@Galleon thanks for the insightful questions! I wasn’t going to get into these details because I thought there would be more discussion about the vision. But seems like people are vision aligned, so let’s get into the woodwork!
Another way to think about it is that it takes the “money Lego” idea well beyond financial protocols, turning them into “media Legos.”
Absolutely. I love that Bluetail has the ability to build upon multiple Ape protocols — ERC721J, Silo Finance, ThriveCoin, ApeTalent, and $APE staking — adding utility to all of them and creating a direct line from that tech to normie web2 users through media.
Benefits or artists: Get better, more flexible payout up front, especially if the artist signs to his own label. Gain exposure to royalty sources unavailable otherwise.
Benefits for listeners: Exposure to broad array of works, gamified engagement
Yep! I’m appreciate you went through the deck and took the time to get it. Dude, thank you for really taking the time out of your day to understand my ideas!
My enthusiasm is not without some healthy concern though.
How the plaform generates revenue:
Seed funding: My plan is one lump sum initially, which only happens once, equal to one year’s projected $APE staking revenue. So Horizen finally drops and we get hard numbers — let’s say $APE staking brings 30% APR. If Apecoin decides to put $1M in $APE to stake for Bluetail, then we actually allocate $1.3million — $1M in staking and $300K as the initial Bluetail rewards pool. It will get paid back within a year.
So the sustainable revenue actually comes from staking. Max LTV limits downside. But make no mistake — we are trading $APE for IP. The big gains come from getting IP that generates royalties. The purpose of the base platform is to sustain long enough to grow its outreach to attract quality artists and users.
This strategy goes to a fundamental belief I have concerning the DAO’s health: The DAO investing directly into individual IPs for music, gaming, fashion, or any “spec industry” is 100% a losing proposition. [Let’s say the DAO invested in “tier A teams” Illuvium, Aurory, Rumble Kong League, Star Atlas, etc. during the Axie meta. Where would that investment be now?] By funding through yield instead of straight up $APE, you give the DAO what it needs to succeed in spec industries — a steady budget to build a platform that attracts IP.
Think the Something Awful Forums and Slenderman. The Something Awful website attracted tons of lore, and finally one came that the community decided organically was amazing. Slenderman was not a function of IP guesswork and betting on the awesome-team-with-all-the-credentials. No! Create a sustainable platform and let the community decide where the big investment goes.
So where’s the upside? A sustainable Bluetail will attract its Slenderman! Then more investment can come from the DAO based on HARD ENGAGEMENT STATS, not “I trust the team.”
…then receive royalties from licensing deposited material. Are there other sources of platform revenue? Is it the royalties alone that will allow the platform to become self-sustaining? Traditional platforms obtain revenue through ads, subscriptions, and selling user data.
Sustainability comes from funding through yield and maxing out LTV to ensure enough additional principal to the staking pool year over year to outpace diminishing APR on staking. (mouthful) Normie record companies can’t do this — there’s no 30% staking in web2. Bluetail uses crypto’s volatility to its advantage.
Ads and subscriptions could be additional income sources as the platform scales. On the surface, I’m against selling user data. Not an expert in this field, so if there’s a less creepy way to do business in this arena, I’m all ears.
More funding questions: Is the seed funding used in part to drive the initial engagement, similar to yield farming?
I’d lobby for a marketing budget separate from the rewards pool, but we’re definitely not paying Snoop Dogg and Eminem $X00,000 to do one song to “drive engagement” and pretending that’s a marketing campaign. We’re doing it the right way, going to music conferences, hitting the unis where music movements are born, doing the Twitter/Instagram DMs, finding those hidden artists on the cusp of success to partner with. Embedding the DAO into the culture. And we’ll need Ape music pros and wannabe pros to make this happen. The difference after Bluetail is they’ll have a platform to rally around.
Are there metrics to determine when the platform becomes self-sustaining, without the need for continued injection of capital to entice either artists or listeners?
The plan is that after the initial lump sum funding, there is no need for continued injection. Full tokenomics to come in Draft stage, but by my calculations, Bluetail could experience 100% loan default and a 5% drop year over year in yield APR and sustain funding. Keep in mind this is a catastrophic worst case scenario where we attract nothing but complete tools.
