Metafactory: A Marketplace for Digi-physical Apparel Created by Community-Owned Brands.

DAOrayaki DAO Research Grant：

14 min readNov 29, 2021

DAOrayaki DAO Research Grant Fund Address: DAOrayaki.eth

Voting Result：DAO Committee Yes

Grant Amount：130USDC

Category: MetaFactory, MetaFactoryDAO, MetaFactory LLC, Digi-physical Marketplaces, Community, culture, and finance, Fashion, designers, Products as tokens, Authenticity, Brands, Bonding Curve Auctions, $ROBOT, Brand Factories,

Contributor：Jones@Daorayaki

Chinese Version:https://daorayaki.org/metafactory/

Brief Overview About Metafactory

MetaFactory was born out of a desire to cultivate crypto culture. Its form and function is continuously shaped by its community. It is the place to celebrate all the amazing, funny, instance, stupidm and wonderful things that make crypto…well, crypto. Metafactory is a crowdfunding platform for the creation of community-owned brands with an initial focus on fashion/apparel. It curates and manages the brand ownership (IP) and product auction marketplace, as well as handling product production and fulfillment on behalf of its brand partners. Furthermore, MetaFactory aims to solve incentive misalignment between fashion and designers, labels and their customers. Apparel pricing is often set by perceived value, driven primarily by emotion, hype and information asymmetry around material/production costs and product quality. This has contributed to weak retail sales, struggling brands and dissatisfied customers. By representing products as tokens and selling them along a bonding curve, Enabling organic price discovery based on free market dynamics.

Background

Consumers are starved for meaningful, authentic relationships with brands — particularly those that reflect their lifestyle and culture. Brands that have focused on building robust, inclusive communities or ‘belonging’ have seen significantly greater brand loyalty and growth in recent years. In fact, “more than half (58%) of consumers aged 25 and 34 say they’d be likely to spend more money on a brand’s products and services if they are part of meaningful brand communities.’ Through direct incentive alignment, enabling individuals to participate financially in brand success, as well as help to govern future brand product direction, MetaFactory believes it can cultivate more successful brands through higher-engaged communities.

How?

MetaFactory hosts bonding curve auctions where brand creators auction off fractional ownership of brand IP / governance, as well as dedicated product auctions for the apparel produced by each brand. MetaFactory acts as a curator, only selecting brands that MetaFactory believes have the creative skill and operational leadership to succeed. In addition to facilitating brand and product auctions, MetaFactory also manages the relationship with product fulfillment / logistics / shipping partners, allowing artists to focus on creating great designs and developing their label.

MetaFactory works closely with the label designers and/or creators to define the auction parameters including starting price, ending price, number of participants, as well as initial genesis product line. Designers designate how much of the original brand IP to retain and how much they are willing to sell to auction patrons. With all the parameters defined, the brand and its assets are put up for auction including a claim to the genesis products of that brand. The auction is conducted via a reverse bonding curve with earlier buyers receiving a higher share of both the label IP and claim to future governance, but at a greater premium.

Auction

Most brand products/apparel items are also sold at auction and represented by their own unique, digital $TOKEN. Each product $TOKEN is listed on the MetaFactory marketplace and sold on a bonding curve. $TOKENS may be freely purchased and sold with each exchange increasing or decreasing the price accordingly along that product’s bonding curve. In the case of product auctions, the $TOKEn price starts low (close to product cost) and increases with every purchase. Ownership of a $TOKEN entitles the owner to one (1) of that specific product including shipping. The MetaFactory marketplace is likely to offer a combination of both product auctions (as explained above), as well as direct product sales (with price potentially determined via the results of the auction).

$TOKEN redemption

When a $TOKEN is redeemed, the product is produced and shipped to the buyer along with a representative NFT (with special benefits). Product $TOKENs can be burned by the brand DAO (reducing supply and increasing the value of each remaining $TOKEN) or sold back to the market with any profit deposited to the respective label’s DAO Bank. Label DAOs can choose how many product auctions to host and the specific parameters for each. In order to capitalize on the profits of a label, DAO members must sell their shares (also known as ragequit), effectively exiting the DAO. This reduces the brand’s DAO bank balance, but also subsequently increases all remaining DAO members’ proportionate claim to both IP/profits and governance.

MetaFactory DAO

The goal of MetaFactory is achieved through the use of DAOs (decentralized autonomous organizations). MetaFactory depends on DAO that represents each brand. Each DAO will own its respective IP and its auction participants are actually purchasing a portion of the voting shares (and proportionate claim to profits) in that DAO. In this way, the patrons also get to participate in governance and vote on the future direction of the label including new product releases, additional designs and potential licensing opportunities (specific details are at the discretion of each brand). Buyers who participate earlier in the auction receive a greater percentage of the DAO shares and respective vote weight, along with a claim to their share of the brand IP. Each auction participant will also receive the brand’s genesis products to be listed in the MetaFactory marketplace after the brand auction ends. MetaFactory itself is also a brand DAO and will be auctioning off membership shares in early 2020. Additionally, MetaFactory receives a small share of each subsequent brand’s DAO shares for managing the auction platform, vendor relationships and product fulfillment. As a result, participation in the MetaFactory Brand auction is a bet on the future success of the MF platform and all of its brand partners.

