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WHY THE ART INDUSTRY AND HOW BIG IS THE MARKET?Art has always been at the heart of human communities and civilisations. It has been with us before we knew how to write or talk and long before we invented money. From the Paleolithic cave paintings to the Da Vinci inspired art on the Pioneer spacecraft traversing the universe, art has always accompanied us as a species. However, the current art market is stagnated with the majority clinging to business models that have not evolved in the last 500 years. Far from embracing new transparent opportunities, the art market is probably more closed and opaque than ever. We are changing this.
Imagine a world where all art is preserved and secured for future generations. Imagine that museums can create completely new revenue stream to rely less on government and private donations. A world where artists can find patrons and collectors easily, and receive profits from their works even after the initial sale for the lifetime. Imagine you can buy inaccessible icons of art like the Mona Lisa or the Night Watch. World, where you can always be sure that the art you are buying is original, and where you are paying one tenth of the fees and commissions you are paying now. This is the world we are building.
The current estimated size of the current art market is between $40bn - $60bn (artnet, TEFAF, Art Basel). Within that, the online art market grew by 12% in 2017 to $4.22bn from $3.75bn in 2016 (Hiscox report). Estimates for 2018 for online art market are in the range of $5bn. Art market has strong growth projections, as the number of wealthy people in the next five years will increase by 43% (from 2.5m to 3.6m people - KnightFrank report), this will have a positive impact on luxury and art markets.
PROBLEMS WITH THE CURRENT STATE OF THE ART INVESTMENT MARKETThere are numerous problems that investors face when trading art. The key challenges are around the inaccessibility of the art market and lack of trust and transparency.
Inaccessibility of the art market
No matter what type of investor you are, you will find that access to the art market is extremely limited. The art space is very much a walled garden and for most investors and art lovers is kept closed. Many deals are happening in secrecy, at exclusive showings and meetings. A handful of art experts and galleries are calling all the shots on what should be considered art and its value. Another difficulty is connected with the evolution of art. Currently most of the art is being created using new media, like digital photography, animation, video, performance, choreography and more. This type of art struggles to break through and get significant support of collectors and investors because of how hard it is to “own it”. Of the few attempts so far to make new media art ownable a successful solution has yet to be found. How do you make a unique, ownable, original version of the new media art piece? We believe that finding a solution to this problem will mark the future of art, as most art in the coming years will be created using new media.
Lack of transparency and trust
Opacity is the second biggest problem on the art market. There’s no transparency on either prices or history of ownership (provenance). Without clear information and public records most trades rely on personal trust. The art market is flooded with forgeries that results in millions of dollars of losses for investors that put their reputation at risk (if they resell an art piece that is later discovered to be fake).
Price transparency
Lack of price transparency is causing investors to achieve much lower profit margins and return on investment multiples. There are numerous intermediaries and middlemen in the art market, both on the sell and buy side. Profits are limited by high fees and additional costs like sellers fees, buyer premiums, insurance, storage, transportation, authentication or consulting advice (easily totaling to 20%-50% of the total price). High fees are eating up profit margins, stalling trading and making art an even more illiquid asset. Prices are often kept secret and, even when publicized, they are rarely accurate. This state of the market is different to almost all other widely-traded investments classes, where one can easily track prices such as bonds, stocks, commodities or real estate.
Ownership and its history (provenance)
Ownership history is notoriously hard to prove in the offline world. The current system relies on personal trust which leads to many scams, where even the biggest collectors and galleries can be fooled by forged art. This situation makes people hesitant to invest in art and so investors trade less than they could. Moreover it drives fees up, and reduces profits, as investors need to rely on numerous middlemen to reassure them about the provenance of any art piece.
