Comprehensive Interpretation of the L1 Blockchain Story Designed Specifically for Intellectual Property

Story is a Layer 1 Blockchain specifically designed for intellectual property, combining the advantages of EVM and Cosmos SDK, 100% EVM compatible, while deeply optimizing the execution layer to quickly and efficiently handle complex data structures such as intellectual property.

What are Intellectual Property Assets (IP Assets or IPA)

IPA is the programmable foundational intellectual property metadata on Story. In simple terms, IPA consists of an ERC-721 standard NFT and an ERC-6551 standard TBA (Token Bound Account) IP binding account. The NFT represents the IP, while the TBA is an independent contract bound to the IP asset, used to control the permissions for interacting with the Story module or storing data related to the IP.

Although the IP assets use the ERC-721 standard NFT, the metadata it contains is a well-designed data structure specifically for IP assets.

In IP assets, there are some predefined attributes, such as relationships, which exist in 40 different types of definitions in the Story, used to address various situations of IP affiliation.

What is an IP Account (IP Account)

IP account is an EOA account bound to an IP, implemented through the ERC-6551 standard. For specific details, refer to EIP-6551.

The IP account mainly performs two functions:

1. Store IP-related data: including metadata and ownership information of associated assets (such as authorization tokens or royalty tokens derived from the IP).

2. Support various modules to use this data: These modules interact with IP accounts and add and store data to them. For example, the functionalities of modules such as authorization, revenue/royalty sharing, work mixing, and IP dispute resolution rely on the programmability of IP accounts.

Module Design of IPA and Existing Core Modules

Due to the existence of IP accounts, IP assets can not only store IP-related data but also interact with various modules through the ERC-165 standard interface. Any user can customize and develop modules, and at the same time, Story has defined four core modules, which are:

Licensing Module

The authorization module allows users to create an authorization from an authorization template (i.e., Programmable IP License, PIL) and attach it to an IP asset. The authorization terms defined in this authorization restrict how others can use your IP for commercial development or joint creation. If the IP asset has attached authorization terms, anyone can mint an authorization token from it, which serves as a license to use the work and is subject to the authorization terms. This will establish a parent-child relationship between IP assets, thereby activating functions such as automatic royalty circulation achieved through the royalty module.

Royalty Module

The royalty module defines how income flows between parent IP assets and child IP assets. Here are two common income flow scenarios, and subsequent articles will break down actual cases in different application scenarios:

• Minting Authorized Tokens: When minting authorized tokens from IP assets, a minting fee may be required. When someone (who wishes to register derivative works or simply hold the authorization) pays this fee, the income should flow up the chain.
• Direct rewards: If someone sends income directly to a certain IP asset, that income should also flow upwards along the blockchain.

Dispute Module

The dispute module provides users with a method to raise and resolve disputes through arbitration. The main components of the arbitration system include:

• Arbitration Policy: The arbitration policy refers to a set of rules, processes, and entities that collectively determine the outcome of disputes. Currently, the only supported arbitration policy is the UMA arbitration policy.
• Arbitration Penalty: Refers to the consequences that occur after the IP asset is "marked". An IP asset is considered "marked" only when the dispute is ruled in favor of correctness. Once marked, the IP asset will be unable to mint authorized tokens, associate with any parent assets, collect royalty income, and will be unable to use all existing authorizations.
• Tags: Story has preset 4 types of tags that can be used to label disputed assets, including: violation of registration (i.e., registering an existing IP asset), violation of use (improper use of the authorization contained in IP assets), violation of payment, and content standard violation.

Grouping Module

The grouping module supports the creation and management of grouped IP assets, and provides a royalty pool function for the group.

Innovative Exploration of IP Asset Applications

After understanding the basic characteristics and modules of IP assets, we naturally recognize the advantages of Story. IP assets can help content creators easily build a copyright empire protected by smart contracts and decentralized networks. With all their intellectual property rights protected, content creators can also participate in a large number of financial derivatives activities. Therefore, let's brainstorm what we can do on Story.

IP asset issuance and features of IP assets

Blockchain equally grants everyone the right to issue assets. Story has designed a complete asset structure and execution module to protect everyone's intellectual property rights, and provides a comprehensive framework for intellectual property registration, application, confirmation of rights, and royalty circulation.

Do you still remember the surprise and excitement that BAYC and Azuki brought to the crypto community back in the day? The crypto community once racked their brains to come up with various solutions to empower the NFTs in their hands. Let’s illustrate directly through a case what the scenario would be like if BAYC were issued on Story.

If BAYC on Story

First of all, as the holder of the BAYC IP, Yuga Lab can now register BAYC on Story as an Intellectual Property Asset, or IPA. After registration, different licensing templates (PIL) can be set for BAYC to impose specific restrictions on the use of the BAYC IP in different scenarios.

