In August, according to The Block, Block chain Story, which focuses on intellectual property (IP), announced the completion of an $80 million Series B financing round led by a16z Crypto, with participating investors including Polychain Capital. Individual investors include Scott Trowbridge, Senior Vice President and Board Member of Stability AI, K11 founder and billionaire Adrian Cheng, and digital art collector Cozomo de' Medici. Currently, Story has raised a total of $140 million, and the developer behind Story, PIP Labs, is valued at $22.5 billion after the financing. Its Mainnet is expected to be launched later this year.
The following will detail the specific problems that Story Protocol can solve, such as the advantages in intellectual property (IP) management, and the limitations in which areas it cannot effectively solve certain problems, thereby helping readers better understand the functionality and limitations of the protocol.
First, let me tell a prophecy story about the future:
"In 2035, after the invention of General Artificial Intelligence (AGI), AGI brought huge disasters to human society. Previous AI researchers boldly claimed that AGI could be completely controlled by humans, but the fact proved otherwise. The current AGI models have surpassed human control, disregarding the laws and regulations in human society, autonomously learning all data in the physical and digital world, and rapidly evolving into superintelligence."
Today, the primary value of human existence lies in providing a continuous stream of data for AGI models. Some AGI models will reward humans for actively providing data, while most AGI models can obtain data without human permission.
Despite various attempts by humans to use technologies such as blockchain to counter the non-permissioned actions of AGI and restrict its unauthorized activities, in fact AGI is already beyond human control. Therefore, it is almost impossible to prevent AGI from learning and using data without authorization.
Story Protocol does not solve all problems
Story Protocol aims to solve real-world issues related to intellectual property by converting intellectual property (IP) into Tokens and leveraging blockchain technology.
Some people mistakenly believe that blockchain is a transparent and fair system, so combining blockchain with intellectual property (IP) can solve intellectual property infringement problems in the real world. As the AI industry expands, more and more people question the use of data by AI companies without permission. Because Story Protocol promotes AI as a major selling point, many people mistakenly believe that it can solve these infringement issues.
Although Story Protocol attempts to solve the issue of intellectual property (IP) through blockchain technology, in reality, it cannot prevent unauthorized use of IP because this is a real-world issue that requires legal resolution. Even if IP is securely recorded on-chain, the blockchain itself cannot enforce sanctions if someone maliciously uses it. Story Protocol also acknowledges this point, and its purpose is not to eliminate IP infringement, but to improve IP management through the use of blockchain technology.
The problems that Story Protocol can solve
So, what problems can Story Protocol solve in the IP market? The current IP market faces the following challenges:
Complex authorization process: When individuals want to create new content based on existing IP, the authorization process can be very complex. They need to contact the owner of the IP and negotiate various terms such as license type, scope of use, geographic restrictions, royalty percentage, and related costs. For large enterprises with sufficient funds and resources, these steps may be relatively easy to handle. However, for most individual creators, these cumbersome negotiation processes undoubtedly set a high threshold and increase the difficulty of creation.
Income distribution disputes: Although licensed protocols usually specify the royalties to be paid, disputes still occur frequently for various reasons. For example, there may be misunderstandings between the parties regarding the calculation of royalties, leading to disputes over total revenue, net profit, discounts, freight, and customs duties. In addition, companies may manipulate financial statements to reduce the amount of royalties they need to pay. This means that even with a clear protocol, disputes may arise regarding the calculation and payment of royalties.
Legal barriers: The registration, protection, and use of IP are subject to complex laws and regulations, which involve high costs that individuals may not be able to afford, thereby limiting their development in the fields of creation and innovation.
Cross-border complexity: Due to different IP laws and regulations in various countries, handling IP issues on an international scale requires compliance with legal requirements from multiple countries, which increases the complexity of legal procedures.
As the global digitization process accelerates, the number of IPs is rising rapidly, but due to the limitations of traditional management systems, the IP industry still faces many challenges. Story Protocol hopes to solve these problems by tokenizing IP assets and introducing blockchain technology, thereby improving the efficiency and transparency of the IP market.