SOLUTION – INTRODUCING ORION VAULTOpen access to the art market for investors across the globe
We are radically improving access to the art market. We offer new investment opportunities for investors around the world, depending on their individual needs, pocket-size and preferences. There are three new ways in which investors will be able to access the decentralized art market. Each is tailored to a slightly different audience, beginning with high net worth investors, then the occasional ones and finally newcomers:
1. Create new digital asset class in the art world - a unique, digital masterpiece
By using specialist photographic equipment (gigapixel camera with laser and sonar), and partnering with museums and artists, we will create a state of the art digital image. There will be only one unique digital image per art piece. Together with artists, curators and experts we will refine it as close to the original as possible. Then, it will be certified and signed by the museum/artist/curator with the commitment that only one will be ever produced. This digital image is then sold at auction, with ownership tracked and transferred through the blockchain on our platform. The owner of such a piece is able to own the Mona Lisa and present it on a screen at home. Moreover, the owner has safe and comfortable access to top-quality artwork and, if he chooses, can appear on blockchain repository as the legal owner, building authority and getting recognition from like-minded collectors. This is the only way to own some of the most famous masterpieces in the world. Investors will be able to trade those digital masterpieces between themselves directly and discretely with low fees, and clear ownership tracked on blockchain.
Digital Masterpieces use blockchain technology to make them unique and ownable. The same mechanics is used for all new media art like digital photography, video, performance, choreography and many more. Thanks to blockchain certification there will be a clear owner of each specific art piece, even if that work is purely digital. Owner will decide whether to make it publicly available, something quite likely, similar how “normal” paintings have owners but are still presented in museums or online for free. We can imagine that the owner of such Digital Masterpiece will choose to make it available publicly, while only he retains the ownership and rights to sell or donate it. We believe that this opportunity is crucial for the world of new media art, and because this kind of art will be a majority of the art in future, this solution is vital to the whole art world.
2. Tokenizing art - allowing investors to own a percentage of an artwork
When artwork is tokenized, investors can easily trade percentage shares of ownership of the given artwork. For example an investor can own a 5% share in a famous Picasso or Da Vinci digital masterpiece painting. The ownership can be tracked, and the investor can later sell their share of the painting. This solution gives access to mid-sized, occasional investors to participate in the trading of the most valuable art pieces. Not everyone can buy an original Picasso work, but many will be able to invest few thousand dollars to own a percentage of it. Even $10 000 or $20 000 can be enough to own a small percentage of a multimillion dollar masterpiece. This allows for more liquid investment compared to other options available for this level of capital.
Tokenization gives access to the fine art market that occasional investors could not otherwise access. At the moment, if investors put their money into an individual artwork, it can take years before they can sell it at a profit. The same is true for art funds that can take years to resolve with uncertain returns. With tokenized art investors can trade parts of their portfolio much faster. In tokenized investment the shares of the painting can be traded at any time; there is no need to wait for the whole fund to be liquidated. This opens new opportunities for investors by giving more flexibility as to when and at what price they can trade. Moreover, tokenization of art is a good opportunity for investors to diversify their portfolio. For example instead of investing in a single artwork, they might split the investment in 5% allocations across 20 different artworks.
3. Patronage with investment options
For some investors it is difficult to put aside $10 000 for even a small tokenized investment. Our mission is to open access to the art world for everyone, therefore we are also creating a new patronage model that allows investors to support artists and invest in the industry with smaller amounts of money. With this model everyone will be able to become a patron and support their favorite artists with small donations. Even more importantly such patrons will be able to become investors, earn a return on their contributions.
How the patronage works:
A patron identifies an interesting artist/s that need support to complete their work.
The patron agrees with the artist on the level of support (e.g. 1000 OV Tokens a month = approximately $300) in exchange for 15% share of profits from sales of their artworks in the future.
As the supported artist starts to become recognized for their talent and begins to sell their work (via our platform), the patron receives a profit share e.g. if the artist sells 5 artworks for total amount of 1 200 000 OV Tokens, the patron receives 180 000 OV Tokens (= at current price approximately $60 000).
Tokens can be used to invest in more artists and/or to buy the digital masterpiece or tokenized artworks for the investor’s portfolio.
