Algorithm and Art NFT Experiment: Are Eulerbeats a new music market or a Ponzi scheme?

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The well-known investor Mark Cuban owns two Eulerbeats works, calling them “the most genius idea ever.”

Written by: Leo Young

If you buy a limited edition original disc of musicians you like, have you ever thought that you can make a copy and make money yourself?

Next, I will introduce to you a recently popular music NFT project to explore this possibility.

Eulerbeats is a non-homogeneous token NFT project based on Ethereum. It combines music and visual art, generates a series of music on the algorithm chain, and is equipped with visual special effects. At the same time, token distribution and economic models are realized through smart contracts. Eulerbeats has released two series of music works, “Genesis” and “Enigma”. There are 27 “original discs” in each series. Users can purchase reissues of the original discs, and the owners of the original discs can get a certain percentage of royalties.

As of the publication of this article, the total royalty of the “Genesis” series has reached 1094 ETH, with a current price of more than 2.29 million US dollars. Twenty-five original disks of the “Enigma” series were auctioned on March 31, with a minimum transaction price of 45 ETH and a maximum of 131.25 ETH.

The famous investor Mark Cuban owns two Eulerbeats works, calling them “this is the most genius idea ever.”

What is so special about Eulerbeats that can get such a high level of attention? Let’s take a closer look.

What are Eulerbeats

Eulerbeats development team Treum.io was established in 2016 and has received investment from ConsenSys, and has conducted a number of pioneering experiments using blockchain technology. Recent products also include Swether.io, which allows users to customize NFT gifts.

This musical NFT project Eulerbeats is named after the 18th century Swiss mathematician Leonhard Euler (Leonhard Euler). Eulerbeats launched two series of music works “Genesis” and “Enigma”, each with 27 original discs, also known as “LP”. Each original work is generated on the smart contract chain called “seed” metadata, according to the use of “Euler’s number” (Euler’s number) and “Euler function” (totient function) to generate “algorithm electronic Le” and the corresponding geometric pattern digital art.

This means that no one knows what the music and digital pictures look like before the original disc is produced. All music texts and data are permanently stored on the Ethereum chain. Even if the Eulerbeats official website is available in the world, the original data can still be extracted to regenerate the work. This is one of the differences between Eulerbeats and other NFT works.

Eulerbeats is most distinctive in terms of royalties and economic models. Take “Genesis” as an example. Twenty-seven original NFTs were auctioned and distributed. Each original disc can be re-engraved 119 times. That is, each original disc can “mint” a maximum of 119 Tokens.

Every time an original disc is reproduced, the owner of the original disc can receive 8% of the original disc as royalties. According to Dune Analytics data, currently Genesis LP 01 receives up to 147 ETH in royalties, and the Genesis series has a total royalty income of 1094 ETH.

Algorithm and art NFT experiment: Are Eulerbeats a new music market or a Ponzi scheme?Source: Dune Analytics

The interesting thing is that the re-engraving of the new version can not only bring income to the original owner, but also may benefit the people who re-engraved the new version.

8% of the income from casting the new version goes to the original owner, the remaining 2% goes to the Eulerbeats team, and 90% goes to the “guarantee bank”.

The casting price of the new version is priced through the joint curve, and the starting price is very low at 0.027 ETH. The new version of the casting can be sold at a price in the NFT market such as Opensea, or re-created.

If someone thinks that the re-engraved version is too expensive or difficult to sell in the market, they can “destroy” the current market price (equivalent to returning the goods to the smart contract) and get a 90% refund of the current price. As shown in the figure below, Genesis LP 01 “Destroyed Income” 10.588 ETH is the income that the owner can obtain after destroying a reissue. If no one destroys the latest price, the next “destruction income” will be 90% of the next transaction price (ie 12.776 * 90% = 11.4984 ETH).

Algorithm and art NFT experiment: Are Eulerbeats a new music market or a Ponzi scheme?Genesis LP 01

Destroying a re-engraved version at the current price will reduce the number of existing re-engraved versions (Prints in Supply) by one, which becomes 73 in this example. After the destruction, the purchase price and destruction revenue will also be reduced according to the joint curve price and proportion.

The owner returns the replica version to the smart contract for destruction, and the smart contract transfers the corresponding amount from the “guarantee vault” to the destroyer.

According to the joint curve pricing, the price of the re-enacted version was very low before the 60th, and the rate of price increase afterwards increased. After eighty there is exponential growth. Before purchasing the 30th version of the re-engraved version, it was less than 1 ETH, after the 100 version, it was more than 119 ETH, and the first nineteenth version was 721.037 ETH. Early re-engraved users will make high profits as the price rises, and the risk to users who later purchase the re-engraved version is getting higher and higher, and they may suffer partial or full losses.

Algorithm and art NFT experiment: Are Eulerbeats a new music market or a Ponzi scheme?Genesis Reissue Version Casting Price Curve

It seems to be a Ponzi scheme, why is it so attractive and attracting so much attention?

