Crypto Art Markets and Latest NFT Sales

• Zack, can you please introduce yourself and SuperRare?

I am the Chief Marketing Officer and head of artist relations at SuperRare since early 2018. SuperRare was the first digital art marketplace that was officially launched on Ethereum back in 2018. We decided to focus on single edition NFT artworks since the beginning. Each artwork that is minted by the artist can only be owned or collected by one collector at any given time. So we do not do multi-editions. For the last three years we tried to focus on the high-end of the market. We gave importance to the control of the artists’ identities, originality of the artworks to gain and sustain collectors’ trust. All tokens at SuperRare are minted by the artist himself/herself
directly.

• What are the factors that make Crypto art market and especially SuperRare attractive for artists?

There are barriers to entry to SuperRare but those are still lower compared to the traditional art markets. A talented artist, who may or may not have millions of followers at social media, can find a chance to enter to SuperRare if his/her artworks are unique. Another factor that makes SuperRare attractive is the royalty payments to artist at secondary markets. We were the first crypto art platform which introduced artist royalty payments in 2018. Artists get royalty income from secondary market sales at SuperRare.

For instance last week one of our artists earned US$80k royalty income from secondary market sales and so I think that’s definitely an important factor that differentiates SuperRare. Community itself is also another important factor; artists and the collectors are very supportive of each other. It is a great way to share your art and get feedback from your peers and be able to collaborate with artists from all over the globe and so I really think that those are some of the main factors that make SuperRare attractive.

“Minting Process is Very Critical”

• Who are the collectors of Crypto art markets? What are the factors that make SuperRare attractive for collectors?

The collectors in the Crypto Art Markets comprised mainly crypto people (individuals who made money from crypto markets (from Bitcoin or Etherium)) and VC firms that are involved at the crypto markets. The preference of the collectors comes from the authenticity of the artworks at SuperRare. Artists themselves mint the artworks at SuperRare there are no intermediaries. At other platforms artworks are minted on behalf of artists. In my opinion the minting process is at the end the signing of the artwork and therefore it is very critical. In future the only way to prove the authenticity of these tokens is going to be that you can track back in the history of the token and see that the original artist was the one that created it from his/her own unique wallet address.

The entire provenance, historical bids of previous collectors at auctions are all recorded in the history of the token at the blockchain. So regardless of whatever happens to SuperRare, the tokens are still completely safe because all of that provenance and history are built directly into the blockchain and are not dependent on SuperRare. At the same time collectors know that they can sell the NFTs they buy from SuperRare easily at the secondary market at SuperRare. At some platforms there is no secondary market. Collectors need to go to other platforms to sell their NFTs. The existence of a convenient secondary market increases collector trust and
improve experience. At the end of the day secondary market you know is the most active in the space and the collectors are going to feel more comfortable buying art on a platform if they feel comfortable.

“…some artists have their unique style, when you see his/her NFT you know that it is his/her NFT because of style. I believe collectors give importance to this kind of artists that differentiate themselves from others.”

• Can collectors sell NFTs they bought at other platforms at SuperRare?

For instance collectors can not sell a NFT that they bought from Nifty Gateway at SuperRare at the moment. But this year this will most probably change and collectors will be able to sell artworks they bought at other crypto art markets at SuperRare. But of course this will be applicable to artworks that belong to artists that work with SuperRare already. We continue to work on this.

• What are their main buying criteria of collectors at the crypto art markets, we all know that majority is not the art collectors from the traditional markets?

Collectors may have many different criteria. One of the major indicator is the average selling price of NFTs of an artist and total volume of transactions. I myself follow these closely and I know many collectors follow also. You know all this information is publicly available such as total accumulated sales amount of an artist at the crypto markets, highest price of his/her NFT…

Another major factor is, you know there are many artists at crypt art markets that have similar themes and create very similar artworks. But some artists have their unique style, when you see his/her NFT you know that it is his/her NFT because of style. I believe collectors give importance to this kind of artists that differentiate themselves from others.

• How can collectors exhibit the crypto artworks?

Many collectors established virtual museums or galleries and they make exhibitions there. It is also possible to exhibit artworks at digital frames like Meural or Infinite Objects. As SuperRare we are working on a solution that will allow artists and collectors to stream their collection.

