NFT Certificates from Užupis
How I avoid becoming a crypto trillionaire and almost got shitstormed for that
Every investor knows this fear. You have put your money and your hopes into a product — whether it’s stocks, cryptocurrencies or even a start-up. You are completely convinced that sooner or later that thing will go to the moon. But then you see the value of your investment decline. Every time you wake up, the price of your investment has fallen further. Your loss increases every day. At the same time, doubts about your investment and yourself are growing. Should I get out to minimize the loss? What if I get out now and my investment goes through the roof tomorrow? What would I answer to those people who might then congratulate me on my presumed success?
I recently got caught up in the historical and hysterical hype about non-fungible tokens (NFT), where some investors are already plagued with similar fears. I for myself express my split opinion on the subject of NFT by making equally schizophrenic works of art about it — I do conceptual NFT art about NFT art. My first collection only consisted of single pixels and was meant to become a satirical commentary on the current NFT hype. Contrary to my intention, however, I fell completely in love with pixels and the manifold application possibilities offered by NFT.
At first, I had a clear idea of what bothers me about NFT art. To me, the growing NFT hype is exemplary of the increasing decoupling of price and value in the financial markets. The price of cryptocurrencies is rising continuously driven by stimulus-bill-financed investors. However, it is a mystery to me where the corresponding increase in productivity can be found that could justify and secure this increase in value. To illustrate this bubble-like development, I have now created a second NFT art series. It is a digital copy of my most important “work of art” to date, the Munich Constitution of Užupis. I present this work to you in the section “NFTs with paradox and 𝝅”, but for a deeper understanding I would like to explain a few things about the original constitution of Užupis first.
A Constitution for the Age of Artificial Intelligence
The Constitution of Užupis is more than 20 years old and to me it is the most beautiful constitution in the world. It is the only constitution known to me that also grants rights to animals and nature and contains the word “love”. But one thing was still missing for me: an article dealing with technology. In 2018 I submitted an application to amend the constitution of Užupis. After a number of emails and phone calls I was allowed to produce my own version of the Užupis constitution with an additional article on artificial intelligence (AI). This AI article was intended to appeal to everyone’s personal responsibility in dealing with AI and, by doing so, it was almost a reversal of the ethical debate at that time.
This first constitutional amendment in the history of Užupis was finally approved under two conditions. First, the new article had to be clearly recognizable as a subsequent addition. Therefore, it was not included as the 42nd article, but was listed with the irrational mathematical constant 𝝅 (≈3.14159 …) slightly below the original constitutional articles. Secondly, there should never exist more than one copy of the polished solid steel constitution in the world. The approved one-off was mounted to the outer facade of the Import-Export bar in Munich’s creative quarter, as there is an increasing number of free artists and tech startups coming together in 2018. Since then, this AI article number 𝝅 has gained some attention. Among other things, it was mentioned in the US Playboy and in the course of this June’s GLOBART Academy it will be presented in Vienna’s parliament as an inspiration to edit the Austrian constitution.
NFTs with Paradox and 𝝅
As I said, I had no permission to reproduce the constitution plaque placed in Munich. However, I was explicitly permitted to create digital copies of the AI- or 𝝅-constitution. So I listed two constitutional copies for auction as NFT art on opensea.io. There is one white version of the constitution with black font, and there is the inverted version with white font on black background. Both together are meant to symbolize the character of Užupis, which is often contradicting and paradoxical, but at the same time somehow leads to harmony among people — like yin and yang.
I also wanted paradox and 𝝅 to be reflected in the format of the auction. Therefore, I chose the reverse auction format, where the price declines continuously until someone buys the digital constitution copies or not. The end date and price of the two 𝝅-constitutions were also quickly found: the auctions were supposed to run for “exactly” 𝝅 years and started at 3,141,592,653,589.7932 Ethereum Coins (ETH) — more 𝝅 did not fit into the input field. This sum of more than three trillion ETH currently equals approx. 5 quadrillion USD. However, I realized that this sum does not exist, neither in ETH nor in USD, nor in both currencies combined. Currently, there are only about 120 million ETH and only 1.2 quadrillion USD in circulation. All the money in the world would not be enough to bid for this artwork within the next few weeks. But the price is steadily declining.
