The following report was written by Messari Hub Analyst(s) and commissioned by The Museum of Crypto Art, a member of Messari Hub. For additional information, please see the disclaimers following the article
Today, an impressive collection combined with future technical integrations have The Museum of Crypto Art (M○C△) tokenholders in position to potentially gain and maintain relevance as curators of culture in the NFT space. Before we analyze why, let’s take a look at the history of the Museum.
An Introduction to MOCA
M○C△ – Museum of Crypto Art – originally began in April of 2020 as a collaboration between friends and crypto investors, Colborn Bell and Pablo Rodriguez-Fraile. They wanted to showcase a premier collection that spoke to the culture of crypto, curated via a uniquely art-focused NFT collection. With the help of art historian Shivani Mitra and architect Desiree Casoni, the Museum collected artworks from top crypto artists such as Beeple, Pak, Osinachi, Hackatao, Fewocious, and more throughout 2020. The full collection is stored at the ENS address museumofcryptoart.eth.
Just a few of the more notable artworks in the Permanent Collection.
In January 2021, Bell and Rodriguez-Fraile split up, with Bell continuing to steward the M○C△ brand alongside Mitra. Soon after, Bell and Mitra stewarded M○C△’s first and most important pivot: the shift towards becoming a community-operated project. As part of the shift, M○C△ was reorganized into a DAO, with the $MOCA token serving as its governance token. The Museum’s $1.5 million token sale attracted notable private investors such as Polygon, Metapurse, Coingecko, and others.
Tokenomics
$MOCA is a fixed-cap asset with a total supply of 10,000,000 tokens, with near-term upgrades potentially making the token deflationary. MOCA reserved 10% of its tokens for an ecosystem fund, airdroped 5%, and reserved 18% for the core team and 8.1% allocated to private sale investors. Finally, the majority of the tokens were allocated towards Permanent Collection acquisitions.
Beyond governance, the MOCA token plans to offer further utility across two axes: Access and Curation:
Access (Moca Points): The MOCA team plans to use a token gated Discord to bring further value to the token. It’s possible to tier discord channels and provide exclusivity to members of the museum. Staking MOCA tokens will earn users “Moca Points”, which will be used to unlock special Discord features.
Community Curation: Curation can potentially be used for a variety of functions, including deciding which pieces get added to different sections of the museum and individual collectors sponsoring their own “wings” and sub-exhibitions of the Museum.
Distribution: “Proof of Art”
Central to the Museum’s shift to a community oriented project is their “Permanent Collection”. These are artworks that will permanently belong to the M○C△ DAO. What’s novel about the Permanent Collection is the allocation of $MOCA tokens to acquire these artworks - about 50% of supply is reserved for Permanent Collection acquisitions. A pseudo-proof of work, this “Proof of Art” serves both as a novel token distribution method and as a means to grow the M○C△ community. Of course, artists can always sell their tokens, but as the collection grows and the $MOCA token gains added utility, community retention should increase. Additionally, as a governance mechanism, artists may find it strategic to align themselves with various digital museums like MOCA to ensure that their artwork is surrounded by other high quality pieces.
The Museum combines this distribution method with a roadmap to decentralized curation facilitated by the token. As such, the token can be conceptualized as a fractionalized right to curate the collection. For this right to curation to gain value, the provenance of an artist’s artwork being a part of a M○C△ exhibition must also gain value - akin to the provenance of having artwork be a part of an exhibition at the MOMA or the Louvre. In this scenario, the Museum could become the leading cultural entity within crypto art, with tokenholders serving as the leading curators of culture within the crypto art scene. Moreover, the Museum’s digitally-native, inherently scalable nature gives it a stark advantage over the incumbent museums which are physically located and largely constrained to the physical world. As time goes on, it’s likely that relevant crypto art will flock to MOCA or other digital native museums, rather than hope to be shown in the physical locations of the old guard.
A Note on Community & The “gm” Test
One way of analyzing NFT communities is to evaluate the activity in the project’s Discord. Infamously, Alexis Ohanian, Cofounder of Reddit and Initialized Capital has stated that one reason he invested in Coinbase was because of the strong community activity in subreddits like r/Bitcoin. Similarly, the activity within a Discord server can shed light into the burgeoning community of any company or protocol. Generally speaking, finding communities who are actively discussing crypto topics related to project, participating in community calls/ discussion or group activities is a positive sign of an aligned community. One quick test for community activity is the “gm test”. For example, analyzing the number of people saying “gm” (or good morning) to the number of people talking about price or generally complaining about why a project doesn’t have a token/NFT yet. If that ratio is very high, meaning there are dozens or even hundreds of people spamming “gm” every single day and nobody cares about the token price/ project floor, you’ve potentially found a more genuine community. Once you’ve identified the initial gm test is a success, then you can dive deeper into the various discord channels to determine the culture and true activity of the community.