II. Trusted and transparent blockchain based platform
Blockchain gives us opportunity to not only offer access to new investment opportunities in the art market, but also to trade with much greater trust, transparency and scale than any other platform so far. There are two main benefits that separate our platform from all currently available online and offline solutions:
1. Ownership on blockchain
Our platform allows users to see who owns the rights to a specific art piece. The ownership can be anonymous, or public if the owner chooses so. Tracking of ownership on the blockchain creates a history of when and at what price deals were made, in a fully transparent way. As the ownership is tracked on blockchain there is no need for multiple intermediaries to connect investors and verify ownership. Investors are able to deal directly between themselves, speeding up the whole process and retaining more profit.
Here are a few examples of how ownership can be tracked for different art investments:
Let’s assume we want to track the ownership of the digital masterpiece, like the digital Mona Lisa. We can see when the certificate of ownership was created, by whom (in this case by the Louvre - and who personally signed it off), with detailed information about the piece like dimensions, imperfections, markings etc. Once the first sale is completed, the certificate lists the originator (Louvre) of the artwork as well as the new owner and the price that it was purchased for. The blockchain certificate keeps track of all price and ownership history.
Tokenized artwork can be owned by multiple investors each holding a percentage of the artwork. The main difference in tracking ownership in tokenized art is that the certificate of ownership will have all current owners (addresses associated with them) together with the information on the current percentage that each of them holds. In this case we will also track the history of price, trades and ownership.
Finally, there is ownership of a percentage of a physical artwork, e.g. a share in a physical Picasso painting that is tokenized. In this case the artwork is stored securely in a fine art storage facilities (e.g. freeport at Geneva airport), while on the blockchain we track who owns what percentage. Investors can trade parts of their ownership on blockchain while we track how this changes over time. It sounds simple, but it will be a big breakthrough in the art world.
In all cases trust is based on transparent data existing on the blockchain, not on multiple intermediaries. Implementation of blockchain ownership and provenance is seamless with no extra steps
for investors. All transactions on our platform use blockchain provenance automatically. This makes Orion Vault the most trusted and transparent provenance tracking platform in art history.
2. 10x lower fees
Thanks to blockchain ownership tracking, there is no need for third party verification. Elimination of intermediaries increases the value for investors on both sides of the deal. Sellers are able to keep more money from the sale, while buyers pay lower fees. The whole transaction process is faster and smoother as fewer people need to be involved and most touchpoints are automated. Consequently, Orion Vault is able to operate on up to 10x lower margins than current solutions. All fees are coded in smart contracts, making them fully transparent. Investors can be confident that they are getting the best deal and that they are treated fairly.
WHAT IS THE PRODUCT?
Digital Masterpieces Use cases
1. The first use case for digital masterpieces is to allow the purchase of a unique blockchain-coded digital version of the most famous physical artworks that cannot be purchased otherwise. These will be genuine masterpieces such as the Mona Lisa, Night Watch etc., that are stored in museums and will never be publicly available for sale. We want to partner with museums, galleries and experts in capturing art with gigapixel camera to create ultra high-quality digital scans. Then together with museum experts and curators we will refine the image to keep it as close to physical piece as possible. Museum experts, curators and all involved in the process certify that only one such copy will be ever created. A certificate of ownership is created and recorded on the blockchain, including all details of both the physical and digital masterpiece. This creates a trackable and ownable version of the digital masterpiece and a detailed database of famous artworks including information on dimensions, metrics and even their imperfections. The digital masterpiece will be available for auction and after sale there will be the first new owner. The owner will be able to directly sell the digital masterpiece to another investor (through the platform), or choose to keep it and start building their digital masterpieces collection. Finally, the owner will be able to tokenize it and sell smaller shares of ownership (more on that in the tokenized art use cases).
2. The second use case is to partner with famous contemporary artists to digitize, code on blockchain and certify their artworks. We want to create a digital state of art and allow contemporary artists to move all their work into digital world. After the digital-blockchain version is created (again only one will ever be available) the original physical piece will be destroyed. Therefore only the digital-blockchain version will ever exist. This can seem a radical approach, however there are a number of reasons why this can be be interesting for both investors and artists. Firstly, the initial digital masterpieces created in this way will be first of their kind, possibly starting a new artistic trend and attracting a lot of publicity (especially when done in partnership with well-known artists). This has potential to dramatically increase their value and desirability. The second reason is the practicality of it, digital masterpieces have much higher chance of being preserved for centuries, as they are not as fragile as the physical ones. Digital masterpieces are also easier to trade and easier to enjoy, as they require no special insurance, storage conditions and transportation. Finally, this option is great for preserving and commercializing physical, street art that is notoriously hard to be ownable and tradeable in the offline world. So far it has been extremely difficult for street artists to monetize their work as it is often destroyed soon after they create it.