$ROBOT Governance

MetaFactory sits at the intersection of community, culture and finance. It is the bridge through which online experiences and identities connect to the physical world via unique apparel and brand experiences that are designed, curated and owned by the community. After 10 months if experimenting, learning and refining the MetaFactory mission, MetaFactory team introduced the culmination of these efforts in the form of $ROBOT, the MetaFactory governance token.

MetaFactory is a rhizome emerging from the interconnection of multiple communities, technologies, social arrangements, contracts, people and entities — a kind of emergent nervous system without a body.

The three main nerve clusters of MetaFactory are:

The MetaFactory DAO, which consists of an unincorporated association of ROBOT holders interacting through one or more specific smart contracts;
The MetaFactory Entity, through which MetaFactory can interface with the offchain fiat/physical world such as paying manufacturers, receiving fiat payment and so on through the government-recognized fiction of legal personhood granted to limited liability companies; and
The MetaFactory BotYard, which is a multi-signature Ethereum account holding undistributed ROBOT guarded by MetaFactory community members elected by the MetaFactory DAo to implement the MetaFactory DAO’s decisions regarding the use and distribution of unallocated ROBOT.

Through the MetaFactory DAO, ROBOT holders can propose and vote on:

MetaFactory-branded product launches.
Uses and distribution of ROBOT.
MetaFactory-branded commercial partnerships and strategy.
Marketing and incentive design for the MetaFactory brand.
metaFactory platform / marketplace features such as sales mechanics, P2P secondary market.
Use of the metaFactory DAO’s treasury.

Token Economics

$ROBOT is the MetaFactory governance Token by which community members decide on token mechanics, reward schedules, partnerships, platform features, treasury use and more. It is also the vehicle by which value is captured, distributed, earned and shared. Creators receive $ROBOT based on the success of their products, buyers are rewarded with $ROBOT for their patronage, and the community earns $ROBOT by helping to curate the marketplace.

Revenue from product sales are used to buy back and provide liquidity for $ROBOT, which support ongoing community rewards. Fund management is entirely under the control of the community members via the MetaFactoryDAO.

The entire 420K ROBOT supply was minted to the BotYard. From there, there ROBOT distributed based on increasing “sales milestones”, as illustrated in the table below to the following groups:

Buyers: proportional to dollars spent on MetaFactory Products.
Designers: proportional to revenue generated by their products.
Ops/Gov: proportional to the value of their contributions, as approved by the DAO, potentially using tools such as SourceCred.

The initial token distribution of 39k ROBOT went to the 43 buyers/designers of the MF Genesis Bomber auction proportional to their bid amount, which fulfills the first $25 sales milestone for the token distribution. From there, the ROBOT holders vote to approve the token allocation for the ops/gob distribution (36k ROBOT).

The issuance schedule described above is only the starting state. The Metafactory DAO can choose to change the distribution schedule through governance vote of ROBOT holders, but the goal is to respect that issuance schedule unless there’s a compelling reason to correct the course. It is hoped that the initial MetaFactory development team, which includes the MetaFactory entity, its equity holders and advisors, will receive a portion of ROBOT as a reward for their efforts. ROBOT holders will vote to determine the relevant ROBOT amounts and terms and conditions of these rewards through the MetaFactory DAO using the Governance Dashboard. There is no funder-specific premine (outside of the tokens allocated to all buyers / designers of the MF Genesis Bomber). The outcome of the vote will be executed on chain by the multisig signers.

Any longer form discussions around governance decisions will take place on the governance forums at gov.metafactory.ai with realtime discussion happening in community calls and in the Discord server. To access the insider discord channels, members must hold at least 100 ROBOT. This threshold can be changed via governance vote.

The next token distribution that will go out after that will be for participants of the WickedSundayClub Genesis auction, completing the sales milestone up to $50k. Lastly, the data for all the shop sales and corresponding ETH addresses will be aggregated to mint tokens for the $100k milestone. All tokens will be locked for transfer until the tokens for all shop purchases before 30th are distributed. After that, transferability will be permanently enabled. The circulating supply at this stage will be approximately 100k ROBOT.

Following that, once the claims contracts and UI are deployed, there will be a retroactive token distribution going out to all individuals who designed or bought any products from the MetaFactory store, proportional to the amount spent for buyers and amount sold for designers. The number of tokens distributed per dollar will be halved at every sales milestone (100k, 200k, 400, 800k, etc, up to 6.4m).However, currently the buyer rewards changed to a percentage of purchase price by Governance on 4/22/21. The sales data will be anonymized and published to IPFS and the code to calculate the token allocations from that data will be made open source and independently verifiable. The output of that code will be a list of Ethereum addresses and their token allocation, which will be ratified by token holder vote and executed by depositing the tokens into the claims contract.

