Altcoins with
pictures
“It’s extremely simple. They are altcoins with pictures. Anything suggesting otherwise is larp and cope.”
He was right, and the people who argued back mostly proved his point by how hard they argued. Punk6529 gave the better answer: the combination is a feature rather than a bug.
What the sentence leaves out is the part that matters here. A token can be made liquid by making more of it. A picture cannot, and there is exactly one of most of the things we care about. Everything on this page is somebody trying to get around that, and most of it is the wreckage.
The problem
A floor is not a bid
A floor price is the cheapest thing somebody is asking for. It is not money and it disappears the moment they change their mind. For a work that exists once there is nothing identical to quote against, so on most days, for most pieces, the honest bid is nothing at any price.
The art world answered this a century ago by paying a person to carry the risk. A dealer takes the work on consignment, holds it for months and finds a buyer. At auction, a guarantor agrees in advance to buy at a set price if nobody else does, and is paid whether or not it happens. Both work. Neither answers on a Sunday, and neither scales past an address book.
What was tried
Six ways to build a bid, and what each one became
Lend against it
Borrow against your picture and keep it. Liquidity without selling.
You keep the price risk, and every loan in the book is written against the same floor. Over one weekend in August 2022 BendDAO's depositors withdrew almost everything, its reserves fell to a handful of ETH, the collateral it had already seized drew no bidders at all, and it voted mid-crisis to drop its liquidation threshold from 85% to 70%.
Break it into shares
A thousand people can own a piece of one picture, so the picture becomes tradeable.
What trades is the shares, and they trade as an index of the floor. The premium that made the work worth owning evaporates, nobody can agree on a buyout price, and the vault sits there. Most of the platforms that did this have closed.
Bid on the whole collection
Real money, standing, funded. A floor you can actually hit.
The offer is for any piece, so it is for no piece in particular, and it gets filled with the worst one every single time. The market maker absorbs that until they stop, and then the floor was never there.
Make a futures market on the floor
Trade the direction without touching the art.
The thing underneath is an index, and nobody can want an index. There is no settlement in the object, so the market has no natural counterparty and almost never found users.
Pay people to make a market
Bootstrap the bids with rewards until the market stands on its own.
The bids were for the rewards. When a programme changed, the bids left with it. Nobody has yet shown liquidity of this kind outliving the subsidy that created it.
Have people stake money behind a valuation
A price with real capital behind it, so appraisal stops being an opinion.
The capital was there for the reward rather than for the work. A number backed by someone who does not want the object at that price is a number, not a bid.
What they have in common
Money that does not want the object cannot hold a bid on the object.
Look at who was standing on the buying side of each one. Lenders who wanted a return and not the picture, so when the loans went bad nobody wanted the collateral. Funds holding a share of an object rather than the object, with nobody to sell it to. Offers that applied to any piece, which is to say to none. Traders who wanted an index. People who wanted the rewards.
The auction guarantee is the only version of this instrument that has worked, and it has worked for generations. The only structural difference is who stands behind the price. A guarantor is almost always a serious collector of that artist, so being wrong means owning something they wanted anyway.
That is the whole thing. Not a mechanism problem, a counterparty problem, and no amount of code has ever produced somebody who wants the picture.
What we built
Small enough to explain in a sentence
Uniswap v4 lets you attach rules to the room where a trade happens. We spent a long time designing rules for an edition: a price that comes down on a published schedule, a premium for choosing a low number, protection for whoever keeps an offer open. Then we checked each one against the code that would have to run it.
Almost none of them can be built. The descending price is decoration, because our asking price can never sit below what the room is already trading at. The protection for patient money is not something the plumbing permits anyone to do. And a price we published as the honest appraisal turned out to be movable for a fraction of what it valued.
What survives is a vault and one rule: you cannot buy half a picture. Two thousand bytes. It sets no prices, keeps no list, takes no cut, and runs no clock.
The one thing worth keeping from all of it: you can read what that contract is allowed to do from the last character of its address. It is built so that it cannot be paid by a trade, and anyone can check that before trusting a word we say.
Where we were wrong
Published, because the failures are the useful part
We designed a room where a work was drawn at random and the money its owner promised set both the buy-back price and the odds. We abandoned it: paid entry plus chance plus a prize is a lottery in most legal frameworks, and that is counsel's decision rather than the code's.
Before abandoning it we tried to fix its worst property, which was that a genuinely good piece was never drawn. The fix paid you to lie. Understating what your work was worth saved you about a ninth of its value every time it sold, at every price, under every setting we could find. A room where understating your own work is the winning move is not a room a gallery should open.
And we built a contract with a hole in it. Handing a work back to take the escrow was wrapped in a safety catch meant to stop a seller trapping the buyer. The catch protected the same person who controlled whether it fired, so a buyer could keep the picture and take the money. It is fixed, it has a test named after the attack, and it was found by running an exploit rather than by reading the code.
Three separate times this year the careful thing turned out to be the bug. That is the most useful sentence on this page.
What is still open
Whether anybody wants the other side
Everything above serves one question, and no contract answers it. Will somebody put real money behind a named work they do not own, and be paid for holding that offer open?
That is the auction guarantee, opened to anyone, at a price they choose themselves. We do not know whether it has a buyer. We are asking ten collectors before we deploy anything, because a testnet cannot answer it and neither can we.
The reasoning behind all of it, with the holes left in, is at the problem, the arithmetic we published about somebody else's pool is at the pulse page, and the room itself, running on a local chain with real contracts and no invented numbers, is at consign.