SIP | Indexing of Shatter Smart Contract from Transient Labs

Governance Discussion
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Authors: Ben Strauss(Transient Labs)
Status: Temperature Check
Type: Governance
Sponsors: TBD
Implementer: SuperRare
Created Date: July 5, 2022
Shatter page: https://transientlabs.xyz/shatter
Temp check link: Discord

Summary:
Shatter is a revolutionary smart contract developed by Transient Labs; creating an entirely new dynamic between the artist and collector. Using the Shatter smart contract, the collector now has a choice: keep the piece as a true 1/1 … or … Shatter the piece, converting the original artwork into editioned ERC-721 NFTs.

Abstract:
Think of Shatter as a switch (executable function inside the contract) that ONLY the current owner (artist or collector) of the 1/1 piece can flip. Until that switch is flipped, the piece will forever remain a true 1/1 artwork. If and when the owner decides to Shatter their 1/1 piece, the smart contract burns the original piece, while simultaneously minting the editions directly to the owner’s wallet using an extremely gas-efficient batch minting process (ERC 721A). Because these new tokens are minted to the same smart contract, they will all show up under the same series. During the creation of the smart contract, the artist defines both a maximum and minimum number of editions the piece can be potentially shattered into. Therefore, these editions will be limited. Each piece can only be shattered once, however, if at any time a single wallet address owns all of the editions of a shattered piece, they may execute a one-time FUSE function to effectively re-assemble the piece into a final 1/1 state.

Motivation:
The Shatter contract implementation is being proposed because it provides artists and collectors more creative control than ever before. Artwork editions have traditionally been a great way to expand a collector base. Now with Shatter, there exists the opportunity to not only reach the audience of the creator, but also the audience of the collector who Shatters the piece. 1/1 artwork can have a hefty price tag, making secondary sales more difficult to come by. Furthermore, it will allow art to be more liquid, giving the collector the ability to break their 1/1 into editioned ERC721s opening up many doors in the secondary market.

Specification:
General: Shatter is a smart contract innovation from Transient Labs that allows artists or collectors to convert the original artwork into editioned ERC-721 NFTs. Think of Shatter as a switch that ONLY the current owner (artist or collector) of the 1/1 piece can flip. Until that switch is flipped, the piece will forever remain a true 1/1 artwork. If and when the owner decides to Shatter their 1/1 piece, the smart contract burns the original piece, while simultaneously minting the editions directly to the owner’s wallet using an extremely gas-efficient batch minting process (ERC 721A). Because these new tokens are minted to the same smart contract, they will all show up under the same series.

Artists’ Control: When creating the initial smart contract, the artist defines a maximum and a minimum number of editions that a given piece can be Shattered into. The future collector/owner can then choose, within the set range, how many editions the 1/1 piece will be Shattered into. Once a piece is Shattered, the editions themselves cannot be further Shattered. The artist also has the option to set a delay period during which the piece must remain a true 1/1 before the collector can Shatter it.

How is it different from fractionalizing?
When an NFT is fractionalized, the ownership of that 1/1 NFT is being shared amongst several different people. The fractional ownership of this NFT is usually represented by ERC20 or ERC1155 tokens. With fractionalization, the original NFT remains an intact 1/1 artwork. Fractionalizing is also backwards compatible, meaning it can be applied to any already existing 1/1 NFT. Shatter, on the other hand, is a novel mechanic built straight into the smart contract for a given 1/1 NFT. Because of this, Shatter is not backwards compatible, as the 1/1 must be minted on a Shatter-enabled smart contract. When an NFT is Shattered, the smart contract mints editioned ERC721s of that NFT, while simultaneously burning the original 1/1. All editions get minted to the owner/collector’s wallet and stay within the same series as the original 1/1 NFT. Unlike fractionalized NFTs, these editions do not represent partial ownership of any existing 1/1 piece. Rather, the collector has full ownership of each edition they own, just as they would with a regular editioned artwork.

Can Shatter be undone?
Yes, and it is accomplished through what we call the “FUSE” mechanic. This function essentially “fuses” all of the editions back into a 1/1 NFT. However, there are a couple of simple rules to keep in mind:

  • You must have ownership of ALL editions from the originally Shattered 1/1 NFT
    • This applies if you kept all editions after Shattering, or swept the entire collection off secondary
  • Once the FUSE function is used, the resulting 1/1 NFT can never be Shattered or fused again. This will be its final state!