The revenue from sales will go to the MetaFactory Entity and will be used to pay for recurring expenses and production costs for goods. ROBOT holders can then vote to decide through the MetaFactory DAO how the surplus profits should be spent. For example, they could be locked in a Balancer liquidity pool to create a permanent incentive model with continuous issuance while preserving a fixed supply of 420k tokens.

In the past year, the MetaFactory core team has spent ~75k USD (not including time commitment/labor costs) from their pockets to bootstrap the project. The goal is to pay down this debt and then keep the operations of the LLC as lean as possible so that maximum value can be recycled back into the MetaFactory ecosystem. ROBOT holders with at least 500 tokens can get access to the detailed expense/revenue data for the LLC for the sake of transparency (subject to any confidentiality obligations or legal limitations that certain information may be subject to).

MetaFactory DAO decisions which affect the MetaFactory LLC will initially have an advisory or signaling status only. Eventually, once things stabilize with governance and the token launch and token holders are confident in the operations/processes, the team aim to put legal structures in place to ensure that the LLC has to abide by the governance decisions made by the DAO, allowing for a truly decentralized community owned and governed platform/organization that bridges from web3 into the real world.

Brand Factories

MetaFactory creates new brand economies where creators and their communities share aligned incentives through vested interest in success. MetaFactory has built a crowdfunding platform with the goal of creating community-owned brands, where the initial focus is on fashion/apparel. The platform provides a unique opportunity for creators and communities to share both responsibility and success through “Brand Factories.”

What is a Brand Factory?

A brand Factory is a decentralized organization that promotes the collective management of a brand. The traditional distinction between supporters and artists is blurred, as everyone has a part in guiding the brand in a positive community with aligned incentives. Factory members share the responsibility of managing the brand via Factory Memberships. The members of a Factory include: MetaFactory, brand artists/ designers, and community supporters.

How does a Brand Factory work?

Each Brand Factory is responsible for designing, producing, and marketing its own products. The original artist/designer provides a style guide, specific to the brand, that sets a standard for the use of typography, iconography and illustration when creating new products. The artist is typically responsible for designing products, but Factory members themselves can also suggest brand-relevant product designs that are voted on by other members.

Proposal creation, voting and general Factory management occurs directly on the MetaFactory platform. Brand Factories may use any of MetaFactory’s auction and/or sales strategies for their products. New products are listed on the MetaFactory marketplace. Production and fulfillment of all products is handled by MetaFactory, under the direction of each Brand Factory.

Product auctions raise funds in the form of DAI (a third-party stablecoin* operation on Ethereum). The Brand Factory manages the DAI, including any surplus remaining after paying the cost of production fulfillment, and other service providers, as applicable. The founding brand artists/designers and MetaFactory have the opportunity to redeem any or all portions of their individual Factory Memberships, at any time. In doing so, their Factory Membership percentages are reduced, while increasing those of the remaining Factory members. Thus, if the founding brand artist.designer and/or MeFactory choose to redeem their Factory Memberships, the governance vote and brand value will proportionately skew to factor other Factory members.

Why use a Brand Factory?

A brand is not a single concept, but rather a set of ideas. It is the sum of every concept, impression, representation, interaction that consumers have with a product or company. It lives and dies by public opinion. It can be informed by official company marketing, but it is defined by its users through public reviews, blogging, social media and more.

Today, companies have more control over how they build, market, sell, and ship their products. However, consumers have more control over how they discover and decide which brands to trust. The result is a closer, more direct relationship between brands and users, with a stronger focus on participation from both sides. Companies have addressed this change, driven by digitalization and networked communications, by increasing transparency and introducing proactive consumer engagement via advocacy programs. MetaFactory aims to take this step further by empowering consumers to become official brand members.

No longer passive participants, brand members actively engage in defining brand meaning and its relationship to the market. They are able to direct and influence a brand based on their personal values and needs. Brand Factories promote cooperative management for the collective good of the brand and its members. In order to benefit from a positive network effect, brands must become increasingly decentralized, sharing the burden of responsibility and the potential for success directly with its community. Public consensus increases and more value is created when all participants are aligned and community members have a stay in a brand’s future.

Team members

Drew Harding — co-founder at MetaFactory, Drew leads Growth at Blocknative, a mempool data and infrastructure service provider, and heads up operations at MetaFactory, a crypto culture, merchandise and research DAO. MetaFactory is currently re-defining fashion design and development, as well as the traditional consumer/brand relationship through its network of creatives and decentralized governance structure.

Twitter Account: https://twitter.com/drewharding

METADREAMER.ETH — co-founder at MetaFactory, Metadreamer is a Metaverse engineer piecing together the web3 puzzle by developing, design, and strategy.

Twitter Account: https://twitter.com/META_DREAMER

FLOC — co-founder at MetaFactory, FLOC known as “Free Leaders On Collective” is a Metaverse decentralized studio shaped by free leaders to work with innovative brands.