• What is the main revenue stream of SuperRare? Platform earn commission on sales, right? Is that major revenue stream? Any other revenue stream?

Our main revenue stream is currently sales commissions. We earn commission income over primary and secondary sales +3% over sales price. At primary market sales artist get 85% of the sales price whereas SuperRare gets 15%. At secondary market sales collector earns 90% and artist gets 10% royalty payment. We support artists to the extent possible while they mint the artworks but we do not charge any consulting fees. Our only income stream is commissions as I mentioned already.

• A crypto art collector commented at an interview that an artist’s social media presence is important as it shows the collector that the artist is eager to self-promote and there are followers who believe in the artist. What do you think about this comment?

Many collectors give importance to self-promotion. At the end they are curios about the artists and they would like to learn who the artists are, their background, story behind their production. Many collectors prefer artists that are very active at the social media as they will promote themselves and potentially their artwork prices will increase.

• What is our recommendation for an artist entering into crypto art market?

There are many artists who want to enter to these markets and tokenize their artworks. This is great but I recommend serious artists to make at least two weeks research and examine each platform, question the technology: Not every artist is familiar to the blockchain technology but there are many videos at the internet that provides information about the technology and NFT. Artists should watch these. They should review which artists are available at which platform also before they participate to those platforms. I think you know it’s definitely getting harder and harder to get accepted to SuperRare right now just mainly because of the amount of incoming applications which is up to 250 per day. We can launch 60 to 70 artists per month. Growth of these numbers are also dependent on the number of new collectors coming to these platforms. Artists should be patient we reply back to artists in 2-3 weeks time. Artists should be patient and do not mint and sell too many NFTs. They should have a more long-term perspective when it comes to their career planning.

• There are many discussions around lack of diversity at the art world and discrimination of minorities, immigrants, LGBT, female. Can you comment on this topic as SuperRare?

We do not ask artists who apply to us about their ethnicity, therefore we do not know. We give importance to diversity but we can have a better idea who the artist is only after the artists are accepted to the platform.
In recent period really amazing artists, women, people from different ethnicities, different color joined us. I definitely think that as time goes we're going to continue to see more and more diversity. But I think in the beginning it was not as diverse as it should be. Because you know it’s all crypto related and you know the players in the crypto world was not much diversed in the beginning. But as markets grow they will become more diversified.

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• Majority of the crypto art market has been dominated by motion designers rather than new media artists who have been creating and selling for long in the traditional art market? Is that right? How will it be in future?

You are right majority of the artist are digital artists. Artists at the traditional art markets are not that familiar with the digital art. It takes time for a painter or a sculptor to experience, learn and  adopt digital technologies at his/her art production. With the invention of internet and improvement of digital technologies a totally different type of artists evolved. Artists who could not be represented at the traditional art markets had a new opportunity. Those were the artists whose artwork can easily be copied and distributed among the internet and therefore artists that can not sell their digital artworks. But blockchain made it possible to sell digital artworks globally
event and protect the authenticity. More traditional artists continue to come into the space definitely seeing a lot of success in the market.

This will be also dependent on the collectors. A totally different segment of collectors exist at the crypto art markets. But I’m not saying it’s always going to be crypto people. Definitely more traditional art collectors will come to the space Crypto collectors are used to speculation on currencies, and use of crypto currencies. In the beginning of March we did auctions of Neil Beloufa and Petra Cortright. Shepard Fairey’s auction will follow the series also. Since we will be seing more and more artists from the
traditional art world we will see more traditional art collectors also.

“I Believe in Single Editions”

• Besides your platform SuperRare, there are also other platforms like NiftyGateway and MakersPlace? Can you comment on the competition and the future of the platforms and how does SuperRare differentiate itself?