Secondly, the royalty module of the BAYC IP will bind 100 million Royalty Tokens, which are ERC20 standard tokens. The main function is to share the corresponding share of income from the royalty treasury of the BAYC IP.

Finally, as the publisher of IPA, Yuga Lab can issue its first specific product using the BAYC IP, the BAYC 10K Collection, which consists of 10,000 uniquely styled monkey NFTs. Of course, this NFT series is issued after minting the authorized tokens of BAYC, and Yuga Lab can stipulate in that authorization that 5% (configurable) of the revenue from all sub-IPs will flow into the BAYC treasury.

From the above figure, it can be seen that Story has designed a complete authorization and royalty system for IP assets. Under this system, holders of IP assets almost do not need to spend extra effort on IP authorization and royalty income issues. Similarly, this system introduces some business logic and trading opportunities that did not exist or were difficult to assess in the previous Blockchain industry, which we will interpret one by one below.

1. IP asset licensing revenue: BAYC, as the parent IP, grants licenses to multiple product lines or other creators willing to create under the BAYC brand. Whether it is a product line or other creators, they need to mint licensing tokens, and the minting fee for the licensing tokens is a direct revenue from the parent IP asset.

2. IP Asset Royalty Income: As the parent IP, BAYC can extract income from all revenues under its IP through the linked royalty tokens. The main source of income for the revenue treasury comes from the IP licensing token minting fees and various revenues from sub-IPs (sub-IP licensing token minting fees and direct income).

3. Authorized token trading of IP assets: For a well-known IP, the authorized token's minting price and secondary market circulation price may both be substantial amounts. Additionally, this is a completely utility-type token, which may lead to a situation of supply not meeting demand for well-known IPs.

4. IP asset royalty token trading: IP asset royalty tokens directly enjoy revenue dividends corresponding to the IP assets, allowing the market to clearly estimate the relevant IP revenue, thereby reflecting more timely in the royalty token price. Similarly, the price of royalty tokens also experiences speculative expectations.

When IP assets achieve clear authorization and royalty circulation under Story, we naturally think that the trading of IP assets will become more diverse.

IP Asset Trading

In the DeFi world we already have, very clear and distinct tracks have formed, such as a certain trading platform being a leader in DEX, another platform excelling in NFT Marketplace, and yet another platform being a leader in Yield token trading. Although the form of trading assets in Story has not fundamentally changed, still being ERC20 and ERC721, the fundamentals of the tokens themselves have undergone significant changes.

For example, the royalty tokens of well-known IP assets. As long as the commercial empire of the IP continues to grow, the licensing fees and royalties generated from direct consumption will all flow into the revenue treasury of the parent IP, then the copyright tokens of the parent IP will have a clear speculation logic. So can we imagine a DEX similar to stock trading software in real life, which clearly presents the income status of copyright tokens and the predictions of future income to traders, after all, this data is all traceable on the blockchain.

Authorized tokens of well-known IP assets will also become new targets for speculation. There may be two scenarios for the speculation of authorized tokens: one is that the number of authorized tokens is limited, and the other is that the popularity and revenue of the IP asset gradually increase, continuously enhancing the value of its authorized tokens. Since authorized tokens are ERC721 standard tokens, similarly, on platforms trading authorized tokens, users will also be more inclined to use trading platforms that can reflect various information regarding the fundamentals of authorized tokens.

Furthermore, if the royalty tokens and authorization tokens of IP assets have transaction logic based on future cash flows, then these tokens can be split into PT (Principal Token) and YT (Yield Token) for trading.

IP asset mortgage

In the DeFi world, there is a sector that cannot be ignored, which is asset collateralization and lending. A certain lending platform manages an unshakable position with a TVL of 21 billion USD, of which over 85% of the assets are ETH tokens.

Returning to the world of IP assets, can IP assets be used for collateralized lending? Can both authorized tokens and copyright tokens also be used for collateralized lending? I think the answer is definitely yes.

In the real world, we have seen countless cases where IP assets are used for collateralized lending. For example, in 2009, a company pledged Marvel IP to obtain a loan of $525 million from a bank for future film development. The main evaluation dimensions for IP pledge financing include: the historical business performance of the IP, audience base and market recognition, future development and monetization potential, the lifecycle and sustainability of the IP, industry environment, and market prospects. On Story, the performance of IP assets is transparent and traceable, which reduces the difficulty of evaluating IP pledge financing. Therefore, it is reasonable to believe that collateralized lending of IP assets will become the core of what Story calls IPFi.

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The examples above are just the tip of the iceberg in the Story ecosystem applications; more ecological use cases can be found in the official documentation.

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