How many times can a piece be Shattered?

A 1/1 NFT minted to a Shatter smart contract can only be Shattered once. The resulting editions from a Shatter can not be further Shattered. And remember, if the Fuse function is used the resulting 1/1 NFT can never be Shattered or fused again.

To help with implementation there will be a Shatter registry that acts as a source of truth for valid and approved shatter contracts created by Transient Labs. Marketplaces such as SuperRare will be able to query this to see if it’s a true Shatter contract developed by Transient Labs.

Benefits:
There are many benefits of implementing Shatter on SuperRare, such as:

  • Creating a new dynamic between collectors and artists
  • Allowing collectors to sell their Shattered editions will provide more liquidity options and a form of insurance against expensive 1/1 art purchases
  • Artists have the potential to reach a larger/different audience through the collector who Shatters
  • Opens up the art market for collectors who are outpriced of 1/1s, therefore hopefully will lead to more collectors on-boarded to SuperRare

Drawbacks:

  • Possible implementation work
  • Introduction of editions of SuperRare, reducing scarcity of 1/1 artworks

Outcomes:
There are a few outcomes that will demonstrate whether this proposal was successful. The first is we see the Shatter contract being used by different artists. Secondly, once a piece is Shattered, the editions are sold to other collectors at a more affordable price point to open up an artist’s collector base. Thirdly, SuperRare will see more market volume-driven from the affordability aspect of collecting editions from our favorite artists rather than only 1/1s.

6 Likes
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mind blown :exploding_head: Really appreciate the level of detail in explaining the shatter smart contract. SuperRare has always been known as a single edition marketplace, so I could see there being some grumblings around whether we as a network should tolerate multiple editions. But I think the benefits outlined in the proposal and opportunities for conceptual art that utilizes a shatter function make a compelling argument. Plus, there is a bit of a difference between minting editions out of the box versus minting an artwork that has shattering as an executable option.

I am still trying to understand what the successful passage of this proposal will mean for the DAO exactly. I don’t believe SuperRare Labs is necessarily limited in its ability to index third party contracts on its UI, but I could see us moving towards curating with the community the list of third party contracts that UI-providers like Labs could choose to implement. In this case, it seems that the successful passage of this proposal will result in the Shatter contract being registered on-chain as a SuperRare DAO-approved contract and possibly the adoption of the code itself as part of the official SuperRare Protocol (assuming Transient is willing to dedicate such code). That would set a precedent for the future that only community approved contracts (or alternatively contracts from community-approved devs) can be indexed moving forward. If this is a pure “to index third party contract or not to index third party contract” proposal, the specification should more clearly state so.

However, if the main question is “whether SuperRare should index contracts that permit multiple editions,” then that brings up some overarching policy issues around single edition art on SuperRare. The successful passage of this proposal in that instance would indicate that the community is willing to make exceptions around digital scarcity under certain circumstances. I’d say that there is certainly room for exceptions especially if there are novel smart contract mechanics like in the present instance, but it opens doors to other questions (i.e., what license to the underlying art does each shard owner have? is the license co-extensive with the license already provided for based on the SuperRare.com terms of service). If exceptions are to be carved out for multiple edition, I’d say they should be carved out on a case by case basis and only for community approved contracts so that we don’t completely unwind principles around digital scarcity.

Regarding implementation, I think there is clear opportunity for conceptual art releases that invoke the SHATTER function. It could be interesting to add in a $RARE incentivization component to this proposal so that we can connect Artists to the Transient team for novel art releases to promote the existence of the new contract (assuming its passed).

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Original text: mind blown :exploding_head: Really appreciate the level of detail in explaining the shatter smart contract. SuperRare has always been known as a single edition marketplace, so I could see there being some grumblings around whether we as a network should tolerate multiple editions. But I think the benefits outlined in the proposal and opportunities for conceptual art that utilizes a shatter function make a compelling argument. Plus, there is a bit of a difference between minting editions out of the box versus minting an artwork that has shattering as an executable option.

Response: I’m very happy you see the innovation and differences between Shatter and an out-of-the-box edition. The main inspiration for Shatter is all about advancing the relationship between the creator and the collector, and opening up an entirely new form of ownership for a digital asset such as a 1/1 artwork.