Creating Utility & Moca Points
A key juncture on the M○C△ roadmap is the previously mentioned Discord integration. The team is building out a functionality that allows Discord users to show off personalized selections of NFTs that they provably own. This functionality is enabled by an integration with the Discord-ubiquitous Collab.land bot. Basically, this bot allows users to verify if a wallet holds a specified token. This has traditionally been used to assign special roles such as “Holder'' in a project, as well as to allow access to restricted channels only available to those who hold certain amounts and/or types of tokens.
With the addition of M○C△’s Discord feature , users can call simple functions to show off various collections that they have preconfigured on the Museum app. For example, someone who owns a CryptoPunk will be able to call !punks to immediately show a selection of one or more punks owned by their wallet. Before this, the way most people in the NFT community showed off their collectibles/artworks was through links to Opensea, or simple screenshots. Unless you had already built a reputation linking your Discord account to the address/ENS that owned the NFT, nobody could verify that you own what you say you do. Even if you did have that reputation, other users could’ve impersonated you and your profile.
Basic functionalities will be free, with increased functionalities going to those who accrue “MOCA points'', which can primarily be acquired via buying and staking $MOCA, or through engagement on the M○C△ app. The features unlocked and the number of points required are shown below.
Considering many people collect more NFTs than they can display in profile picture and banner slots on social media, the demand to display other NFTs from an individual’s portfolio is likely to be high. This is especially true for NFTs that have a certain level of perceived clout, most often due to a high level of rarity and/or valuation. Since Moca points will be required to display more NFTs, it’s possible that the Discord integration acts as a utility (and potentially demand) catalyst for the $MOCA token.
Additionally, future integrations including Telegram and Twitter integrations, multi-asset avatars, and others may create similar demand side catalysts to buy and stake $MOCA.
In order to take advantage of the M○C△ platform’s functionalities, users must “activate” their NFT onto the platform, with a fee of 0.1 $MOCA to do so. This fee is then burned by the protocol. Assuming the fixed supply doesn’t change, that means a total of 100 million NFTs could be activated on the platform before every token is burned. For reference, 1.7 million NFTs were sold on OpenSea in the month of September alone. (h/t rchen8).
Now, that fee won’t go into effect until January of 2022, but it seems as though that model will be unsustainable if M○C△ captures a significant portion of current NFT buyers on discord, not to mention futureusers. It seems likely that one or more of a fee reduction, a move away from burn method, token inflation, or a dynamic issuance model will be needed to make the token and by extension the platform sustainable. Even though it will be unsustainable, this is a good problem to have, as it signals demand for the Museum’s services.
Community Curation
As it stands, the core M○C△ team selects the artworks added to the Permanent Collection. As the token spreads throughout the community, and the protocol progressively decentralizes, it seems likely that collection acquisitions would be taken over by the DAO or a committee within the MOCA DAO. An optimistic outlook for the future of community acquisitions is an experience similar to Party Bid, in which collectors collectively bid on different artworks in a fun online setting. This is unlikely to happen until the community reaches a more mature, engaged point, and the timeline for that to happen is unknown, given the rapid, unpredictable rate of change in crypto markets.
A potential template for community purchases - Party Bid. A chaotic good, if you will.
Competitive Analysis
As the protocol and its token carry a wide range of use cases, M○C△ competes with a wide range of teams across the digital arts space. I compare the Museum across the three functions of the token mentioned above: Distribution, Utility, and Community Curation.
Does Decentralization Matter?
As previously mentioned, the MOCA token doesn’t confer any fractionalized ownership of the underlying assets. The argument for fractionalization has typically revolved around 1) taking a highly valuable, illiquid asset and making it liquid, and 2) giving access to financial upside for those who cannot or will not pay for a “full” NFT. One popular exception to this line of thinking is Fingerprints DAO. Fingerprints is the largest holder of Autoglyphs, as well as other culturally significant NFTs and incubates several NFT-centric DAOs. In this respect, Fingerprints is similar to the Museum - a group of collectors trying to curate what they believe is valuable to the crypto art space.
Currently, a tier one membership in Fingerprints DAO goes for ~25 $ETH on the OTC market. One reason why $PRINTS (Fingerprints’ native token) has been very desirable is its exclusive nature – a 25 Ether entry point means only OGs or whales have access. While $MOCA aims to be the Museum for everyone, $PRINTS is the club for the elite of the elite, and as such it commands higher prices – despite similarly not conferring any ownership or utility beyond access to a private Discord.
