EulerBeats could overturn the Music Industry and birth a Record Label DAO with its DeFi economics.
This week, in the midst of the Hashmasks frenzy, a ConsenSys backed company quietly dropped EulerBeats, “an ultra scarce collection of 27 art + music originals.” Each original is a non-fungible token (NFT) that stores a unique song and animation eternally on the Ethereum blockchain. This alone is a technical breakthrough. EulerBeats went one step further. Not content to simply pioneer a new genre of NFTs, EulerBeats also programmed each NFT with a novel economics that is destined to spark skyrocketing value.
EulerBeats will soon attract immense attention from musicians, the music industry (producers, record labels, etc), NFT collectors and DeFi speculators.
It will likely will join Hashmasks as one of the most sought after NFTs — especially because it is a first-of-its-kind blockchain music. The nature of EulerBeats’ tokenomics rewards strategists, it is therefore crucial to grasp the significance of EulerBeats early and move decisively.
EulerBeats is a technological breakthrough for storing art and music on the blockchain.
While experts in generative music quibble over whether EulerBeats is the first (or second) to store audio on the blockchain, the fact remains that EulerBeats has accomplished a technological breakthrough that will have a far reaching impact.
What, specifically, is it that makes EulerBeats technologically superior? For that, you’ll want to dive into an article written by one of the developers:
On-Chain Artwork NFTs
Not all art NFTs are created equal. Some seek to overcome the transience of the digital medium. Let’s find out how.
The “too long didn’t read” version is that everything needed to reconstitute a EulerBeats track is stored directly on the Ethereum blockchain. This is not true of other NFTs (such as Cryptopunks) which are stored off-chain. Presumably, the value of NFTs stored on-chain should exceed that of NFTs stored off-chain as on-chain storage guarantees the artwork will exist eternally.
“EulerBeats are are generative visual & audio art pieces. The recipe and instructions to re-create the visualization and music reside on Ethereum blockchain.”
The tokenomics of EulerBeats is superior to other NFTs and will attract DeFi speculators
EulerBeats is an NFT which unique tokenomics that will attract DeFi speculators. Those who understand the game theory of EulerBeats will profit significantly from being strategic.
Here’s the key information you need to understand:
EulerBeats is an ERC-1155, a token that is both a Non-Fungible Token and a Fungible Token.
This means there are two kinds of EulerBeats: there are originals and there are prints.
For each EulerBeat there is 1 original and 120 potential prints.
EulerBeats originals were minted for .271eth and are now being traded on OpenSea. The cheapest original is currently 24.99eth ($47,900).
Owning an original comes with a few perks, the two most important being:
- Perpetual Revenue: “All EulerBeats original owners will earn 8% of the revenues on each print sold of the original they own.” (source)
- Commercial copyrights: “Minters of an Original NFT receive worldwide, non-exclusive, except for commercial exploitation which shall be exclusive to the Minter, transferable, royalty-free license to use, copy, and display the Original NFT, including for commercial purposes.” (source)
In other words, the Original NFT is a revenue generating NFT with vast untapped commercial possibilities. The revenue sharing is handled on-chain by the EulerBeats smart contract.
The second kind of EulerBeat is the print and this is where the economics gets far more complicated and enters into game theory territory.
Prints are “are replicas of an original” that grant the owner personal use copyrights. Up to 120 prints may be made of each original.
The price of each print increases along a bonding curve. Which means that “as the number of prints in circulation grows for a particular original, the price of issuing its next print increases at an exponential rate.” (source)
For example, the 19th print of a track costs 0.538eth, the 52nd print of a track costs 2.554eth, the 60th print of a track costs ~5eth and the 100th print costs over 100eth.
Prints have instant liquidity because they may be “burned”—sold back to the EulerBeats smart contract—for 90% of the value of printing a track. In other words, if it costs 1eth to print the next track then a print can be redeemed for .9eth.
Consider three caveats, and the contours of the game begin to be clear:
- Prints of the same LP are the same
- Individuals may buy multiple prints of the same LP
- Prints can be traded and sold on OpenSea
I’ll leave it as an exercise to the reader to unpack the full implications of this on the value of prints.
Here’s a hint to get your started:
EulerBeats will ultimately lead to the first Record Label DAO
With the basics of EulerBeats now understood it is possible to anticipate various scenarios for where the project will end up. There are many possibilities—the one that I’d like to explore briefly is also the one that seems most natural: the establishment of the first Record Label run by a Decentralized Autonomous Organization.
Imagine if, for example, the original of LP 1 was owned by everyone who had a print of LP 1. To make it happen, the original print would be transferred to a smart contract governed by the owners of prints of that OG. Then you’d have 120 potential shares whose entry price is on a curve and when new owners come in, the 8% revenue would be redistributed to existing print owners. This creates a virtuous circle with real revenue and commercial possibilities. This print owners DAO could exploit the track commercially as well, bringing additional revenue to the collective.
The value of the 27 distinct EulerBeats will depend on the canny strategies devised by their owners to incentive print ownership. Some owners may pursue an airdrop strategy. Others may sell their stake to a collectively run DAO. And a few might go rogue, attempting their own maverick strategy to turn EulerBeats into a DeFi darling.
EulerBeats has opened up a world of new possibilities. And it sounds good too.
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