Jotting down some notes about how NFT companies can leverage the value of their brand and treasuries to create more value for the holders of the art. Multiple ways to use NFT’s in the crypto space:

• Art - Small shop sales like an artist sells paintings or sculptures & hope for royalties

• Affinity - Build community with the proceeds, relies on product, hype, & star power

• Shares - Unregistered securities offering, use to fund company or project

The last case, and likely the second, satisfies the SEC’s definition of a security from the 1930’s. This article will ignore these factors and dig into how traditional business methods might translate to the digital world, in some cases with crypto techniques.

My favorite Buffett piece was written for Fortune back in 1977 and discussed how inflation impacts equity investing. In it he describes the five ways corporations can increase return on equity:

He also discusses the “bountiful triple dip” experienced in the 1946-66 bull market, which I enjoyed re-reading. The full article is incredibly useful and worth the time, but back to what the best business analyst in history can teach crypto companies.

Turnover isn’t very helpful, considering (1) economies of scale don’t work with a creative enterprise selling artwork and (2) royalties are optional on-chain and rely on the contracts, courts and handshake agreements offline.

Borrowing money (items #2 and #3) to create more work will require a high interest rate because the value of the assets securing loans is volatile (for now, at least) and, because royalty cash flows are unreliable, securitization is unlikely to scale either.

Skipping to #5….

Let’s finish this discussion with income taxes. Unfortunately lower taxes are unlikely, and Buffett concludes this as well, but the example of Amazon 30 years later does help here. We learned in the 2010’s that high growth companies can, at least in a low interest rate environment, enjoy a high stock price to sales multiple for a sustained period. This market dynamic allowed Amazon to delay profits and pay almost zero income taxes for over a decade.

Balaji - Defi Matrix as an advanced form of barter, which gets away from the debt cycle and replaces it with more equity. How much better is this than borrowing with non-recourse loans and having bankruptcy law as a backstop? The problem there is most developing economies don’t have a sound enough legal system for this model.

Access token - somehow combined with fractionalization and burning?

Internal IDO with BB tokens where:

• Re-purchased NFT’s are used to fund project, with option to burn

• Burning the NFT confers: X tokens, YYYYY, and an access NFT

xNFT and Token Goals