Introduction

Today I will talk about Art Gobblers, a NFT experiment designed by the engineers at Paradigm. 

The premise of Art Gobblers is that Art Gobblers are NFTs that can produce blank pages by burning Goo, a token that is emitted by these Gobblers. The amount of Goo that is emitted by a Gobbler is dependent on how much Goo they currently hold. The more Goo that a Gobbler holds, the more Goo it will produce. This makes Goo highly inflationary.

Blank pages can be drawn on by artists, and Art Gobblers can gobble these drawings, permanently locking them into an Art Gobbler’s contract. The gobbled drawings can be viewed through the Art Gobbler app, and thus each Art Gobbler will serve as an on-chain art gallery.

The issuance of new blank pages is set up using VRGDA , a novel mechanism that was designed for this project. This VRGDA mechanism essentially adjusts the cost of producing these blank pages to follow a set rate. If new pages are being issued at too fast of a pace, then the amount of Goo required to produce a new blank page will be higher. Conversely, if new pages are being issued too slowly, then it will be cheaper to produce new blank pages. For Art Gobblers, this rate has been set initially at 69 new blank pages a day, and over time will gradually slow down to 10 new pages a day. 1 in 10 of newly created pages will go to a vault to be distributed to artists in the community.

Goo can also be burned to mint a brand new Art Gobbler. Like brand new pages, Gobblers will also use a VRGDA mechanism to determine the Goo costs of minting a new Gobbler. 2,000 Gobblers were minted for free at project launch, and 8,000 more Gobblers will be emitted over the next ten years. Initial issuance of new Gobblers will start at around 200 new Gobblers a month. 1 in 10 newly minted Gobblers will go to the team, and an additional 1 out of 10 will be distributed to the community.

There also is the existence of Legendary Gobblers, which require the sacrifice of normal Gobblers. They use a standard Dutch auction mechanism, so once a Legendary Gobbler sale begins, the price becomes cheaper and cheaper until it is finally sold. The Legendary Gobbler also has the perk of emitting Goo at twice the rate of the combined Gobblers sacrificed to summon them. Legendary Gobblers auctions will begin each time an additional 10% of the total supply of Gobblers is issued (so every 581 regular Gobbler mints), and thus a total of 10 legendary Gobblers are possible. Auctions for these are scheduled to end before the next Legendary appears. 

Original Thought

The initial price of an Art Gobbler before any Goo has been generated is driven by collective demand for it. Whereas your standard defi token will go live with a liquidity pool, Art Gobblers are illiquid NFTs. There is no stableswap formula to regulate violent swings in price, and upon launch supply side pressure is naturally larger than buy side pressure. Whitelisted holders had a cost basis of 0, and the demand was high from people who did not make the WL. Some of these people were art collectors interested in the project, and were willing to pay a large sum of money to be able to participate. This kind of person set the initial market prices for Gobblers. All price action after is increasingly speculative, and people contributing care much less about the art.

Goo has little long term monetary volume. Goo will accrue at an increasingly fast rate as time goes on, and there is no ceiling for this rate nor total supply. Thus, Goo supply is designed to approach infinity, and price will approach zero in response. The only way to remain immune to Goo inflation is to either leave your Goo staked or invest in Goo assets- Gobblers and Pages. Because both Gobblers and Pages use the VRGDA mechanism, the optional decision is to buy at any price below the issue rate. Lastly, the VRGDA mechanism should not be seen as a limiter on prices. It makes Goo assets more expensive to buy, but the VRGDA mechanism does not ever make it impossible to buy a Goo asset. The only limit to how much assets can be bought is when prices surpass total Goo in existence. Thus, the VRGDA mechanism should be seen as more of a floor vs a ceiling.

Only one thing matters for Goo, and that’s how quickly a party can produce it. Because Legendary Gobblers produce Goo at twice the rate of the combined Gobblers sacrificed to summon them, a legendary Gobbler is instantly worth 2x the amount of Gobblers that were burned to mint it. There is zero downside to minting a Legendary Gobbler, and thus, I imagine Legendary Gobbler mints will be heavily botted. I predict that a MEV-savvy party will accumulate an extremely large amount of Goo and mint 10+ Gobblers at once, intentionally overpaying for these Gobblers in order to trigger the Legendary Gobbler sale to start, and then buy out the Legendary Gobbler at the top of the next block.

During the test run, the meta was to buy out Gobblers and drive up the price for everyone else. Prices surged for new Gobblers as people (correctly) realized that Goo was worth very little. It’s very easy to understand once you frame it a little differently: do you want money or a money printer? What would you even do with money anyways? That’s right, buy a money printer.

Now, I’m highly skeptical that things will play out the exact same way they did in testnet. For one, testnet users were competing for a high score. In testnet, there was nothing else to do but accumulate Gobblers to make your Goo multiplier bigger and bigger. In the now-live project, things are a little different- you can now sell your Gobblers or Goo for money. 

Thus, consider the following comparison.

Art Gobblers

1. Gobbler and Goo price and liquidity comes from demand for the two

2. You burn Goo to mint Gobblers, which have their price backed by the $ amount of Goo it takes to create a Gobbler at any given moment

3. These Gobblers then produce Goo, everyone becomes Goo rich, also Goo is inflationary

4. Repeat?

Luna

1. Luna price comes from Luna/UST demand, UST was backed by Luna

2. You burn Luna to mint UST, which has its priced backed by the $ amount of Luna it takes to mint UST at any given moment

3. You deposit UST into anchor, and everyone becomes UST rich, also UST is inflationary

4. Disaster

The key difference between the two is that there isn’t a Goo backed stable paying 20% yield subsidized by fluff and air to accelerate the destruction of the system. Because the vast majority of current Art Gobblers holders that weren’t on WL don’t actually care about the art that much, for now I think Art Gobblers is currently just a giant game of musical chairs. It’s kind of like if you had to hold a NFT to enter OHM staking, same shit but just repackaged a little differently. Eventually Goo supply will outstrip demand and the bubble will pop. People will rush to sell their Gobblers and the floor will quickly drop and people undercut each other with their floor listings, as well as dump their Goo and exit through the small door that is the Goo liquidity pool.

That said, I do think Art Gobblers is a bold experiment that pushes blockchain art forward. I do think they might actually become successful in the long run in creating a bunch of decentralized art galleries. I just think prices will implode violently first. I could also be very wrong and that Art Gobblers are the future of France. What do I know really?

Links:

Community analytics dashboard for Gobblers":