[Request for Comment] Rare: The Ethereum L2 for Art

Governance Discussion
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Author: SuperRare Labs

Summary

We propose an Ethereum Layer 2 blockchain specifically designed for the onchain art market. By lowering costs and removing barriers for creators, collectors, and builders, we can scale the onchain art economy to reach billions of people. And importantly, by establishing a network where value flows directly to the community, we can foster a more equitable and sustainable art market for the future.

Introduction

Since launching the first version of SuperRare in 2018, SR Labs has remained laser-focused on a single goal: to build a better, more transparent, and more connected art market onchain.

The first step was to bootstrap an early digital art market with SuperRare. The second step was the launch of RareDAO and $RARE in 2021, from which point governance of the protocol, and protocol fees, were handed over to the community.

The next step is to scale this niche market to millions, then billions of users. We must lower barriers for creators, collectors, and tastemakers, making digital collecting 10X easier and more compelling for both cryptonatives and the traditional art market. And we need to empower the next generation of onchain apps that will elevate cryptoart into a $100B+ market.

These are hard, multifaceted challenges, and we can’t overcome them alone. To accomplish this, we propose Rare: an Ethereum L2 designed specifically for the onchain art market.

Critical challenges

High costs and barriers to entry

Since 2018, over $1.9M has been paid in ETH gas fees on SuperRare alone. These fees are a burden to users, causing friction and limiting participation in the onchain art market. Lowering these costs is essential to our mission of making digital art accessible (and fun!) to a broader audience.

Incentive misalignment

The core promise of crypto is that users should own and benefit from the networks they use. Control and value should be in the hands of the community, not corporations with different agendas. Many platforms fail to embody this ethos. We see an opportunity to create a network that truly aligns with these values.

Media preservation and storage

Storage of media associated with NFTs is a complex topic that many platforms ignore. However, in order to bring the world’s most valuable art onchain, we must ensure robust, decentralized, and reliable storage solutions that safeguard the longevity and integrity of digital artworks.

Fragmented provenance

The NFT landscape has evolved dramatically, with numerous new platforms and marketplaces emerging in the past few years. While this proliferation offers creators many options, it has also resulted in a fragmented ecosystem that is challenging to navigate, because different identities are often used on various platforms and chains. We need a decentralized, cross-chain registry for web3 creators, collectors, assets, and provenance.

Rare: complete infrastructure for the next-generation art market

Core features

  • Low fees: 10x lower transaction costs compared to Ethereum L1

  • High speed: Fast, efficient transactions powered

  • Regenerative art economy: Overseen by the nonprofit RareDAO Foundation, Rare’s sequencer fees will go to the community

  • Modular scaling: Keep high value assets on L1 while auctioning them on L2 with faster and cheaper transactions

  • Decentralized storage: Allocation of sequencer fees to subsidize IPFS and Filecoin for resilient and decentralized storage

  • Canonical creator registry: A unified registry for creators with a .rare name service, to solve issues of identities and provenance fragmented across platforms

  • Royalty registry: Supported on SuperRare since day 1, royalties are not the industry standard they should be. Rare will support the open source royalty registry and make integration simple for devs

Technical Details

Economic Model

  • Revenue goes to creators & builders: Sequencer fees generated by Rare, like the fees on SuperRare, will go to the community treasury
  • RARE utility & distribution: RARE is used to power onchain transactions
  • Staking rewards: rewards for users securing the network & running sequencers
  • Curator rewards: Additional rewards for active tastemakers via curation staking

Does Ethereum need another L2?

It’s been inspiring to see Ethereum’s scaling solutions mature. Analytics site L2 Beat enumerates diverse projects focused on everything from gaming, to memecoins, to DeFi, to generalized rollups like Base. So, why do we need an L2 chain for art?

First, we’ve always believed that art deserves its own dedicated space. The importance of this focus is the reason art galleries don’t also sell video games, and why SuperRare has succeeded in the traditional art market.

Second, as the digital art market expands, so will its unique challenges. A network specifically focused on art, with a dedicated grants treasury, governance, and culture, will be better equipped to address these issues than a general-purpose blockchain. Just as NFT platforms have become more specialized, we think vertical-specific L2s and L3s will play a crucial role in the future.

Lastly, we share a vision of a multi-chain future, and Rare will be part of this ecosystem designed to support diverse economies. This positions the cryptoart community to leverage interoperability and shared security, ensuring that Rare can scale effectively and remain at the forefront of the digital art revolution.

