Metaversal is a Bankless newsletter for weekly level-ups on NFTs, virtual worlds, & collectibles
Dear Bankless Nation,
The intersection of DeFi and NFTs is fostering innovation that will significantly impact various aspects of culture in the coming years.
With this in mind, Sound, a leading web3 music project, has recently introduced its unique take on the DeFi-inspired bonding curve approach called “Sound Swap.”
While there have been previous bonding curve music experiments, such as Euler Beats, Sound Swap sets itself apart by offering a generalized infrastructure that will empower musicians on Sound to reach broader audiences while also optimizing earnings and ensuring ongoing liquidity for their NFT drops.
In the future, this sort of bonding curve style may become popular for all types of collectibles, and if this becomes a reality, Sound Swap will have played a crucial role as an early driving force. Accordingly, let’s get you up to speed on the basics of this new system for today's post!
🙏 Sponsor: Kraken — the most trusted and secure crypto exchange in the world✨
Sound Swap, a New Way to Collect and Trade Music 🎼
Sound just unveiled Sound Swap, a new functionality for one-click collection and sales of Sound music NFT editions.
This system lets collectors mint editions even after a primary sale ends, and since funds get stored in a liquidity pool as new editions are collected, other people can instantly sell their editions at the current market price as well.
How It Works
Every NFT drop conducted through Sound Swap begins with a 24-hour open edition (OE) release where each edition is priced at 0.005 ETH a pop. Musicians earn 95% of the proceeds during this primary sale phase.
After the first day of minting ends, then the drop switches over to the bonding curve format, through which every new buy raises the price of an edition and every sale lowers the price. Once the Sound Swap system kicks in, each of these secondary mints brings 7.5% to the artist(s), 2.5% to Sound, and 90% to the drop’s associated liquidity pool.
Again, this liquidity pool approach is designed to let people instantly sell their editions at current market price. To help you better visualize this process, consider this basic example that the Sound team has offered:
“If 50 editions are collected in the primary and 10 editions are collected on Sound Swap, then only 10 editions can be sold. Once 10 editions are sold, you can no longer sell on Sound Swap unless additional editions are collected.”
Why It Matters
One of the toughest problems NFT creators face right now is choosing the exact price and supply mechanics of their drops, so it’s notable that Sound Swap will make it so musicians don’t have to wrangle with these factors right out of the gate. That’s a definite step forward UX-wise.
Sound Swap lets music drops enjoy flexible “living” supplies that can expand over time as their audience grows, paving the way for more fans to become collectors.
Altogether, Sound Swap strikes a compelling balance between UX simplicity (for both creators and collectors) and optimizing for artist reach and earnings. That said, I suspect we’ll see more projects adopting this sort of approach for cultural collectibles, since the OE x bonding curve hybrid is a new thing that’s pointing to many more possibilities.
What to Watch
Interested in taking Sound Swap for a spin?
For anyone curious, the system began its debut today with artist Reo Cragun’s new song, “Spent,” which has its OE phase running from March 28 at 4PM EST through March 29 at 4PM EST. After this initial 24-hour window, the Sound Swap bonding curve flow will kick in and then secondary minting will be possible.
As for the artist, Reo Cragun’s a web3 music trailblazer who launched the first EP, Frameworks, on the Sound Protocol and also founded the emerging artist collective, LNRZ. If you want to start diving deeper into the NFT music scene, “Spent” is an opportunity to support and collect from one of its pioneers.
The Big Picture
Sound Swap typifies the kind of interesting advancements that occur when projects iterate and innovate at the crossroads of DeFi and NFTs.
Yes we’ve had bonding curves before, and yes we’ve had OE mints before. But when you combine these two mechanisms together you get a generalized system that can empower many musicians going forward and serve as a replicable distribution model for all sorts of collectibles beyond just songs.
Accordingly, will we see analogues spin out for autographs, poems, videos, etc.? I think so, so keep an eye on Sound Swap in the context of it being the first of a new kind of cultural primitive.
Check out the first Sound Swap drop: “Spent” by Reo Cragun 🎵
Read my previous weekly roundup if you missed it: The Token Times ⌚️
William M. Peaster is a professional writer and creator of Metaversal—a Bankless newsletter focused on the emergence of NFTs in the cryptoeconomy. He’s also recently been contributing content to Bankless, JPG, and beyond!
Subscribe to Bankless. $22 per mo. Includes archive access, Inner Circle & Badge.
🙏Thanks to our sponsor
Kraken NFT is built from the ground up to make it one of the most secure, easy-to-use and dynamic marketplaces available. Active and new collectors alike benefit from zero gas fees, multi-chain access, payment flexibility with fiat or 200+ cryptocurrencies, and built-in rarity rankings. Learn more at Kraken.com/nft
👉 Visit Kraken.com to learn more and open an account today.
Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.
I don't understand this explainer: “If 50 editions are collected in the primary and 10 editions are collected on Sound Swap, then only 10 editions can be sold. Once 10 editions are sold, you can no longer sell on Sound Swap unless additional editions are collected.”
Is the supply 60 editions? Are the 50 primaries unable to be sold on Sound swap? Or is it 50 editions are sold total, 10 are placed on Sound Swap to be sold on secondary?