Watching my Revenue Vanish
When I started this auction, I was shocked how fast the numbers were rattling down. The price fell by several thousand ETHs per minute, or several billion USD. And this will go on for 𝝅 years now until the NFT artworks become literally worthless on 04/20/24 at 8:24 p.m. At that moment, I could empathize a little bit with the investor’s fear described in the beginning: hypothetically, anyone could buy my NFT artwork at an absurdly high price at any time. Tomorrow morning I could wake up and someone could owe me more than all the money in the world. At the same time, I am watching this potential profit vanish with incredible speed. This actually felt a little bit strange.
Until the start of the auction, it was just mind games, but now I could really become incredibly rich at any time. This idea is quite attractive, but it also brings me into a moral conflict. The attempt to monetize the Užupis Constitution is absolutely not aligned with the spirit of Užupis. From an Užupis’ point of view, money and, above all, greed for it are the cause of many problems. This conviction is so central that it can be found in the national coat of arms of our little republic. The coat of arms of Užupis shows an open hand with a hole. The idea behind it is quite simple: if everyone had a hole in their hand, we would not be able to crave other people’s money because it would fall straight through the holes in our hands anyway.
Precautions Against Crypto Trillions
So how could I prevent becoming a completely unearned crypto trillionaire? I could just cancel the reverse auction for a few dollars, but then I’d have to forego the mesmerizing sight of the 𝝅 trillion ETH dwindling every second. Instead, I have teamed up with our republic’s crypto pioneer Gleb Divov and his colleagues who run the Užupis CryptoArt Hub “Digital / Kalnas”. Together we developed NFT-based mechanisms that effectively protect investors against profits — aligned with the spirit of Užupis. We have created new NFTs for this purpose, which, similar to warrants known from stock trading, allow a bet on the amount of my auction revenue. What?
Let me give an example: we have issued a “LONG Certificate” that you can buy for 0,314 ETH (approx. 500 USD). With this certificate you will be betting that the black copy of the constitution will receive a minimum bid of 314 ETH (approx. USD 5 million) until the end of the auction in more than three years. If the constitution does not achieve this price, you earn nothing. But if the constitution achieves that price, you will receive a perverse premium of 314 ETH. That would be thousandfold of your 500-USD-invest within 𝝅 years (yes, a thousandfold).
Mini Shitstorm in the NFT community
We posted our not yet publicly listed certificate on Twitter and less than three minutes later an alleged NFT collector wrote a direct message on twitter. He stated his interest to buy the certificates and might consider to invest even more. But since he couldn’t quite believe our promised profit, he would like to call me on the phone. In that phone call I could convince him of our product by explaining all the technical details to him, and, in his preferred scenario, email him the code right away. I replied to him that I couldn’t do this, and, within atoseconds, the guy totally freaked out. He threatened to blacklist me on Discord in the NFT community if I didn’t immediately prove to him that I wasn’t a scammer by explaining all the details.
Instead of explaining the technical details I explained to him that our “cooperation” would end here. This triggered him to send even more direct messages, mentioning my mother as well as the role of the Germans in World War II. At the same time, he issued several scammer warnings to his Twitter followers, which were shared several times within a few seconds. He started posting screenshots of our private direct messages, and several of his followers also sent me abusive direct messages. At the same time, he kept asking for a phone call.
To some extend I could understand the precautionary flagging by the NFT troll with the short fuse. Our offer just sounded too good tob e true. Other leverage certificates traded on the stock market usually promise a profit factor between two and a maximum of ten, but they never promise thousand times the stake. However, the choleric Twitter friend probably overlooked the fact that we own both, the certificate as well as the 𝝅-trillion-ETH-artwork. The potential gain would be covered in any case. The premium of the certificate would be paid directly from the auction revenues of the constitutional copy. If we managed to auction off the constitution for the enormous sum of 314 ETH, we would instantly lose the 314 ETH again — totally aligned with the spirit of Užupis. Nevertheless we explained that to our wannabe-scammer-scammer, who thereupon deleted his defamatory tweets.
What do we learn from all this?
First, there is a lot of steam in the hyped NFT boiler. Second, too much money is always accompanied by too much greed. Third, NFTs are great for making them a subject of artistic research, e.g. by turning the investment object into an investment instrument.
Unfortunately, in this article I could neither elaborate on how your chance of winning anything with our certificates is affected by the of the price development of the underlying ETH, nor why even a profit factor of 1,000 can lead to a loss if the underlying currency also collapses a thousandfold. In this article I could also not dive into the funny feedback loops that could arise if a second certificate bets on the outcome of the first, or if three, four, five certificates bet on each other, criss-cross and circularly. We are still researching all this, but some things are already clear to us: Paradox starts with 𝝅 and the meta the better — Už!