3. The third use case is to allow artists who create only in digital space (such as video, music, interactive, performance) to create unique digital art pieces ownable on the blockchain. This unlocks new potential for new media, digital art, which has struggled with ways to capture the value of their unique creations. The process is simpler as there is no need to capture and digitize the physical art. Artists who are registered and verified on the platform are able to create the ownable digital certificates for their art themselves. This can open the art market to much wider audience both in terms of investors as well as artists. On one side of the spectrum we can monetize ephemeral fine art (e.g. performances done by Marina Abramovic), while on the other side allow for commercialization of contemporary entertainment (e.g. famous YouTube artists can offer for sale the one and only certified first recording of his first ever YouTube video).
Tokenized Art Use cases
1. The first use case for tokenization of art is to create an easy, trusted and transparent way to own a share of physical artwork. Most fine art pieces are stored in special facilities, similar to like gold that is kept in a vault. Current owners of physical artworks, whether private or institutional investors can tokenize them and sell partial ownership rights. All physical artworks before being tokenized on our platform go through an independent audit, to confirm their authenticity, provenance, storage condition and insurance value. Due to the physical nature of the tokenized asset, security and legal structure is of key importance. After an audit , investors are able to buy and trade the percentage ownership of those artworks on our platform. This provides them with more liquid and secure investment than traditional art funds. At the same time the original owners put their collection to work, realizing partial profits and using them for other investments (like expanding their collection). [/size]
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2. The second use case within tokenization is shared ownership of digital masterpieces, like the digital Mona Lisa, contemporary artist’s artwork, or digital performance video. In this case the process is much easier than in tokenization of the physical artwork, since there is no need for auditing and secure storage of physical art. Ownership of digital artwork is tracked on our platform, as in the example of digital masterpieces. The main difference to the digital masterpieces use case is that instead of one owner, who owns the artwork fully, in the tokenization model there are multiple owners, each having a percentage. Investors are able to easily trade their percentages directly between each other. This also creates new investment opportunities where one investor buys and fully owns the digital masterpiece and can later tokenize it and sell it to a wider group.
III. Art Patronage Use cases
1. The first use case for art patronage is donations. Art afficianadoes and supporters are able to help new artists develop their talent. We want to make sure that artists benefit fully from donations, which is why the fees are up to 10x lower than current solutions. Investors can support artists as a form of charity contribution, because they want to help or they enjoy an artist’s work and want to build future relationships. On the other hand, investors can decide to make donations in return for non-monetary rewards like autographs, vlogs showing how they work, Q&As, events/meetups or pre-sale options. This allows both investors and artists to try the platform with very low exposure. It also brings a lot of new participants who in the future can become bigger and more experienced investors.
2. The second use case for art patronage is supporting artists in exchange for a share of profits from future sales done by the artists through our platform (the percentage to be agreed between investor and artist). This gives opportunity for even new investors to participate and benefit from the art market with a relatively modest commitment. This is also a great way for investors to build relationships with artists and potentially establish long term cooperation. At the same time artists get more funds to help them create and promote their work. The whole process is smooth: artists receive their funds automatically each month, and once they sell their artworks through the platform, investors instantly get their share. As all the data is being aggregated on the platform, investors are able to find the most suitable and promising artists, while artists get exposure to the patrons most likely to support them. Moreover, the platform helps artists (and investors) to properly price their work, taking into the account artists’ popularity, art trends, audience and history of similar investments/deals.
