Value proposition
The Art Exchange’s mission is to empower existing art market players and potential investors alike. We offer more than a financial tool as we deliver a sustainable solution to improve the transparency in the art market, with the ultimate goal to increase diversification and liquidity, whilst lowering the entry threshold.
The Art Exchange is a long-term project that will be delivered in four stages.
Preparatory stage: transfer of prices of selected artworks to blockchain
It is the lack of infrastructure and transparency that prevents the development of fine art derivatives in Decentralized Finance. This fast-growing niche allows everyone to access financial products virtually for free in an efficient and trustless way. However, it may be challenging to establish a trustless connection between blockchain and real-world prices and events. At the preparatory stage, we have developed sustainable mechanisms to transfer sale prices of selected artworks to the blockchain on Ethereum. Our experts will cherry-pick the lots from the evening sales of Christie's, Sotheby's, Phillips and other auction houses to be added to the platform.
We can also fulfill third-party requests to transfer the verified prices to the blockchain.
Trustless prices will be accessible and open to use by the art world. We are guided by the best practices of the Decentralised Finance community, whose common infrastructure allows participants to build independent financial solutions. We hope that this infrastructure will facilitate decentralized art-related projects.
First stage: risk-sharing instruments
Even though art has become an asset class of its own, there are still no financial instruments to mitigate or trade risks. Whilst a classical financial market offers investors options to purchase a part of a promising company through shares, the art market is behind. The Art Exchange has launched a peer-to-peer derivatives platform that is fully decentralized and allows to trade complex derivatives with cash/stable coin settlement. Based on Opium Protocol, we issue position tokens that are backward compatible with ERC-721 standards.
Second stage: a bond fund that is secured by artworks
Art collectors are no strangers to being short on cash, but once in a while, they would find themselves in a situation where there is no liquidity to support their collecting spree. The process of reselling art is lengthy and doesn’t solve the main issue of a collector: how to get a quick cash injection against a part of a collection without the need to sell and rebuy their artworks.
The Art Exchange offers collectors to borrow against art collateral. Our team carefully selects artworks and performs necessary due diligence according to our policy and existing regulations.
Platform users can receive a high yield from an art-secured loan which will be overcollateralized. The bond fund will open attractive opportunities, with the new asset class in the current low-interest-rate environment.
Third stage: collective ownership, tokenization, co-investment
Tokens are instruments for collective ownership that are meant to lower the entry-level to the art market and increase the liquidity of art as an asset. Tokens allow for an art piece to be divided into fractions for further resale to multiple co-investors.
We built the platform to be compliant with the current regulations, but we make it easy to switch in the future, once the dedicated blockchain regulations are in place. That partly explains the three stages in the project's design: while the first two phases can be completed under current regulations, we are looking forward to a more elaborated set of policies to control the blockchain technology to help implement the tokenization.
For seamless user experience, we have designed a user-friendly, cryptographically protected wallet application for smartphones which makes the use of a blockchain-based product as easy as using an online banking application. We use meta-transactions and smart contract-based wallets for the best user experience and security possible.
The Art Exchange is:
- a co-ownership platform that allows fractional ownership of classic fine art
- an Ethereum-based platform for peer-to-peer financial contracts on art
- a borrowing platform that offers art-secured loans and asset-backed deposits
- a sustainable oracle solution to facilitate art-related projects on Ethereum
- theART wallet: secure and user-friendly application to seamlessly access blockchain
Last modified 2yr ago