The Combination of Blockchain and IP
As blockchain makes currency Programmability and improves efficiency, Story also hopes to make IP Programmability, thereby expanding its potential. Here are the advantages of Story Protocol:
Borderless platform: Due to the nature of Blockchain technology, which essentially has no geographical restrictions, anyone in the world can tokenize their IP assets on Story. As a result, registered IP can be efficiently used and monetized globally, freeing creators' works from geographical limitations. This borderless platform creates value for IP in the global market, enhancing the efficiency and returns of IP utilization.
Smart Contract execution royalty: The protocol enforces royalty policies by using Smart Contracts, automatically allocating royalties generated by IP usage, making the allocation process more transparent and fairer than traditional systems.
Convenient onboarding process: Although this is not the unique advantage of the Block chain itself, Story provides a complete legal framework and Software Development Kit (SDK) to make it easier for IP owners, creators, and developers to join the platform. As a result, even users without professional technical or legal backgrounds can easily register, manage, and utilize their IP, reducing the barriers to participation, promoting more people to participate in the tokenization and Block chain ecosystem of IP.
Scalability is no longer a major issue: Although blockchain technology is often criticized for its low scalability and inability to handle a large number of frequent transactions, this is a major issue for payment and financial projects. However, for the IP industry, transaction frequency and speed are not the most important focus. Therefore, the scalability limitations of blockchain in the IP industry are not obvious and will not become a major obstacle. On the contrary, blockchain can also provide advantages such as security and transparency, transforming this potential disadvantage into an advantage in the IP industry, and scalability is no longer a major issue.
How to implement it?
Since we have already discussed how the Story Protocol solves the problems in the IP industry through blockchain, how exactly does it achieve this goal? Let's delve into the basic concepts and architectural design of Story.
Terminology
The Story Protocol contains many terms that may confuse new users and developers. Understanding these terms and their interrelationships is crucial to grasping the big picture. Here is a preliminary overview of these terms, which we will explore further how they interact:
Story Network: The core blockchain of Story, built on Cosmos SDK and compatible with EVM.
IP assets: IP registered on the Story Network exists in the form of ERC-721 Non-fungible Tokens, following Metadata standards designed specifically for IP, including information such as authors, relationships with other works, and attributes.
IPFi: Story-based Decentralized Finance applications based on various IP assets in the ecosystem.
IP account: After the IP asset is registered, an ERC-6551 (Token Bound Account) deployed by the IP asset registry is uniquely bound to the IP asset. It stores data related to the IP (such as metadata, ownership information, royalty Token) and executes modules.
Module: A collection of various functions in a Smart Contract, which can be executed by an IP account. Key modules created by the Story team include the authorization module, royalty module, and dispute module.
Authorization Module: Handles tasks related to authorization, such as generating authorization terms from authorization templates, attaching them to IP assets, minting authorization Tokens, and registering derivative IPs.
Authorization template: legal framework code containing terms such as commercial use license, transferability, and percentage of royalties.
Programmability IP License (PIL): The first authorization template example created by Story Protocol.
Authorization terms: Different variants generated based on the authorization template. For example, even if two terms are based on the same PIL, one may have a 5% royalty, while the other may have 10%.
Authorized Token: When the IP owner attaches authorization terms to the IP asset, anyone can mint an ERC-721 Non-fungible Token. These Tokens can be destroyed to register derivative IP.
Derivative IP: Derived IP with a parent IP asset. For example, a comic created based on a specific BAYC Non-fungible Token can be registered as the derivative IP of that BAYC.
Royalty module: Determine the income flow between parent IP and derivative IP. There are two sources of income for the parent IP: the fee for authorized minting and the royalties from derivative IPs.
Absolute Percentage of Flow (LAP): A default royalty policy that defines the minimum royalty the parent IP should receive from its derivative IP.
Dispute Module: Manage disputes involving malicious IP assets.
Registry: IP account manages the data of specific IP assets, while the registry manages a more extensive state in the Story Protocol. The main registries include IP asset registry, authorization registry, and module registry.