Product UX
Orion Vault platform lets users discover new investment opportunities in an easy and fast way. Our explore algorithm optimizes the experience based on the types of artists, assets and source of artworks (e.g. museums) that you prefer to invest. Detailed views let you enjoy the artwork as well as get key information about its title, artist, owner (if ownership was set to be disclosed), initial certification (e.g. artists/museums/curators/art experts), chain of ownership and financial performance. Your portfolio view lets you track the performance of artworks in possession. This is done by our pricing algorithm that constantly analyses new trades on OV platform as well as crawls the external databases to estimate the current market value of your assets. The algorithm applies also to sellers, buyers and artists to advice them on the market price for their deals. The whole experience is clean and fast, to enable users to make best investment decisions and enjoy their art.
WHY BLOCKCHAIN? Tokens are essential to create a healthhy and growing investment ecosystem, they will lower transaction fees, speed up interactions between parties and automatically code the art piece ownership on blockchain.
Key interaction between parties
Museums, galleries and artists are able to use OV tokens to digitize the unique art pieces and code ownership on blockchain. Initially we will provide the service for free to get biggest museums and artists to cooperate with us. In the future as more and more museums, galleries and artists join our platform and code ownership of the art pieces to the blockchain, they will use OV tokens to benefit from the service. Museums will be able to use tokens to fund operations and renovations on much greater scale than ever before.
Investors are able to buy the unique digital, blockchain encrypted, art pieces using the OV tokens. They can also buy percentage ownership in tokenized digital artworks. Investors can trade directly with each other, as well as with artists with no need for 3rd party.
Patrons and Investors are able to support and invest in artists in the following ways:
1. Charity contribution - support artists of their choice without investment benefits.
2. Rewards - support artists and get unique access to artists work and life (updates from work, events/meetups, pre-sales, Q&As etc)
3. Profit share - for significant support over time, investors can participate in profits generated by artist’s work. Percentage split and duration of the agreement will be specified by investor and artists and coded in the smart contract, making any settlements automatic.
Artists can use tokens to get support from community experts - for example more experienced artists, art judges, promoters. Tokens will be also used to enter into art competitions and promotions organized by OV and community. This will further help artists improve and promote their work.
There are two main tokens that will be used on the OV Platform. The first is the Orion Vault Coin (OVC), ERC 20, fungible, utility token, that will be used for the payments and using special features on the OV Platform. This is the token that will be issued during ICO. The second token in Digital Masterpiece, non-fungible token, this token will be unique and will represent specific Digital Asset (artpiece). Those tokens will be created by certified and verified by OV, users (artists and museums), and will be traded on the OV Platform, by using OVC.
TOKEN GENERATION EVENTICO Fall 2018
Pre-sale - precise dates to be announced
Main sale - precise dates to be announced
380 000 000 tokens created - this is the total supply. We will not create additional tokens.
280 000 000 tokens available for ICO
1 ETH = 3846 OV tokens | 1 OV token = approximately 0.13$
ICO hard cap at 72 800 ETH | approximately 36 000 000$
ICO soft cap at 16 000 ETH | approximately 8 000 000$
Minimum contribution 1 ETH main sale | 20 ETH pre-sale
Pre-sale 80 000 000 tokens at 30% bonus
Main-Sale 100 000 000 tokens at 20% bonus
Main-Sale 100 000 000 tokens at 10% bonus
INTRODUCING THE OV UTILITY TOKENOrion Vault Platform is open to everyone for sign up.
- Users that want to trade, or artists/museums who want to introduce their artworks, are being verified as the first step.
Upon successful verification an anonymous account of OV User is created and associated with an EOA (External Owned Account - so called private account/address) on Ethereum Blockchain. OV User has a choice to remain anonymous within OV Platform while their identity is securely stored either offline by OV Platform or a specialized third party.
OV User, who initially will be one of the biggest museums or known contemporary artists can submit an artwork certification request. OV Platform along with third parties exercise an audit to verify the artwork’s authenticity, provenance and current storage conditions.
Upon a successful audit a Digital Masterpiece in ultra high quality is constructed and available to the OV User along with a public Digital Masterpiece Certificate. The certificate is ERC721 token, governed by Smart Contract. The certificate is issued to blockchain by OV and assigned to OV User’s EOA to publicly designate ownership status.