Tl;dr

Rare represents a crucial opportunity to grow digital art collecting from a niche success to a massive global market by reducing costs, empowering developers, and doubling down on our belief that value should flow directly to the community.

What do you think? Please drop comments and feedback below!

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I think this is a fascinating idea - I’m very intrigued!

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Great idea, now how do we, Creators manage to join this initiative?

Thanks!

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Thank you for sharing the detailed proposal for Rare, an Ethereum Layer 2 blockchain designed for the onchain art market. While the vision for reducing costs and fostering a more equitable art market is admirable, I have a few concerns and counterpoints I’d like to highlight:

  1. Lack of Demand and Fragmentation: One of the primary issues facing the onchain art market is a lack of demand, compounded by the fragmentation across various platforms. By pursuing an L2 solution, we risk further siloing the market, making it even harder to achieve the critical mass needed for widespread adoption and success.

  2. Layer 2 Saturation: Layer 2 solutions have become commodities in the blockchain space, with many already competing to address high fees and scalability issues on Ethereum. Introducing another L2 may not offer the differentiation needed to stand out, especially in a market already saturated with similar solutions.

  3. ETH L1 Fees: It’s widely acknowledged that Ethereum L1 fees are high, creating barriers for broader participation. However, the solution might not lie in another L2 but rather in exploring more efficient and scalable alternatives like Solana. Solana’s architecture inherently provides lower fees and higher throughput, which can better accommodate the growing demands of the digital art market without relying on additional layers.

  4. Consolidation on a Single Chain: To effectively scale and unify the onchain art market, we need to move to a single chain that can handle the future influx of art. If the onchain art market is going to be as big as we anticipate, Solana is currently the only viable option to achieve this at scale due to its robust infrastructure, low transaction costs, and high-speed capabilities. Its design is optimized for high throughput and low fees, making it well-suited to support the expected growth and complexity of the digital art ecosystem. If not Solana L1, then an SVM (Solana Virtual Machine) should be considered as a scalable alternative.

  5. Incentive Misalignment: The solution to incentive misalignment is not using Rare as the gas token, which leads to further extraction. Instead, the focus should be on solving demand and accessibility challenges. By driving more revenue and increasing the value of Rare, we can better align incentives with token holders and create a more sustainable and equitable ecosystem.

In summary, while the goals of this proposal are commendable, the broader solution might lie in adopting platforms like Solana, which inherently provide the benefits sought by the proposal. This approach could offer a more direct and effective path to achieving a scalable, low-cost, and unified onchain art market.

Thank you for considering my feedback. I look forward to further discussions on this topic.

Best,
Nate

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Interesting idea! Why not use Arweave for permanent storage of the art, though? Seems to me like the logical conclusion the space will evolve to eventually anyways. Letting the creator chose between IPFS or a more permanent solution with Arweave could also be an interesting option.

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Rare is an essential chance to expand the digital art collection, as my teacher stated. More and more worthy pieces will be shown, piqueing people’s interest in art and drawing them to other branches of it. Apart from this tipping system, it’s quite well-organized, and assistance is always available.

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I think its a interesting and attractive idea which raises some questions:

  • Attracting liquidity to new L2s is non-trivial and takes strong incentives. How will be be achieved and maintained in a world of fierce liquidity competition?

  • Ongoing dev/product efforts needed to maintain a build a successful and competitive L2 could detract away from SR core mission. L2s do also fail e.g. https://publicgoods.network/ is closing down its rollup, in a SR scenario the risk to NFT token longevity is present.

  • Transaction volume - will there be enough volume to make it economically viable to pay for blob / blockspace rent on the L1, what is the required transaction throughput lift needed to make a L2 economically viable and fully pay for DA. I assume $RARE would need to be sold to pay for DA to rollup on the L1 in some form, what are the implications of this.

  • Attracting builders - with a potentially reduce use-case and focus, would the RARE L2 attract enough builders? What additional things could be build on SR/$RARE on a dedicated L2 than on an existing ecosystem L2?

  • Why not use another mainstream L2 such as OP Mainnet, Arb One or even Polygon etc? These seem neutral enough to not compete directly with SR mission but also you benefit for existing users and liquidity and means a focus could be more on use cases of $RARE within these ecosystems?

Love the idea but think it needs some more thoughts on trade-offs in the direction of change.

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I think this is a good idea to help move with how the market is moving, but to develop one’s own blockchain l2 is great!

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