Verifiable Authenticity

The authenticity and provenance of an artwork (physical, digital) is reflected on a trustless, immutable decentralized ledger in the form of non-fungible tokens, namely artwork tokens. The owner of an artwork can prove ownership to others by demonstrating control over the associated artwork token. Buyers of an artwork will only be willing to pay the fair market value if they receive the artwork (physical, digital) together with the associated artwork token$^{11}$.

The non-fungible character of the token and the fact that it is traceable to the original artist account guarantees a seamless provenance tracking. The settlement of an artwork transfer is executed in an atomic swap resulting in significantly reduced transaction risks for buyers and sellers. The rights and obligations associated with an artwork (e.g. exhibition rights, profit participation rights) are immutably recorded in the metadata of the artwork token$^{12}$, maintaining a high level of legal certainty and transparency for all involved transaction parties.

On the incentive level the ALLOVR model is enforced through a dedicated token economy (section 3) with an integrated governance model (section 4). The respective technical implementation and solution architecture is presented in section 5.

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$^{11}$You might notice that a physical artwork actually can be transferred without the associated artwork token being transferred. That is basically right but even for secondary market transactions very unlikely, as all involved parties in the transaction have no interest in doing this. The artist and his/ her dealer regularly have a strong interest that transfers of artworks are always accompanied by the transfer of the artwork token, as this keeps all artists (and dealers) rights embedded in the metadata of the artwork token in place and enforceable. Buyers and sellers regularly have a shared interest in remaining in good faith with the artist and his/ her dealer and consequently have a general incentive in reflecting all artwork transfers in the associated artwork token. Moreover, the seller can be held financially responsible by the artist or his/her dealer for contractual breach, as the transfer of the artwork is only allowed together with the associated artwork token. The incentives on the buyer side are even stronger, as he/she requires the artwork token as a proof of authenticity and ownership.

$^{12}$The fundamentally important profit participation right is not only reflected in the metadata but enforced automatically within the artwork transfer, as the profit participation amount - if applicable - is automatically collected from the payment amount and distributed into the artist staking pool.