$ANIMAL (https://info.uniswap.org/pair/0xc787dad394ae566dee96575a676afdf3c0c7a88f) is an experimental creator token for visual artist Oleg Kolbasov, aka Animal Money. (https://animal.money)
The idea here is that an artist can issue their own ERC20 token, seed a liquidity pool, and accept their own token as payment for unique NFTs.
This makes the token price a reflection of market demand for the artists’ NFTs and speculation on the future demand for their NFTs. It’s a minimum viable system for creating an independent fan economy. All you need is an ERC20 token, an ERC721 contract, an AMM pool, and artistic talent.
Learnings From #NFTHack
The original concept was that we would issue an $ANIMAL token on Uniswap, and whoever accumulated 50% of the supply would be able to win an NFT and physical painting that was being painted live on Twitch.
This would be an interesting real-time auction of a painting while it is being created, with the addition of a secondary market for the $ANIMAL token that could create interesting trading behavior and a lot of fan interaction.
What we learned is that Uniswap v2 price slippage makes it impractical to accumulate 50% of the token supply. Gas fees were also prohibitive, especially given the low initial token price (~$1 per $ANIMAL), which made token purchases feel slightly ridiculous, since the gas cost was much higher than the token cost.
The price of $ANIMAL ultimately quadrupled, but there would need to be many more trades against the pool to bring it up to a reasonable price, and lots of gas burned on the way.
However, setting up the ERC20 token and Uniswap pool was very simple. We began to think about different ways to create an ongoing revenue stream for creators through the same mechanism, and decided that this flow should be repeatable:
- A creator deploys an ERC20 token and AMM pool, setting a reasonable initial price.
- They deploy an ERC721 (or possibly ERC1155) contract for minting NFTs.
- They list items for sale, priced in their ERC20 creator token, which can be minted as NFTs (or sold directly as physical items or experiences, if there’s no relevant NFT angle.)
- Fans buy the creator token in order to redeem it for NFTs or other buyable things from the creator, and speculators buy the creator token anticipating future demand.
- The artist sells the creator tokens they received as payment back into the pool whenever they want, benefiting from the increased price.
We’re pretty sure this would work, and would give the creator full control over their internal fan economy without any protocol or marketplace dependencies.
We want to deploy an ERC721 contract for minting NFTs of Animal Money’s artwork, which will be listed for sale priced in $ANIMAL tokens.
We also want to migrate most of $ANIMAL’s liquidity from Uniswap v2 to Uniswap v3 when possible. Being able to specify a price range as an LP instead of supplying liquidity from 0 to ∞ should fix the price slippage issue we ran into during the hackathon, and we can set a more realistic base price.
We also want to make NFT token minting and ERC20 token trading possible on Layer 2, to reduce gas fees.
Finally, we want to explore NFT marketplaces that allow payment for NFTs with any ERC20 token, which would allow us to price our NFTs in $ANIMAL.
Until we find a suitable venue, the $ANIMAL-to-NFT redemption will be a manual process where you have to contact the artist directly. That’s cool if there’s also a physical piece of art tied to the NFT, since you need to work out shipping, but if it’s a pure NFT minting action, it would be better if you could do it automatically.
How MetaCartel Can Help
We were excited to get the message encouraging us to apply for a grant, since we have all of these ideas that are ready to go!
What we really need is money for gas, paint, and canvas. The implementation itself is fairly straightforward. Any tips on marketing or emerging marketplaces that would let us price NFTs in our creator token would also be great, or if there are any holes in our proposed implementation above that we haven’t considered.
Pretty sure 3 ETH would get us to where we need to be. This would be mostly spent on gas and providing liquidity, with a bit cashed out to offset material costs for painting. (Canvas is expensive!)
The immediate step would be to deploy the ERC721 contract and complete our first direct NFT sale for $ANIMAL, and the other steps will need to wait a little bit for Uniswap v3 deployment.