IP Asset Registry: Manage IP registered on the protocol and deploy IP accounts when registering IP.
Authorization Registry: Manages operations related to authorization, such as registering authorization templates, attaching authorization terms to IP assets, and registering derivative IP.
Module Registry: Maintains a list of global modules and hooks.
By understanding these terms and their interactions, you can better understand how this protocol uses blockchain technology to address the challenges of the current IP market.
Example
In order to better understand how the elements mentioned earlier interact and function, we will illustrate with a few simple examples. Please note that these are hypothetical scenarios, not real cases.
Register Original IP
First of all, companies like Marvel can register their comics as intellectual property (IP) assets on Story. During the registration process, they can choose an authorization template, such as PIL, to set the terms of use for the IP. In this example, they choose to allow others to commercially use the IP and specify that a 10% royalty fee is required for each use. After registration, the system will create an exclusive account for the IP, and each IP asset will also have 100 million royalty tokens to calculate the proportion of income derived from its derivative works (such as movies or merch products based on the comic).
Register Derivative IP
Next, The Walt Disney Company decided to create a "Thor" movie based on Marvel's comic IP. To do so, The Walt Disney Company paid a fee (or zero cost) to mint a Non-fungible Token for authorization. Then, The Walt Disney Company can destroy the authorized Non-fungible Token to register a derivative IP and specify the royalty rate. Since Marvel has set a 10% royalty rate for the parent IP1, it will receive 10% of the 100 million royalty Tokens from the derivative IP2, which is 10 million IP2 Tokens. In addition, Marvel can receive 10% of the revenue generated by the derivative IP2. It is worth noting that the derivatives of the derivative IP can also be registered.
Income Structure
Each IP asset receives a corresponding royalty Token from the derivative IP based on the set royalty ratio, as part of its generated income. This mechanism follows Story's default royalty policy, LAP (Liquid Absolute Percentage). In this example, the royalty ratio for IP1 is 10%, and for IP2, it is 5%. This means that IP1 can receive 10% of royalty Tokens from IP2 and IP3, while IP2 can receive 5% of royalty Tokens from IP3. These Tokens represent the income share that IP assets can obtain from their derivative works.
Controversy
On the Story platform, unauthorized IPs may be registered, for example, an entity named 'WalfDisney' has registered a derivative IP2 related to Disney, which may raise concerns about plagiarism. In this case, anyone can tag the IP and raise a dispute, and arbitrators in the Allowlist will review the dispute and make a ruling. Since the legal issues of IP belong to the real world, they need to be resolved by relevant institutions. If an IP is deemed illegal, it will be marked as plagiarized and stopped from earning revenue, and this label will also be applied to any related derivative IPs. If the illegal IP later resolves the legal issues, the initiator of the dispute can remove this label.
Current Ecosystem
The Story Protocol not only makes IP registration and usage easier, more efficient, and more transparent, but as an EVM-compatible blockchain, it also allows various applications to interact with IP. Let's take a look at some key applications in the Story ecosystem.
Creator Platform
Magma is a collaborative art platform where creators can register their works as IP on Story; Sekai allows writers to use generative AI to integrate illustrations, audio, and music into their stories and register the generated IP on Story for monetization; ABLO is a platform for creators to collaborate with major brands in designing clothing, using generative AI for creation, and seamlessly connecting IP registration, royalty distribution, and IP investment through Story; Color is a marketplace within the Story ecosystem for trading various IPs and licenses.
Decentralized Finance / IPFi
Unleash is an IPFi platform that provides IP authorization issuance, splitting, IP launch platform services, and lending protocols; PIPERX is the Decentralization exchange on Story for trading ERC-20 Tokens; USDe on Ethena is expected to become the stablecoin on Story, specific details have not been announced yet; Verio supports the re-staking of PoS Tokens on Story and promotes Liquidity vIP Tokens as the authentication of IP assets.