Many platforms are seen as record keepers at the eye of the collectors. Many collectors still review closely at which platform the artwork is minted but in future they will be more interested at who minted the artwork. In future my vision is Superrare will become a marketplace that collectors can buy and sell all NFTs independent from the platform they were first minted. Nifty Gateway is totally a different market. At certain time of the day they drop artworks. You can buy with US dollars. They are attractive to different art collectors. Concept is completely different, there are timed-auctions with open edition sales. For instance in 10 minutes time
collectors can buy as many as possible. This is their business model. They’ve definitely been successful with their business model. This continues well but that creates a large oversupply. You pay a serious amount of money but you see there are sometimes 5,000 editions of the artwork you bought. I personally believe that the unique works (single edition works) will preserve value. But of course some artists’ multiple edition works will preserve value also. In general I believe in single editions. The authenticity is critical also. At Nifty Gateway Nifty mints the artworks itself on behalf of the artist. Artist does not mint the artwork from his own crypto wallet. As NFTs can be bought by US Dollar, transaction background can not be recorded at the token.

What I mean is you know if you have a timed auction on SuperRare and you know let’s say five of the most influential people in the world are all fighting against each other on this artwork. All of those bids and all those people are being recorded in that artwork’s history on the blockchain. In a way that forever you’ll be able to look back and see all that history regardless of what happens to SuperRare. At dollar auctions only the winner is recorded at the token’s history. SuperRare differentiates itself at this point as it allows all bidders and the winner of the auction to be recorded at the history of the artwork.

“….But currently the big collectors can influence the market. But when the number of collectors increases this will change.”

• The crypto art market showed an incredible growth and reached total volume of US$30m in 2020, but it is still a small market? Does this make it vulnerable to speculative transactions? Are there any measures to prevent that?

Market is about to hit 200 million and so. That grows really fast. Just in February monthly volume reached 100 million dollar. The market is exploding right now and I I do think that in six months time it will be a very large market. But currently the big collectors can influence the market. But when the number of collectors increases this will change.

In January daily active collector number at Superrare was around 400. In February this increased to 900 and continues to increase. When it comes to the measures to prevent it, you know there is a lot of manipulation at the traditional art world also it’s pretty impossible to completely prevent any sort of manipulation by people that have a lot of money but I do think that part of the beauty of the blockchain and crypto compared to the traditional art world is that everything is totally transparent at least on SuperRare. You know you’re able to look at the blockchain and you’re able to verify wallets and you’re able to verify if there is funny business going on. You know that there is a 15% commission to be paid on primary market sales. If you’re trying to do something like money laundering it doesn’t make sense to pay 15%. There are some platforms that takes no commission, at these platforms you can open a second account and sell to yourself at no cost but this does not make any sense at SuperRare.

Auctions Taking Place In Crypto Art Platforms

• What do you think about the Christie’s record sales Beeple NFT and Sotheby’s announcement of cooperation with Pak, another famous crypto artist?

I’m very glad that the Christie’s and Sotheby’s, largest players of the traditional art world, are starting to take crypto art markets seriously. I would have much preferred to see the auction taking place in crypto art platforms (at blockchain) where all of that data is being recorded in the artwork’s token. That being said I still think it’s very exciting and I think that development itself attracted a lof of attention and introduced crypto art markets to major collectors of the world. I think that we will continue to see more experienced collectors coming into the space.

• New crypto art collectors can be curious about the taxation of the income at Crypto Art Market? Can you please elaborate on that?

The tax regulations differ from country to country and so you know depending on where you live your taxation can be a different. To my best knowledge in US the way that it’s currently being handled is that it’s basically being counted as income so profits that you make are just basically added to your taxable income. We are expecting more clarity on the regulation and the tax rules. But I recommend for now people to declare and pay taxes over their income.

“We Don’t Give Custodial Service”

• Are you accepting only etherium at SuperRare as payment, is that right, will it be possible to pay with dollars in future?

We made the decision to do all the transactions with Ethereum for a pretty specific reason. With this we can record the provenance, every bid and previous collectors. All sales are all being recorded in the history of the artwork. This is done via the cryptocurrency as soon as you start accepting dollars then all of that is basically happening off chain and not being attached to the token. So platform becomes a custody. At SuperRare we do not give custodial service, we never take custody of anyone’s money or anyone’s artwork, it all happens directly peer-to-peer from artist to collector and so there’s no way for it to remain decentralized in peer-to-peer using
US dollars. Because we would have to custody people’s money in that situation. So I do think that we will move towards having additional payment options like stable coins which are basically pegged to the US dollar but it’s still a cryptocurrency that can all be tracked but I’m not sure that I see us going full on US dollars.