The encrypted Digital Masterpiece is stored on OV Platform and 3rd party distributed file systems: either on traditional cloud servers (e.g. Google Cloud, Amazon Web Services) and/or IPFS (e.g. Filecoin).
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Trading setup
Orion Vault Platform aims to provide secure and fast trading environment for Digital Art Assets. Investors are able to trade directly between themselves, which speed up trades, allow for more participants to invest - hence increasing liquidity, and offer lower fees, hence retaining more profits for investors. OV offers multiple trade options. From fix priced trading to various auctions models. It is up to investors to choose their most prefered ways of trading. Below we look at simplified fix price trade:
Investor 1 organizes assets using OV User Interface to allow others to find them on the Orion Vault marketplace. Another OV User (Investor 2) explores Digital Masterpieces available for sell. OV recommends a price for trade, using our pricing algorithm that constantly analyses new trades on OV platform as well as crawls external databases to estimate the current market value of your assets. The algorithm applies also to sellers, buyers and artists to advice them on the market price for their deals.
When Investor 2 finds an interesting Digital Masterpiece (ERC721) she/he extends an offer (agrees to buy at the price stated by Investor 1) on OV Marketplace. Investors reach agreement and a Trade Smart Contract is signed by both and send to blockchain for execution.
Investor 1’s address (EOA) receives 1 000 000 OVC (ERC20) and Investor 2 acquires a Digital Masterpiece Certificate (ERC721) i.e the DMC (ERC721) is assigned to OV User’s EOA to publicly designate ownership status.
Patronage setup
Patronage is aimed to provide open art investing for millions of people. Investors with even few hundred dollars (or equivalent in Orion Valut Coin - OVC) are able to invest in young artists and potentially get share in the profits that come from sale of their art. At the same time artists gain a new way in which they can be supported, and receive basic funding to pay for materials and bills as they create a new collection. Both Patrons and Artists can build long lasting relationships. Here how the simple setup can look like:
Artist and Patron as OV Users explore OV platform searching for patronage opportunities. When the match is made Patron and Artists sign a Patronage Smart Contract and send to blockchain for execution.
The patronage can have multiple benefits which are decided by the Artist and the Patron based on a level of support. For example for small support, equivalent of 5$-50$ per month Artists might offer a unique view into their work, showing pictures and updates from work, scheduling virtual Q&As or real life meeting, and so on. For a more substantial support e.g. 200$+ per month Artists might offer a percentage of profits generated from the future sell of their collections.
For instance the Patron commits to support the Artist donating 500 OVC (ERC 20) on monthly basis for the next 12 months. The artist commits to share 10% of sell profits with the Patron. The Patronage Smart Contract triggers automatically once every month transferring the donation to the artist. Upon every trade the Trade Smart Contract on blockchain checks for existing Patronage Contracts in place related to a seller. If a seller is in a Patronage relationship then shares agreed in the Patronage Contract are automatically transferred to a Patron. In case the monthly donation doesn't arrive on time the Patronage Smart Contract loses its power and doesn't apply to either Artist or Patron anymore.
TOKEN DISTRIBUTION380 000 000 tokens created - this is the total supply. We will not create additional tokens.
280 000 000 tokens available for ICO
1 ETH = 3846 OV tokens | 1 OV token = approximately 0.13$
ICO hard cap at 72 800 ETH | approximately 36 000 000$
ICO soft cap at 16 000 ETH | approximately 8 000 000$
Minimum contribution 1 ETH main sale | 20 ETH pre-sale
Pre-sale 80 000 000 tokens at 30% bonus
Main-Sale 100 000 000 tokens at 20% bonus
Main-Sale 100 000 000 tokens at 10% bonus
Remaining 100 000 000 tokens will be split as follows:
25 000 000 tokens in OV reserve for liquidity of the platform
20 000 000 tokens for Community and Partnerships
35 000 000 tokens for OV Team with 1 year lock up (16 000 000 Founders; 19 000 000 for remaining team members)
17 000 000 tokens for Advisors, Early Backers
3 000 000 tokens for Bounty[/size]
BOUNTY - Will be announced soon, join our official TELEGRAM channel for more info. TEAM AND ADVISORS
