Hashmasks could decenter the art world, upend DeFi, and trigger a dramatic transfer of wealth. Will it?
Last week, an anonymous collective of artists released Hashmasks, a set of 16,384 “unique digital portraits” that are now permanently stored on the Ethereum blockchain. Hashmasks landed during the boom in the market cap of many DeFi projects—and most attention was, and is, firmly fixated on the financial sector within the cryptocurrency economy—and yet, even by DeFi standards, Hashmasks was a prodigal success: raising more than $14 million with a refreshing, authentic aesthetic. Single hashmasks have since sold for as high as $650,000. See current market action at OpenSea.
To tell you the truth, my imagination has been captured by Hashmasks—so much so that I had trouble sleeping last night (which is rare for me)—that’s why I feel compelled to explain why you’ll soon be seeing Hashmasks everywhere.
Hashmasks are alpha.
Hashmasks are at the edge of the edge of the edge.
Most people are still struggling to grasp cryptocurrencies. Fewer still are comfortable navigating Ethereum. And fewer than that are experienced with valuing art on Ethereum. Furthermore, Hashmasks are not just art—if they were only an art project then I wouldn’t be rushing to write this article—Hashmasks are interdisciplinary. Their design is influenced by the key innovations driving decentralized finance and the art world.
Hashmasks will have a significant financial and aesthetic impact on the world.
As such, it is reasonable to assume that few will grasp the significance of the Hashmasks project until it has grown exponentially in market cap and celebrities flex by loaning their collection to virtual museums. By then, the most common Hashmask will be far too expensive for most people to dream of owning—after all, there are only 16,384 in existence and there are structural reasons to believe their value will increase rapidly.
Hashmasks are a perfectly executed multifaceted creation. There isn’t time now to explain every feature of Hashmasks, so let’s focus on a few of the most important traits distinguish the project.
Hashmasks are an artwork that emits income.
The creators explain this point succinctly:
“Hashmasks is a digital art collectible built on top of the Ethereum network. The collection consists of 16 384 unique digital portraits (the “Hashmasks” or “Art”) that are hashed on the blockchain and are represented by a non-fungible token (“NFT”) each. In addition, each NFT accumulates a utility token (“NCT”), which serves only one purpose: To rename the NFT on Ethereum. There are no other functionalities of the NCT token. The Hashmasks smart contract allows participants to purchase the NFT representing the digital portraits from. The NCT utility token cannot be purchased, but it can be freely accumulated by holding the NFT. The only utility of the NCT token is to change the name of the NFT on the Ethereum blockchain.”
In other words, each Hashmask produces a stream of tokens whose value is speculative. Hashmasks is therefore two markets, not one: there is the value of the artwork and the value of the name changing tokens. This creates arbitrage opportunities between Hashmasks and NCTs. At minimum, it means that holding Hashmasks will generate some income, the amount depending on how the market values the naming rights of Hashmasks.
Hashmasks have a transparent ownership policy.
Danny, the collector who paid a record $650k for a Hashmask, explained why the ownership policy of Hashmasks encouraged him to buy:
“I also liked that there’s a transparent copyright policy that gives the owner freedom over their non-fungible tokens, whereas most NFT projects have a license that restricts the buyer from commercializing their NFT,” Danny said
The creators of Hashmask explain the copyright policy clearly:
“You Own the NFT. Each Hashmask is a NFT on the Ethereum blockchain. When you purchase a NFT, you own the underlying Hashmask, the Art, completely. Ownership of the NFT is mediated entirely by the Smart Contract and the Ethereum Network: at no point may we seize, freeze, or otherwise modify the ownership of any Hashmask. [….] The Company grants you an unlimited, worldwide, exclusive, license to use, copy, and display the purchased Art for the purpose of creating derivative works based upon the Art (“Commercial Use”). Examples of such Commercial Use would e.g. be the use of the Art to produce and sell merchandise products (T-Shirts etc.) displaying copies of the Art”
In other words, purchasing a hashmask gives the owner total and exclusive commercial control over the artwork.
Hashmasks have attracted an adept community
A community of brilliant people has already coalesced around Hashmasks. Here are a few of the projects that have been created in the first week:
Most telling of all, MaskDao, a Decentralized Autonomous Organization, is being launched with liquidity mining that will incentivize buying Hashmasks:
Get to know the community by joining the Hashmask Discord:
Hashmasks has a floor price and a decentralized pool that provides instant liquidity.
Art is typically less liquid than cash. But what if it wasn’t? Right now there are tremendous inflows of capital in decentralized finance because those protocols are, by their nature, extremely liquid. Which means, for example, that you can currently dump up to $2.8 million worth of UNI, the token of uniswap, without decrease the price more than 2%.
For Hashmasks to become a major asset that competes with DeFi protocols in terms of market cap, which I’m arguing that it can, then a liquid market would need to exist. Well, good news: such a market already exists.
Hashmasks can be deposited into a pool at NFTX and quickly converted to eth, stablecoin, or any other token on Sushiswap. The way this works is that the pool at NFTX holds hundreds of Hashmasks. Anyone can deposit a Hashmask and receive a MASK token. The MASK token can be traded and sold. Or the MASK token can be returned to the pool in exchange for a Hashmask.
The implications of this are profound. Above all, it establishes a floor price that stabilizes the market for Hashmasks and decreases the risk for art collectors.
Still, a caveot is necessary. All Masks deposited into the pool are mixed together. So if you own a high priced Hashmask then you’d be selling for the lowest possible price.
As Adidust.eth explains:
“One cannot really exit becasue NFTX has floor hashies meaning you cannot put in a scarce hashmark like a mystical and expect the same back.”
Still, NFTX opens the door to whale liquidity providers to enter the Hashmask market once it has matured. See here for more ideas about the liquiditization of Hashmasks.
Oh, and just today another liquidity option has arrived. NFT20 offers the ability to swap any hashies for another hashies in their pool. A major innovation that firms up the floor price. Learn more here.
Something genuinely new has arrived in the world. Hashmasks will have a lasting impact on the trajectory of blockchain art and decentralized finance. If you don’t see it yet, that’s okay—few people will. This is legit alpha.
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Ready to go deeper into Hashmasks? Try this more advanced article about the tokenomics of Hashmasks and Name Changing Tokens:
Hashmasks in the Dark Forest, or why DeFi alphas will love farming Name Changing Tokens.
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