Zora Drops $TAPE An RAC Album Token – Should We Celebrate?

By May 12, 2020Ethereum
Click here to view original web page at defirate.com

Yesterday afternoon, the highly praised project Zora debuted $TAPE – a bonding-curve based token represented a limited-edition cassette of producer RAC’s new album BOY.

⋆ .. * ✹
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˚ $TAPE BY @RAC IS LIVE ON ZORA
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~ https://t.co/wr5WZSG7Ev ~ pic.twitter.com/tdapU6b5ST

“There will only be 100 of these cassette tapes manufactured, and they are being sold using $TAPE—a digital token which represents them. This means that they can be bought, sold and traded like a cryptocurrency. This enables André to realize the true value of his work, and share in the succcess of the BOY cassette tape with his community.”

Specifically related to the creator (in this case RAC), Zora drops allow issuers to share in the upside on secondary markets – a problem of legacy hypebeast trading in which issuers are limited to the profits made off the base product price. With bonding curves, each purchase increases the value of the token, with the creator (and Zora) retaining a portion of that profit. It’s said that Zora will charge a 1% trading fee on the consumer side and keep up to 10% of generated revenues.

To facilitate the sales, Zora partnered with Magic (formerly know as Formatic) to lower the barriers to crypto onboarding through an email-based registration system. Better yet, $TAPE is leveraging DEXs like Uniswap to create a secondary market for trading prior to the good becoming redeemable. The thought here is that it allows the item to find it’s true value through price discovery throughout the course of the product’s ideation, creation, and fulfillment.

Less than 48 hours later, $TAPE is trading at ~900% above its base price of $20 – peaking at around $880/TAPE late last evening. You’ve surely seen people celebrating this accomplishment as both prominent thought leaders and RAC himself have been quick to state how ecstatic they are about the success of this offering.

but seriously, this is all wild and I'm blown away by the response. I've had so many conversations over the years about scarcity in a digital environment and it's wild to see it play out in front of me.

For those who are not familiar with Zora, the limited-edition goods project is run by the team behind Saint Fame – an internet-owned fashion collective first making waves through their $FAME Genesis Shirt.

Long story short, the notion of leveraging cryptocurrencies to empower creators is extremely enticing, to say the least. As someone who participated in the Genesis Shirt sale and has been a supporter of Saint Fame and Zora since day one, $TAPE should get me amped up for the future of hypebeast sales on Ethereum.

However, something isn’t sitting right with me. Let’s talk about it.

For the Fans? Or For Profit?

As anyone who’s seen hypebeast sales knows, there are thousands of limited-edition goods out there priced at insane valuations. In fact, there are communities, markets and professions made solely off the sale of these goods. This is one of the beautiful things about an internet-driven age – specifically, the notion of globally accessible products bought and sold using e-commerce solutions.

If Zora is meant to be a market for creators to profit off of running limited-edition goods, they’ve done a fantastic job at doing just that.

As an avid fan of both music and crypto – specifically the intersection of the two – $TAPE was a drop that I was very excited about. What’s more, is that tokenized assets provide a means for governance and community-owned strategies that have been all but nonexistent in legacy hypebeast markets.

Unfortunately, this is where things took a turn.

For any RAC fans, this cassette tape was likely something novel that you were hoping to get your hands on. Now, less than 48 hours later, you can essentially kiss that dream goodbye.

Trading at $100 just 2 hours after it’s release, the $20 entry price was quickly purchased in heaps by speculators, with many buying upwards of 5-10 $TAPE at a time. This was the first signal that there was no intention for the vast majority of early buyers to redeem the product. In fact, roughly 50 of the 100 total tokens were scooped up in the first minute of the offering going live.

If Zora is meant to follow in the footsteps of Saint Fame and be community-owned, this experiment seemed far from that. To me, it feels like Zora has taken the elements of Saint Fame that were exciting (i.e. LE goods priced on a bonding curve) and stripped away the notion for supporters to share in that upside (profit-sharing, governance, etc.)

In fact, all of the buyers of $FAME who redeemed the token for the physical shirt (which is the main goal?) have seen nothing of benefit in return. While redeemers earned $AINT, these tokens do not entitle them to anything related to Zora, with the added fact that Saint Fame’s DAO has seen no activity since March. With no communication channels for shareholders and no public discussions, it’s hard to understand how this project is “internet owned”.

What’s perhaps most frustrating about this experiment is seeing thought-leaders, many of which who I very much respect, championing an experiment that blatantly endorses speculation after rampantly shaming others for participating in similar experiments in the form of personal token sales.

No one asked, but this is the right way to “tokenize yourself”

Don’t make it an investment contract.

Sell something real. https://t.co/JkZU1JtNj7

— DavidHoffman.eth (@TrustlessState) May 12, 2020

If a sleek website and a $550 cassette tape is the definition of “real” we’ve certainly got a long way to go before anyone takes this industry seriously. I’m just as big an advocate of experimentation as the next guy (this is crypto after all), but it seems unfair to praise this model while bashing others for trying to do something similar.

What’s the Point?

Let’s be honest. The main reason why crypto has received such a bad reputation from the mainstream audience at large is the fundamental focus on speculatory “number go up” beyond anything else that the technology is useful for.

While Zora has nothing but the right mindset when it comes to creating new vehicles and onramps to get people to pay attention to Ethereum, it feels like calling this a community-owned experiment is a bit misguided.

If this is meant to be a web3 hypebeast market for creators to benefit only, that’s perfectly fine! This concept is playing out in spades.

However, it’s my strong belief that in order for crypto to reach a significant audience, the conversation can not be predicated around profits coming solely from speculation. In fact, the whole reason why the DAO space has seen so much growth in the past year is for that very reason – it is human-focused, not cash-focused.

It’s evident that Ethereum is reaching the point where it can make some serious waves in the coming years. Seeing as it’s up to us to shape that narrative, I ask the community – do we really want to be known for new ways to enrich ourselves through speculation, or should we focus on empowering those participating in these initiatives from day one?

In closing thoughts, here are a few takeaways I personally feel could have helped this offering:

  • Limiting the amount of $TAPE any one party can purchase
  • Restricting transfers as to discourage speculation
  • Flattening the bonding curve so that valuations do not become unattainable to real fans
  • Engaging the SF & Zora community in more ways than directing them to buy a token on a bonding curve
  • Enabling card payments at launch (currently “coming soon”) if non-crypto users are meant to participate at the start of the drop

Overall, I applaud Zora and RAC for running an experiment that has garnered so much attention from the wider Ethereum ecosystem. I understand this article is contentious and hope that these comments can be taken in a constructive manner as I have no intention to damage my relationships with those involved or supporting this initiative.

Here’s a great piece on Bankless about RAC supporting the DeFi movement and many of the stories we cover here on DeFi Rate.

To stay up on all things Zora, follow them on Twitter.

Full disclaimer: I had the chance to buy $TAPE early on and did not. I missed out on a massive ROI and am salty at how much the price has increased. This article is meant to encourage better practices by those running community-oriented initiatives (like DAOs) as it’s likely this is just the start of new projects leveraging them maliciously (which Zora and Saint Fame are not). Opinions are my own.

Cooper is the Editor of DeFi Rate. He is an ambassador of Set Protocol and an active contributor to MetaCartel where he seeks to find emerging consumer-facing applications that propel the Ethereum ecosystem. He often works with projects as the Director of Fitzner Blockchain Consulting where he coauthors the weekly publication Token Tuesdays.

Like my writing? Drop me some gwei @ coopahtroopa.eth

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