Maecenas Review – ART ICO Fine Art Investment Blockchain Platform?
Maecenas is a “decentralized art gallery” that aims to be the world’s first blockchain platform that democratizes access to fine art. Here’s our review.
What Is Maecenas?
Maecenas is an art gallery built on decentralized blockchain technology. The platform aims to democratize the world of fine art, making it more accessible to people outside of a certain class.
Obviously, fine art isn’t cheap. Some of the world’s wealthiest individuals pay millions of dollars for fine art. It’s a type of asset reserved for a very specific class of individuals.
Despite the exclusive nature of fine art, there’s an estimated $3 trillion worth of fine art in safe storage. $65 billion of that artwork is traded annually through auction houses and art dealers. Furthermore, fine art is seen as a reliable and safe store of value. It’s a non-traditional investment. However, some wealthy families have kept art in their portfolios for centuries.
That’s where Maecenas sees an opportunity. Maecenas will tokenize fine art, sell it on the blockchain, and democratize access to the world of fine art. Maecenas believes the fine art marketplace is in desperate need of an open, fair, and transparent trading platform. Until that platform is created, the fine art industry is missing out on enormous amounts of capital.
The Maecenas token sale is underway throughout August and September.
The company’s name, by the way, comes from “an early patron of the arts” named Gaius Maecenas, who helped democratize art in Ancient Rome by financing poor poets.
What Problems Does Maecenas Seek To Solve?
Maecenas is built on blockchain technology. Maecenas aims to modernize an industry that’s remained basically the same for centuries. Here’s how the company sees the potential of blockchain in fine art:
“But now blockchain can provide the foundation for a secure and efficient market that enables buyers and sellers to transact directly without intermediaries. An open, agile platform can energize art markets and bring millions of investors off the sidelines.”
Today’s fine art marketplace is dominated by old auction houses. The two largest auction houses – Sotheby’s and Christie’s – monopolize 80% of the secondary market volume. They offer identical fee structures that force art buyers to pay up to 25% commissions, while sellers are charged even more.
These auction houses also control access to information. By restricting access, these auction houses inhibit price discovery. It’s nearly impossible to know the fair price of a piece of artwork because there’s no way for investors to assess market sentiment.
Other markets have stocks or cryptocurrencies to help determine prices. The fine art industry, however, has no order books or exchanges, and historical information is scarce and sparse because art pieces are traded so infrequently.
Maecenas aims to solve all of these problems.
How Does Maecenas Work?
Maecenas envisions a future where fine art is traded on a transparent, immutable, and secure blockchain. The company plans to completely remove intermediaries from the equation. They plan to replace brokers with smart contracts that transparently define auction rules, bidding systems, and income distribution.
Meanwhile, fine art will be traded through an open exchange, giving frequent updates on what the art is really worth. Portfolio managers can price their positions more accurately and diversify their risk by investing in a range of different art assets. There’s no need for someone to concentrate their funds in a small number of hard-to-sell pieces.
Maecenas’s blockchain creates tamper-proof digital certificates linked to pieces of art. These certificates are immutable once they’re recorded on the blockchain. They’re impossible to forge due to the cryptographic nature of the blockchain.
Maecenas will tokenize artwork, so a single piece of artwork is broken down into thousands of certificates – similar to how a public company issues shares. Investors can then purchase these certificates to own a percentage of a given piece of art, and they can sell them back to other investors at any time via the Maecenas exchange.
The platform will have a strict due diligent process when adding new pieces of fine art to the platform. This will involve verifying the art’s legitimacy, insurance policy, safe storage, valuation, condition, and other key indicators. Maecenas plans to only list high-quality artwork with a pristine track record.
After the art is listed o the platform, the art will go through a Dutch auction process. Investors submit private bids stating how many shares they want to purchase and at what price. This is similar to a confidential and cryptographically secure book-building exercise. It gives investors bargaining power while also providing them with a fair and transparent pricing mechanism. It also avoids the “fixed price” listings seen on conventional auction houses.
Auctions for fine art are expected to take place over a number of days or weeks, allowing anyone to participate. Artwork can be listed in multiple fiat currencies, including the USD or EUR, or cryptocurrencies like BTC and ETH.
The Maecenas Token (ART)
The Maecenas platform will be powered by a digital currency called ART. ART is the token used for all transactions on the platform. The token functions as a clearing and settlement mechanism for art investment – similar to how Ripple tokens (XRP) can clear and settle foreign exchange transactions.
A total of 100,000,000 tokens will be issued. The ART tokens are an ERC20 standard token on the Ethereum network.
30% of the total supply of tokens will be sold in the crowdsale. 30% will be kept as a reserve liquidity fund. 20% will be allocated to incentivize partners and acquire clients. And 20% will be retained by Maecenas.
The public crowdsale is ongoing throughout September and October.
How To Use Maecenas
Want to buy or sell art on the Maecenas platform? Here’s the basic process that will be used:
- Step 1) The owner of a piece of fine art decides to sell the artwork on Maecenas. The owner chooses in which currency they would like to receive the proceeds from the sale. They can choose ART tokens, cryptocurrencies, or fiat currencies.
- Step 2) Investors participate in the auction by submitting ART tokens to the auction’s smart contract. Investors can participate using fiat currencies or other cryptocurrencies, in which case their money is kept in a separate deposit account.
- Step 3) When the Maecenas platform receives money, it allocates an equivalent number of ART tokens to the investor, then pledges the tokens on the smart contract on behalf of the investor. Maecenas acts as a market maker to guarantee liquidity.
- Step 4) When the Dutch auction process is over, the smart contract proceeds to analyze all the bids to determine the final share price and the number of shares each successful investor ends up purchasing.
- Step 5) The smart contract settles the transaction by issuing artwork crypto-shares to investors. The artwork seller receives either the ART tokens or the equivalent amount in currency depending on what they chose before the auction started. Maecenas acts as a market maker to guarantee liquidity, and hedges the foreign exchange risk upfront as bids are submitted.
Throughout the Dutch auction process, Maecenas’s smart contract acts as an escrow. Foreign exchange rates are provided by a trusted Oracle.
Who’s Behind Maecenas?
Maecenas is led by CEO Marcelo Garcia Casil, Chief Art Officer Jerome Croisier, and Founding Partner Miguel Neumann.
The company has offices in London, Singapore, and Geneva. The company has already established partnerships with “freeports” in these cities and other art hubs. Freeports are special economic zones near airports where art is kept in secure storage while still being kept away from local tax regulations. Such facilities exist in Geneva, Luxembourg, Singapore, Shanghai, and New York.
Maecenas aims to democratize and modernize an industry that sorely needs it. The world of fine art auctions hasn’t been disrupted in centuries. Today, two major auction houses dominate 80% of the marketplace and charge lucrative commissions to both buyers and sellers.
This monopoly leads to reduced transparency in the art industry, inhibition of price discovery, and overall lower liquidity and efficiency.
Maecenas wants to solve all of these problems using blockchain technology. You can learn more about the project online today at Maecenas.co.