This post has been updated as of May 18th, 2022.
Recently, we published the Loud Paper to introduce RARA’s Social Curation Protocol for NFTs. A core primitive of the protocol is transforming NFTs into 1x use reaction tokens, the Web3 equivalent of a like, emoji, or meme.
Today we will dive deeper into reactions as follows:
“Reactions” are non-transferrable, consumable tokens generated by an NFT’s media that are used to react to and curate third-party NFTs.
“Transformation” (updated May 18th, 2022) is the process of turning an NFT into a reaction. NFT owners transform NFTs into 1x use ERC-1155 tokens based on the work of the NFT. Transformation can be as simple as a copy, fun remix, or even cutting out the key focal points of an NFT.
To transform NFTs into reactions, NFT owners (1) name their reaction, (2) add tags for searchability (e.g., LOL, 😉, or BAYC), (3) confirm the look of the transformed reaction, (4) set creator royalties (if not predefined), and (5) prove ownership of their NFT in the registration process. The transformed media is used to mint reaction tokens which are non-transferrable and only useable for curation.
Transformations enable NFT owners to pick out the best part of an NFT and make it look like a cool reaction for other NFTs.
Genesis Transformations (updated May 18th, 2022). For the Genesis Reaction Registry, NFT owners may create exact copies of an NFT, add a simple border and shadow (similar to adding a white matte around a picture before framing), or request a custom transformation like these.
Future transformation effects will be released to support more media types (e.g., GIF, MP4, WAV) and different contexts such as socially liking and curating NFTs. For example, the Genesis Transformation effect is good for curating NFTs in social feeds analogous to Instagram, but a different transformation may be better for curating NFTs in a 3D environment like Cryptovoxel’s metaverse.
Transforming NFTs into reactions is native monetization of media.
If you own a Picasso, you don’t want to sell the Picasso, you want to sell museum tickets and posters. Similarly, long term holders of NFTs do not want to sell their NFTs. Hodlers want to sell experiences with their NFTs. Reactions are fan experiences with NFTs custom built for the social experience of liking and curating NFTs together as a community.
Earning Yield. Making money with reactions is simple. Register NFTs to sell reactions. Earn the “Maker’s Cut” of 4.5% of every reaction sold. The Maker’s Cut is set by the protocol and all or a portion may be shared with the NFT creator. The remainder of the reaction sales proceeds are reserved for curation incentives which will be discussed in a future post.
Increasing Valuations. The underlying value of an NFT will increase as the NFT sells reactions. NFTs with a history of earning cash-flow will become more valuable than comparable NFTs without cash-flow. Currently NFTs are valued based on their goodwill “meme” value. When RARA’s protocol is released, NFT value will be meme value + discounted cash-flow value adjusted for growth expectations.
The result? NFT valuations will be easier to define, making NFTs even more valuable across Web3 including DeFi.
RARA’s protocol will launch with a Genesis Reaction Registry for NFTs. RARA’s community will help select which reactions will be whitelisted for launch.
Wondering which NFTs in your wallet to register with the Genesis Reaction Registry? Any NFT(*) can be registered but not all reactions are created equal.
Great reactions, like great emojis and memes, express something.
PFP Collections. NFTs designed for profile photos are excellent candidates for NFTs to register as reactions. Why?
Memes. Crypto runs on memes. Since Hal Finney tweeted “Running bitcoin”, and a BitcoinTalk poster was too drunk to spell as he declared “I AM HODLING”, memes have proliferated our culture. The most valuable NFTs are memes – NFT-backed reactions will be the same.
That’s where the MemeHunt comes in. As we lead up to the protocol launch, RARA’s community is on the hunt for the best NFT memes to register with the protocol. Follow @rara_social on twitter and join the hunt.
(Updated May 18, 2022)
Prior to registering an NFT with the protocol, NFT owners should ensure the creator granted the have the appropriate copyright to create copies, remixes, or derivative work and to sell reactions. NFTs registered as CC0 or otherwise grant NFT holders commercial rights to sell copies or derivative work rights based on the work of the NFT are perfect NFTs to register. For example, NounsDAO, CryptoToadz, Sartoshi’s mfers, and Loot are example CC0 collections while other NFTs like Bored Ape Yacht Club enable certain commercial rights. However, you should review each NFT yourself, talk to your own attorney, or just ask the creator if you are unsure of your NFT rights.
More details to follow in another post.