Algorithm and art NFT experiment: Are Eulerbeats a new music market or a Ponzi scheme?Amir shot Enigma LP 01 and 06

Is it a new type of music trading market or a Ponzi scheme?

Except that some people think that Eulerbeats is an AI algorithm to generate art and music works on the chain, they are willing to pay for it. The new royalty economic model and the ownership of works are where the potential is to be tapped.

The owner of the original disc has the ownership of the original disc, and the owner of the re-engraved disc has the right to use the work. This is equivalent to buying a record for music lovers. The potential use of Eulerbeats far exceeds that of ordinary records. This is why someone will pay a high price for the original disk.

For example, you can work with well-known musicians to mix and publish new works, and the original owner as the copyright holder will get the most profit in future applications. In this sense, buying an original disk is equivalent to acquiring a product and launching a new business. And this new business profit model also needs to be explored.

First of all, if the purchase of the original disk is to start a new business, then the purchase of the re-engraved version can be called an investment in the shares of the original disk and enjoy future value gains. As the sales of the original reissues increase, original owners can share royalties with re-enacted users and even extend their business income in the future. The more profits shared, the more users will buy and hold the reissue. The higher the price of re-engraved editions, the more re-engraved editions are destroyed, and the higher the royalty income.

In such a positive cycle, more “generous original owners” will be incentivized, which in turn will bring more loyal users.

Beanie (@beaniemaxi), who owns Genesis LP 01 and 19, publicly airdropped NFT souvenirs to users of these two original reissues.

Algorithm and art NFT experiment: Are Eulerbeats a new music market or a Ponzi scheme?Source: https://twitter.com/beaniemaxi/status/1377355022736879618?s=20

Secondly, for creators, this means a brand new profit model. In the past recording industry, the income of creators was only a small part of the total income. The new royalty distribution method brought by Eulerbeats allows creators to enjoy long-term profits. At the same time, the smart contract automatically distributes royalties and settles in real time, which can save a lot of intermediate costs.

“For a long time, musicians and artists have received only a drop in the bucket. They need a new way to choose how users pay and how they charge themselves, without having to go through a third party to collect fees.” Eulerbeats co-founder Tyler Mulvihill said.

In addition, as a separate product, the original disc can easily form a community. A small community will grow into a DAO. For example, the original disk can be “fractionalized” so that more people can enjoy the overall benefits while participating in future product decisions.

The closed investment group BeetsDAO raised 300 ETH in the Discord group of EulerBeats in March to participate in the Enigma auction. Purchased four original discs of Enigma LP 02, 04, 17, 20.

Algorithm and art NFT experiment: Are Eulerbeats a new music market or a Ponzi scheme?Source: https://twitter.com/BeetsDAO/status/1378770379121033218?s=20

“Whether it is used by other artists for mixing or for other purposes, these original discs can be used in endless ways.” Sasha Rosewood, one of the co-founders of BeetsDAO, said, “We are always thinking about the direction of development in this field. How organizations can truly bring disruption, how creative works can get out of a new profit model, what kind of new digital creator economy NFT will release, then we see EulerBeats, this is the direction we want to develop, this is the perfect place we want to build .”

From Robbie Barrat’s AI art to Eulerbeats now, we have moved from the experiment of algorithm plus art to a new exploration of the integration of algorithm art plus economic model and social mode. It remains to be seen whether Eulerbeats’ new royalty distribution method using smart contracts is a Ponzi or a disruptive innovation. At least it has been verified by the market to a certain extent.

Algorithm and art NFT experiment: Are Eulerbeats a new music market or a Ponzi scheme?

Comparison of “Genesis” series and “Enigma” series

Both the “Genesis” and “Enigma” series have 27 original discs, both of which adopt the ERC-1155 multi-token NFT standard. There are other nuances.

The 27 original works of “Genesis” are all publicly auctioned. Twenty-five copies of “Enigma” were put up for auction, one of which was donated to DAO and one was reserved for the team.

Of the revenue from the reissue version, 8% of “Genesis” goes to the original owner as royalties, 2% goes to the Eulerbeats team, and 90% goes to the “guarantee bank”. 8% of “Enigma” royalties, 8% go to the project team, and 84% are deposited in the “guarantee bank”.

Each original disc of “Genesis” can be re-engraved with 119 editions, and each original disc of “Enigma” can be re-engraved with 160 editions.

Algorithm and art NFT experiment: Are Eulerbeats a new music market or a Ponzi scheme?Design differences between “Genesis” and “Enigma”

The “Genesis” pattern adopts circular, square, and diamond colored geometric patterns. “Enigma” uses a circular stitching pattern.

reference:

  1. EulerBeats | About
  2. EulerBeats Genesis Analytics (duneanalytics.com)
  3. EulerBeats 101: An overview of the coolest new art+music+math crossover NFT project with an ingenious economic model | by Tyler D Warner | Mar, 2021 | Medium
  4. How EulerBeats could change the way artists get paid (theblockcrypto.com)