered their floor prices, it makes it more lucrative for the collectors during one of these events.

So, as we’ve had months of collectors making certain demands on pricing towards artists - it’s no surprise that high profile artists may hold high profile collectors to a similar set of standards. I scratch your back, you scratch mine.

“We have ways of making you talk”

Let’s say, hypothetically of course, that you’re a collector that has just listed a piece of art on secondary markets for below the floor price of the available primary pieces. Let’s say that the piece of art you listed was from a semi-popular artist. Let’s say the artist DMs you saying you listed it too low. For sure, you own it so you can do what you want with it. Do you choose to:

  • Ignore the artist and just do your thing
  • Try to work a deal out with the artist in private
  • Start a crusade on Twitter
  • Some of the above

The high-profile crusade that has been cruising around the past few days is a very specific situation and is a unique, intimate situation between a collector and an artist. Because of the number of people jumping in with their own commentary and pushing the crusade forward, it may seem like this is a recurring problem. I want to talk about some of the commentary I’ve seen and then pause for a moment to share what other artists and collectors should consider as takeaways.

“If the art was worth what you’ve listed it at - someone would have already bought it”.

This is a somewhat valid criticism. In a bull market, it is very easy to determine where demand is for a particular artist or their works. Last time I mentioned that art should probably be judged based on a piece by piece basis instead of “this was created by this artist and their floor is X eth so all their art is valued minimally at X”. In a bear market (which we’ve been in since October) the assigned value of pieces from popular artists tends to drop and the secondary action on most 1/1’s dries up completely. A bear market presents a decent opportunity for collectors to secure pieces they find have value at optimal price points. If they are collecting to hold forever, that’s great. If they are collecting as a speculative investment - it is a gamble that could pay off if/when the bull market returns and if the artist they’ve collected continues to participate in the space.

As we are in December, I’m not convinced that ‘true value’ will be possible for a majority of secondary listings. Remember: value is derived from the buyer - but when there are 0 buyers, it is difficult to discern value.

To test this theory, I made a series of secondary listings on previously high demand artists. I’ll do a separate write-up on these experiments but my key takeaways from these experiments seemed to solidify a few things.

  1. Collectors will not likely be able to sell anything on secondary while primary listings are sitting unsold
  2. Secondary min-listing may trigger bids but the odds of hitting your desired sale price is going to be pretty low
  3. Eth volatility will result in lower primary final sales totals during bear cycles
  4. Don’t min-list if you don’t want to be approached by both artists and their collectors
  5. I have a suspicion that secondary sales of 1/1’s on platforms like Foundation are going to be difficult in general because collectors aren’t fans of giving other collectors more ETH. I’d urge platforms to allow collectors to set a royalty split on secondary listings higher than the minimum threshold.

In short, it is true that if there is demand then someone would have bought it. But we are a small hot tub of collectors and if we’re all semi-cognizant that there is a ton of uncertainty on when coin markets will “go back up”, a low probability of a short-term flip, and a chance we’re short on liquidity then it’s unlikely we’ll purchase on secondary unless the piece is insanely low priced.

“Just buy it back”

In the totally hypothetical situation outlined above, we are looking at a popular artist and a popular collector. As someone who has bought back pieces I’ve sold both on primary and secondary, I understand the value add of ‘just buying it back’. But I don’t think this should become one of the commandments of participation. Most people in NFTs aren’t high profile but instead are smaller creators doing their best to stand out.

Let’s say you are a small artist and have only sold a few pieces. Right off the bat, you have not made enough ETH from your sale to even buy the piece at the price you originally listed it at. After commission fees and mint costs, you are not breaking even on a sale.

On Foundation, the average mint + list cost the past month has been between .02 and .08. Let’s just say it’s the best case scenario where it costs only around .0125 for a mint cost and list cost. You list a piece at .45 and it sells. After sale you receive .385 after fees. After applying the costs to mint/list - you’ve made .35ETH.

While it’s unlikely one of these small creators would even so brazenly call out a collector that lists “under value” - we have to consider that most influencers are followed primarily by these small creators.

Let’s consider the notion that no one knows anything (including me) about how things will play out in this space long-term. This likely means that everything anyone says is mostly irrelevant to anyone else reading it. Things are not so black and white. Dealing in absolutes is great for engagement but not so great for longevity.

What should we consider?

There’s nothing wrong with having these conversations about the etiquette behind things like listing pieces or flipping them. At the end of the day, the assets are the owners to do what they will with.

But I think we should consider how we approach these conversations. Snowballing a minor criticism into a major witch hunt seems a bit scary to onlookers.

For artists:

Finding a community and niche is important. Talked about this before. But you can’t really choose who ends up owning your artwork and that should be something you come into the space recognizing. The more popular you are the more critical lenses will be shined on how you interact with those around you. It’s okay to feel burned by someone but usually the best approach would be - try to engage and then if it doesn’t work out the way you want, just end the conversation. It’s not worth the dramatics that come with engaging with others of equal ego. When we talk about consistency, that isn’t just in pricing, it also means in the way you interact. You don’t have to be afraid of tarnishing your image if the way you’ve interacted is consistent. Like I’ve said before, act authentically and you’ll find others you resonate with. Remember, the only thing you are left with after the money is gone is your reputation - and that’s not something that can be solved with economics.

For collectors:

You’ve spent your money and you can do what you want because of it. However, this is a space that is ever-changing and the methods that work for you will not work for everyone. I don’t think everyone needs to hold hands and skip along in peace and harmony but consider for a moment the implication of burning an artist at the stake over a trivial interaction through DMs. We’re all in this tiny hot tub together and all it takes is one new collector to throw around a shitload of ETH to change what we think is the norm. If we want to eventually grow large enough to enter the king’s pool, we should consider there’s a lot to learn from egos outside of our own. Remember, the only thing you are left with after the money is gone is your reputation - and that’s not something that can be solved with economics.

NFTs are not just one group of collectors or artists. There is no one rule that works for every subculture within the NFT space. Just like the internet, there are various groups with different interests and different values. Those values are reflected based on the pieces bought and sold but they are also cemented in the interactions we have with each other. Remember, the only thing we are all left with after the money is gone is our reputation - and that’s not something that can be solved with economics.

Shin, don’t forget the tragedy of DickButt_Futax69. Though he could influence markets and rally people, after the goodwill was gone - he was left with nothing. A legacy squandered for the sake of cheap engagement during boring bear cycles. Also Shin, do you wanna buy some deathsticks?

I’d like to thank Shiomu.eth, Morello.eth, KaijuKing779.eth, abdulaziz.eth, and ligaratus.eth for their perspectives. I’ve borrowed some of their thoughts they’ve shared as framing in this piece, though they may or may not agree with the way I’ve interpreted them. I’m appreciative of the ongoing conversations.

I’d like to thank shinjurou.eth for the Featured Image artwork and being an ever-engaged apprentice of the dark side. 50% of the proceeds from this article will go to Shin.

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