Original text: I am still trying to understand what the successful passage of this proposal will mean for the DAO exactly. I don’t believe SuperRare Labs is necessarily limited in its ability to index third party contracts on its UI, but I could see us moving towards curating with the community the list of third party contracts that UI-providers like Labs could choose to implement. In this case, it seems that the successful passage of this proposal will result in the Shatter contract being registered on-chain as a SuperRare DAO-approved contract and possibly the adoption of the code itself as part of the official SuperRare Protocol (assuming Transient is willing to dedicate such code). That would set a precedent for the future that only community approved contracts (or alternatively contracts from community-approved devs) can be indexed moving forward. If this is a pure “to index third party contract or not to index third party contract” proposal, the specification should more clearly state so.

Response: Luckily Transient Labs (TL) and SuperRare have been working together for a little while now, and we (TL) have been indexing our contracts over for some amazing dynamic projects lately. But to date, these contracts have been customized in the way of media metadata (animation urls vs jpegs vs mp4 for example). The Shatter contract is a different animal however, as the core on-chain mechanics are brand new, and in SuperRare’s case violate the current terms of service that prevents editioned artworks. This is why we are taking this one through the DAO! :grinning:
On the topic of “official SR protocol”, we have discussed making Shatter a SR exclusive smart contract, but then again we don’t want to limit non-SR artists from being able to innovate using Shatter in the future.

Original text: However, if the main question is “whether SuperRare should index contracts that permit multiple editions,” then that brings up some overarching policy issues around single edition art on SuperRare. The successful passage of this proposal in that instance would indicate that the community is willing to make exceptions around digital scarcity under certain circumstances. I’d say that there is certainly room for exceptions especially if there are novel smart contract mechanics like in the present instance, but it opens doors to other questions (i.e., what license to the underlying art does each shard owner have? is the license co-extensive with the license already provided for based on the SuperRare.com terms of service). If exceptions are to be carved out for multiple edition, I’d say they should be carved out on a case by case basis and only for community approved contracts so that we don’t completely unwind principles around digital scarcity.

Response: We are well aware of how the Shatter contract can be seen as opposing the historical digital scarcity of SuperRare, which is why we see the importance of running this through the SIP procedure. As far as the licensing, think of the shattered editions no different than a normal limited edition collection. There is no “shared ownership”, as each edition is fully owned by the collector of that specific edition (no differently than a collector owns a 1/1 on SR, same default licensing policies apply, unless specified otherwise by the creator [Cath Simard’s Free Hawaii photo for example]).

Original text: Regarding implementation, I think there is clear opportunity for conceptual art releases that invoke the SHATTER function. It could be interesting to add in a $RARE incentivization component to this proposal so that we can connect Artists to the Transient team for novel art releases to promote the existence of the new contract (assuming its passed).

Response: Always game for stuff like this, and will be eager to have these discussions once/if the proposal is approved!

1 Like
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Really cool and interesting.

Question I have would be for SuperRare side of things.

Could Shatter contracts be indexed if they are 1/1s, removed from indexing when Shattered, then returned to indexing if Fused?

Or does this defeat the purpose?

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This would be something that could be technically triggered on SR’s side of things. However, it removes a huge part of the core benefit for collectors and the Shatter contract: being able to list and sell their newly minted editions in a top-tier market place such as SR.

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I love this idea.

Editions are a great business model, however in their simplest form I found it hard to get excited about them. Adding the game mechanics of the shatter contract makes them much more interesting, and also ties the edition to an original 1/1.

This is a big shift for the network and protocol. I’m very curious to see what other artists and collectors think!

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Awesome to have your interest John! From the community outreach and pressure testing we’ve done on our side, we have got nothing but positive and excited feedback from the artists and collectors we talked to. This would include people like Archan Nair, Reuben Wu, Michael Sidofsky, Cath Simard, OSF, NorCal, Batsoupyum, Anchor Drops, and more!

8

Very interesting…love the gamification aspect.

Very supportive of this if Shattered limited editions are not indexed so SuperRare can remain true to its 1/1s. And only non-Shattered/Fused works be displayed and sold on SR.

Can this be done?

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Technically since the contract itself is being indexed onto SuperRare, any artwork minted to that contract will automatically show up under that same SR series. Therefore, the shattered editions will show up under the SR series for that artist/collector. There probably is some way to write som band-aide code on SR’s side that could hide the editions, but that defeats one of the big perks of the Shatter contract: being able to list these shattered editions on the SR secondary.