Issue #1 : Superare and the 1/1 art market
Hi everyone,
I have lately been spending some time reading about 1/1 curated art marketplaces. The one that I found the most fascinating is @SuperRare which recently converted to a Dao-run curated art marketplace. Let's dig into its history, on-chain data, and fundamentals. The report is written with the basic assumption that everyone who is reading this is aware of the basic concepts of DAO, NFT, governance, ERC 721 standard, tokenization, and other related topics.
Let’s dig in.
Superare was started on April 15th, 2018 amidst a bear market. It was born from a simple idea to build an art market that puts power into the hands of artists. Artists have always resorted to digital art since the invention of computers but due to its intangible nature, the size of the digital art market has been significantly smaller than that of the physical art market.
The launch of crypto punks (the first generative art collection launched on ethereum blockchain) in 2017 gave inspiration to the ERC 721 standard on ethereum, which ushered in a new era of digital scarcity. It offered provenance, ownership, immutability, and tradeability of art.
The Superare team for the first 3 years would select handpicked curated art pieces from artists and list them on their platform but they soon realized that they can't be gatekeepers of curated art and hence launched Superare 2.0 which converted the entity to a DAO.
This also gave birth to Superare Spaces which are independently run storefronts on SuperRare that can curate art and artists, promote sales, run auctions, and collect commissions. Spaces act as a curated marketplace within a marketplace. Each Space is overseen by a designated operator (or operators), chosen by a community vote of $RARE holders. Elected operators get to choose and onboard their own artists, market as they see fit, help them with promotions and earn commissions on all sales through their space.
Superrare 2.0 also launched with $RARE token (which was airdropped to the community) which would be the governance token to run and manage the DAO. All commissions and fees earned by Superrare go to the treasury managed by the Dao governing council, which is also tasked with overseeing SuperRare curation and the platform’s future. The Superrare Governance Council is a group of nominated community members that implement decisions based on the votes of $RARE token holders.
The $Rare token was retroactively airdropped to everyone who played an instrumental role in bootstrapping SuperRare into the platform that it is today.
150,000,000 $RARE - 15% of the total supply of 1 billion $RARE was airdropped to everyone based on the following criteria.
The underlying token distribution of $Rare token is as follows -
15% - Retroactive airdrop
40% - Dao treasury - 25% of this is available at launch while the rest will have linear vesting of 4 years.
25.5% - Team (3 years vesting with 6 months cliff)
14.5% - Investors (3 years vesting with 12 months cliff)
Strategic partners and collaborations - 5%
Details of linear vesting are as follows -
Revenue model of Super rare -
1. Primary sales by artists - 15% by community treasury and 3% network fee to community treasury
2. Primary sales by spaces - 5% community teasury + 3% network fee to community treasury
3. Secondary sales - 2% network fee to community treasury
Growth in Revenue
Super rare saw more rev in the October alone than it saw in the entire year of 2020.
September saw $2.4M in revenue. Oct is already at $3M in total revenue and well on pace for a record $4M in revenue
Blue lines represent primary sales
Orange lines represent secondary sales
Growth in volume compared to peers -
The below chart clearly indicates Super rare leading the 1/1 curated art monthly volume with @withFND leading the 2nd place and @makersplaceco lagging behind on the 3rd place.
In terms of 1/1 crypto market share as of yesterday,
@SuperRare has a giant 61.5% market share
@withFND has a 35.8% market share
@makersplaceco has a 2% market share
@AsyncArt has a 0.5% market share
@KnownOrigin_io has a 0.2% market share
@SuperRare volume, both cumulative and breakdown of primary and secondary sales volume are as follows -
Cumulative volume has well surpassed $150M
Secondary sales dominate primary sales on Super rare.
Breakdown of active collectors and artwork sold -
April was the highest month for collectors with 929 monthly active collectors.
Cumulative unique collectors on Suprrare have surpassed 4000.
This is an indication that Superrare has low collectors but each collector is a high net individual spending high volume/purchase
@StarryNight_Cap run by @Vince_Van_Dough, the NFT arm of 3AC run, is the top collector on SR, in the last 30 days.
3AC can standalone can drive huge meaningful volume, but more importantly, this is a leading indicator for what other funds/HNWs will do.
Breakdown of total artists and total artworks sold -
Cumulative unique artists who have sold on Superrare have surpassed 1600.
In totality, ~30k artworks have been sold on the platform till date.
Top 5 artists on Superare -
1. @XCOPYART - 134 sold worth ~ $22M
2. @videodrome - 41 sold worth ~9M
3. @Hackatao - 124 sold worth ~$6M
4. @dmitricherniak - 11 sold worth ~5M
5. @Coldie - 107 sold worth ~3M
and many more, like @muratpak who's sold 75 for ~$1.8M
Top 5 collectors in terms of usd spent -
1. @Anonymoux2311 - 86 bought worth ~5M$
2. @punk4156 - 22 bought worth ~$4.4M
3. @krybharat - 167 bought worth ~$4.2M
4. @batsoupyum - 134 bought worth ~3.7M
5. @crypto888crypto - 98 bought worth ~$3.6M
So why do these collectors collect and spend millions of dollars in digital art ?
-financial upside/speculation
-love of art/aesthetic value
-belief in advancing art/artists
-status/signaling
-community/connection
-expression
-fun/excitement
-intellectual curiosity
FYI, 1/1 pieces on Superare have outperformed eth by ~4x in the last year even though eth was up by 9x since during the same timeframe.
So clearly, there’s a huge financial upside for collectors to collect these rare pieces from the top artists globally.
Moving onto fundamental valuation of $Rare token -
Current price - $1.95
Total supply - 1B
Circulating supply - ~142M
Circulating MCap - ~$278M
FDV - $1.95B
Expected revenue in Oct - $4M
Annualized rev (based on oct rev) - $48M
P/E Ratio - 40x
This puts $Rare among top Defi projects in terms of P/E ratio. Let's look at the top Defi projects in terms of P/E ratio and with the launch of the spaces program, the P/E ratio is bound to get lower with increasing revenues.
Let’s understand how Superrare is different from Opensea.
1. Superare’s goal is to help people find beauty, appreciate and connect through it
2. Not attention trapping UX
3. Museum or gallery-like experience
4. Collectors are more connected to the platform vis-a-vis Opensea
5. Minimalistic UI
What is Superrare's moat ?
1. SR is a bet that the 1/1 NFT market will grow along with the broader crypto market.
2. We live in a world of increasing capital & decreasing meaning, so people will pay more for meaningful things.
3. Collecting has always been a fun part of human experience. Collecting creates meaning in the form of aesthetic beauty, connection (with artists/NFT community), status, & supporting artists you believe in
4. Even if a small fraction of crypto-rich funds & individuals decide to store value in 1/1 SuperRares, that's enough to move the revenue needle.
5. Superrare's focus on decentralized and crowdsourced creation and focus heavily on the technology and infra needed to back curations at scale.
Counterthesis ??
1. The biggest threat to Superare is when true competition emerges and poaches market share from SR and/or forces SR to collapse fees and thus revenue.
2. The experiment of decentralized curation/SR spaces fails.
3. Crypto/ethereum/digital art dies
How did you like the article ? Feel free to hit me on Twitter (link in the hyperlink) if I missed covering anything related to Superrare.
For freshers, I’ll recommend joining Superrare Discord servers to learn more about their governance model and future roadmap.
Best,
Abhishek.