Fingerprints DAO website. 20 $ETH or more to join that Discord.
In summary, communities have historically won through providing a sense of exclusivity and ownership of assets. The Museum provides neither of those, and may face a competitive disadvantage with respect to other similar organizations as a result.
Utility In All Its Forms
Many PFP or art NFT projects provide zero tangible utility, with one notable exception being projects like gen.art, whose membership functions as a “mint pass” allowing owners to mint new collections, avoiding the need for a gas war. Projects like gen.art have “vertical utility”, providing utility to users within their product suite. M○C△ is uniquely positioned to have “horizontal utility” by offering a service – verifiable ownership – that any NFT holder can utilize. Since the Discord integration requires users to burn and/or stake $MOCA tokens, this demonstrates a clear path to utility for the $MOCA token. Since most other NFT projects either do not intend to provide utility or face significant execution risk (e.g. a game developer raising capital before a game is built). The Museum stands above the field with respect to tangible utility in term sof its Moca points, access and governed control over the Museum’s vault of assets.
With respect to intangible utility, M○C△ is in a unique position. On one hand, the artwork within the Permanent Collection currently possess a high valuation. On the other hand, no one token holder really owns it, and therefore token holders receive no advantage of the ability to sell the museum’s pieces or financialize these artworks in the manner as other organizations or individual NFT owners. If MOCA is able to leverage its assets to earn revenue then the value of owning MOCA tokens might increase. Lastly, the perceived social value of a Museum owning an asset versus an individual is also different. This makes owning a part of the Museum potentially less socially desirable than owning a specific NFT. If a culture of using/showcasing collectively owned NFTs were to take off, this problem would be mitigated.
Intangible Utility in the wild -- A portion of a Fidenza bought at a 2500 ETH valuation. Many likes followed.
Community Curation Pt.2
Since the keys to the Museum haven’t been turned over to token holders yet, M○C△ finds itself in the same position as its centralized-by-design competitors: with centralized curation. It will be interesting to see if, over time, the team giving more control over curation to the community will spark demand to curate and thus drive value to token holders.
A Note on Web 2.0 Risks
A major advantage I’ve highlighted is the utility of the $MOCA token in regard to web2 social media integrations. In a way, these features – Discord/Telegram commands and verified single and multi-asset avatars to recap – serve as a sort of bridge between our favorite web2 platforms and our favorite web3 assets. Well, what if those companies build their own 2.0 <> 3.0 bridges? We’ve already seen Twitter tease out support for verifying avatars and integrating Web3 wallets like MetaMask. Discord teased at native web3 integrations before backing out due to backlash from their community. Telegram could theoretically implement custom NFT profiles, with custom functions to boot. Additionally, these networks could implement these features for free, like most of all the other features they provide to users.
However, large companies are typically slower to roll out these types of features into their platforms, which is why startups like Collab.land have become widely utilized. Additionally, companies like TikTok have chosen to partner with existing platforms like Audis rather than build out Web3 features in-house. It seems likely that So while these existing platforms pose some competition, M○C△ will likely innovate these features at a much faster rate than the incumbents, if the incumbents decide to build these features at all.
Final Thoughts on MOCA
The Museum of Crypto Art is a very unique project within the crypto art space. Optimized for long term relevance, it has built a collection of extremely relevant and valuable artwork, largely avoiding more recent, popular trends. Should the project successfully decentralize curation, the community will have an impressive collection to govern, with a clear path to further acquisitions. Until that point, the Museum inhabits an awkward middle ground: governed by a small, centralized group that doesn’t promise the sense of exclusivity other small collector DAOs do. Near-term upgrades providing utility to the token have a high likelihood of bringing new users to the M○C△ ecosystem, increasing token demand and potentially creating new long-term community members. Should that demand come, there’s a high probability tokenomics will need to be updated, as token supply could quickly go into deflation if platform use grows exponentially.
Ultimately, the end goal for the Museum seems feasible; they have a culturally relevant, valuable collection and a token with several potential use cases in the near future. The missing component is a vibrant community to capitalize on both. The release of the token’s various features over the next 3-6 months should go a long way to change that.
This report was commissioned by The Museum of Crypto Art. All content was produced independently by the author(s) and does not necessarily reflect the opinions of Messari, Inc. or the organization that requested the report. The commissioning organization may have input on the content of the report, but Messari maintains editorial control over the final report to retain data accuracy and objectivity. Author(s) may hold cryptocurrencies named in this report. This report is meant for informational purposes only. It is not meant to serve as investment advice. You should conduct your own research and consult an independent financial, tax, or legal advisor before making any investment decisions. Past performance of any asset is not indicative of future results. Please see our Terms of Service for more information.
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