Get ready for an exciting journey! Over the next few weeks, I’ll be unveiling a series of blog posts that delve into the transformative power of our new OPNs RWA module. This innovative tool is set to revolutionise both the Real-World Asset (RWA) landscape and the event and ticketing industry.
These upcoming posts will provide you with an in-depth understanding of the mechanics of our RWA product. You’ll gain insights into the technical aspects, the underlying business logic, and the token economics that make this module so unique.
If you’ve been following my previous writings on this topic(here, here) — don’t worry! I’ll be recapping key conclusions to ensure everyone’s on the same page.
Our 4 key learnings
To save you on some reading, I will summarise the four main insights about onchain event financing in this blog. These learnings inspired us in the design. More technical and the role of the token in this all will be explained in subsequent blogs following in the next weeks.
Killing the ticket monopolies by a thousand cuts
Financing is key to securing high-profile deals and events in the entertainment industry, a fact often overlooked, leading to dominance by a few large ticketing companies. A few years ago, we began developing an RWA module for onchain ticketing, sparked by the need to provide substantial funding for large-scale events, a complex and unpredictable area traditional lenders often avoid.
This wasn’t a whimsical decision, but a response to a market need. Large-scale ticketing is less about QR codes, a solved problem, and more about adequate financing. The power of entertainment giants lies in their ability to fund major events, not in generating QR codes.
Our RWA module, OPN, aims to disrupt this status quo. Using onchain NFT tickets and DeFi, we’re creating tools to compete with large companies like Ticketmaster. Our goal is not to replicate Ticketmaster but to improve upon it using onchain incentives and enabling third-party developers to build on our protocol. We aim to democratize event financing, creating a more equitable, efficient, and transparent ticketing industry.
Onchain tokenization and fractionalisation remove the need for massive balance sheets
Large ticketing firms like Ticketmaster finance major events, using their financial strength to secure more events and set ticketing fees. They turn loans into bonds and distribute these in investable forms, a process known as tokenization and fractionalisation.
We use the same concepts with our OPN RWA module but execute them entirely onchain, removing friction, allowing real-time settlement, and facilitating wider investment. This democratizes event financing, traditionally dominated by big entities like Ticketmaster.
Our aim is to disrupt this by offering a more efficient and accessible event financing alternative.
Collateral: Tokenized onchain ticket inventory
FTX and 3AC’s defaults left many creditors unpaid, most still embroiled in bankruptcy court. However, DeFi creditors like Aave and Compound were fully repaid due to the unambiguous nature of onchain transactions.
OPN’s model similarly settles ticket sales and their value flows onchain in real time, eliminating room for dispute or delay. The loan is repaid, or there are certain consequences, such as tickets becoming un-scannable. While there is some flexibility, a hard limit exists, after which agreed terms are enforced.
Despite seeming rigid, such strict loan terms increase repayment likelihood. Protecting the principal(initial loaned amount) is crucial in loan management. In RWA protocols, entities sourcing and verifying borrowing opportunities are ‘loan originators’. In OPN’s case, we call these ‘Inventory originators’.
OPN advances further by tokenizing ticket inventory and associated value flows, such as secondary market fees or reseller profit shares. Every ticket (re)sale includes a token transfer that can be split, with these tokens serving as collateral.
Empowering artists and creators; Bringing back the Bowie bond
Our RWA module empowers creators and artists by providing innovative financing capabilities. This allows creators to fund their projects while offering fans the opportunity to directly support their favorite artists. An interesting example of such a financing model is the Bowie Bond, where David Bowie sold the cash flows from his albums to large registered investors way back in 1997.
Today, our RWA module enables onchain tokenization and fractionalisation. This advancement allows artists’ future income streams to be invested in by anyone with a crypto-wallet, bypassing traditional financial intermediaries. This approach could have not only increased Bowie’s earnings from the bond issuance but also provided his fans the opportunity to own part of his legacy.
While the Bowie bond was backed by music royalties, we also see potential for bonds backed by future ticket sales or other onchain assets. This new direction opens up exciting opportunities for artists and their supporters, changing the way we invest in creative projects.
Closing thoughts: Overcoming LiveNation’s Unbeatable Edge
Over the last 40 years, tens of thousands of articles and videos have expressed frustration over LiveNation. A common sentiment is, ‘how can a company with such high fees, taking advantage of fans and artists, continue to dominate without competition?’ In any other industry, a company as opaque and self-serving would have been replaced by a superior alternative long ago.
What these authors fail to understand is that LiveNation’s monopoly isn’t rooted in technology. They dominate because when you need to finance an 800-million-dollar stadium, LiveNation is the only available financier. The condition that Ticketmaster must be the ticketing partner, thus potentially exploiting your visitors, is a difficult concession. However, it’s better than not having a stadium at all.
While it’s premature to declare their reign over, we believe that the rollout of our RWA module is a significant step towards loosening their grip.
Upcoming blogs we have lined up
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Why onchain ticket inventories are a natural fit as RWA collateral
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How onchain value flows ensure we are the first creditor that is paid back
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The role of the OPN token in our RWA module
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Onchain Tickets x GambleFi: Issuing 12 conditional tickets(validity is outcome dependent priced by sports books) for 1 actual ticket for this year’s biggest event
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