Powered by Apecoin: Would all transactions be done in $APE? Ie, are the artists paid in $APE if they cash out initially, are the loans are denominated in $APE, and are license royalties paid in $APE? Will the token-gating be such that only holders of $APE can deposit as artists or listen to music? What other benefits would holding $APE entail?
The plan is an $APE base, including loans, although I’m debating whether to offer a choice of loans in $APE and stablecoin. Loaning in only $APE drastically reduces risk of forced liquidations, so I’m leaning that way.
License royalties paid in $APE for web3 deals if opposite party accepts. Otherwise, we’re flexible. Still researching web2 deals — how to sync with legacy PROs, etc. Big point here: If it turns out Bluetail can’t sync with PROs, it doesn’t have to. The platform is not exclusive, and it should stick to what it does best.
Benefits for holding $APE: Artists get better placement, higher LTV, possibly better terms on license deals. Holders get weighted voting, possibly loan interest rate bonuses if they invest in an artist. Top artists/investors holding $APE and participating in Bluetail get prizes including merch or travel to awesome music festivals. Open to suggestions here!
I would open listening to everyone, web2, web3. No need to gate that.
Quality control: Will there be curating? Example, Artblocks has the AB Curated portion of that NFT platform. On the other hand, will it be more of a free-for-all similar to fx(hash) on tezos, where an artist can post pretty much anything nonmalicious? As an aside, I am quite fond of both platforms, and both are successful. Just curious.
I lean towards fx(hash) with perhaps a curated premium section for top performers or Yuga ecosystem holders.
But I think the direction of the marketing serves as curator as well. We make the platform known to small labels and artists on the verge, who bring their audiences with them. Tezos in general appeals to a pretty highbrow hippie crowd, so fx(hash) naturally gets high quality stuff. We do the same.
Mechanics: Will the platform be on Ethereum mainnnet or L2 or alt L1? Gas fees could be a concern at some point.
I much prefer ETH L1. If gas ever becomes an issue, the DAO can become a hero by offering to refund the gas fees for Bluetail Music Competition winners, a contest Bluetail will throw as marketing outreach .
The biggest points of failure I see are social risk and revenue bleed.
Social risk: Yep. There’s a lot of tumbleweed platforms out there, especially in music. Here’s how we make sure it doesn’t happen. First: The platform is made to aggregate a lot of Ape music tech (some tumbleweeds ). I want to incentivize these builders to get involved as marketers and bring their audiences.
The biggest difference is that I understand from working with Flow and Cxmmunity that culture is going to drive web3 adoption in the mainstream, not tech alone. So the DAO must use Bluetail to imbue itself into the culture. The advantage of Bluetail is that it brings a lot of great tech to web2 that would otherwise have less direct and immediate value. Web3 music pros can’t ERC721J to artists. But they can explain “earn your next advance through likes and shares.”
Bottom line though: Motivated people have got to use Bluetail to get Apecoin involved in the IRL music industry. I’ll be the first. Attending conferences. Pitching syncs.
Revenue bleed: funds being drained by artists cashing out on deposited NFTs that do not generate further revenue
I plan on implementing engagement protections to keep trash tier artists from gaming collateral from fake likes. That’s the ThriveCoin tech at work.
As far as cashing out on trash work, with those protections in place, the NFT’s value is based on community input. Trash work won’t get any likes, so no collateral is built up.
I plan on implementing an 80% slash on any cashouts and letting people know upfront about it. Engagement is meant to build collateral, not income. But artists that cashout help the DAO, because the slash actually repurposes more $APE than a max LTV default. These are things we can do to protect the platform.
But more than anything, Bluetail is an opportunity for the DAO. No piece of tech can stop people from trying to game the system. I expect that. If the people surrounding it allow garbage to proliferate, then it will. Once the proposal passes and it’s built, it’s up to us to continue using it in the right way.
Overall, this idea has serious potential. Specifically, the creative way of combining aspects of media platforms and defi platforms as media Legos could not impress me more. Let’s see where this goes.
More questions if you have them! This is exactly the feedback I need to shore up loose ends. Thanks again, Galleon!