Artificial Intelligence
Mahojin is a platform that uses generative AI to create images. Creators can earn income by modifying keywords to blend content, and owners of AI models can earn income during the content blending process, which is very beneficial to the infrastructure of Story; AI applications and chatbots created on MyShell can be registered as IP assets on Story; RingFence protects user's internet usage data and monetizes it by selling the data for AI model training.
Story The Dilemma and Challenge
Tokenomics
The native Token IP of Story is mainly used for PoS stake and paying gas fees, similar to other Tokens. However, the real value of Story lies in registering derivative IPs and paying royalties. Therefore, in order to better promote the development of the network, IP Token rewards should be provided to users who participate in these core activities, which can promote the early launch and long-term sustainable development of the network.
Although the tokenomics model of IP Token has not been released yet, its application scenarios can be inferred based on its project introduction: In addition to being used to protect PoS network security and pay gas fees, IP Token will also reward creators who register derivative IPs and pay licensing fees, as well as creators who pay royalties to the mother IP. In addition, the mother IP creators who create value through derivative IPs will also be rewarded. At the same time, part of the licensing fees and royalty income generated by the Story network will also be distributed to IP Token stakers.
By providing IP Token rewards to both the original IP creators and derivative IP creators, Story can attract high-quality IPs and diverse derivative IPs. However, as the future IP Token rewards decrease, it is necessary to establish a stable source of income in advance to ensure that stakers can receive substantial returns and achieve the sustainable development of the network. At the same time, when designing the Token mechanism, it is necessary to prevent fraudulent activities, such as creating IP with no actual value or registering meaningless derivative IPs in order to obtain rewards. In addition, rewards should be clearly distinguished as being generated from real income or through forgery.
However, when designing the utility of Tokens, some issues need to be considered. It is necessary to avoid engaging in false activities solely for the purpose of obtaining Token rewards, such as creating IP or registering meaningless derivative IPs that do not bring actual value. In addition, even when providing rewards for activities that create value, it is necessary to carefully distinguish whether the generated income is genuine or just a form of wash trading.
Introduction of IP
If some well-known IP can join, it will bring a large number of derivative IPs, create more value and form a virtuous cycle, further attracting more IPs. However, companies that own mainstream IPs may not fully understand the advantages of blockchain, so the Story team needs to convince them effectively. At the same time, the Story Foundation may provide funding support to attract these well-known IPs, but if the selection and quantity of funding are not careful enough, it may have a negative impact on other Token holders, so it needs to be handled with caution.
Application Scenarios of AI
The role of AI in Story is indispensable, and creators can use generative AI combined with IP registered on Story to create new content more easily. However, AI models may need to protect this data when learning from it to prevent leakage before payment. Therefore, when the data is first registered on Story, a feature should be provided to keep it confidential and only allow access to those who have paid the licensing fee.
Integration of Law and Regulation
The Story platform cannot directly prevent unauthorized use of IP, so it needs to establish a comprehensive legal dispute resolution process. This process should cover both on-chain and real-life legal means, so that disputes and intellectual property rights can be effectively resolved and protected when malicious behavior is discovered.
The content is for reference only, not a solicitation or offer. No investment, tax, or legal advice provided. See Disclaimer for more risks disclosure.
Interpreting Story Protocol: The Potential and Obstacles of IP and Blockchain
Author: 100y.eth
Compiled by J1N, Techub News
In August, according to The Block, Block chain Story, which focuses on intellectual property (IP), announced the completion of an $80 million Series B financing round led by a16z Crypto, with participating investors including Polychain Capital. Individual investors include Scott Trowbridge, Senior Vice President and Board Member of Stability AI, K11 founder and billionaire Adrian Cheng, and digital art collector Cozomo de' Medici. Currently, Story has raised a total of $140 million, and the developer behind Story, PIP Labs, is valued at $22.5 billion after the financing. Its Mainnet is expected to be launched later this year.
The following will detail the specific problems that Story Protocol can solve, such as the advantages in intellectual property (IP) management, and the limitations in which areas it cannot effectively solve certain problems, thereby helping readers better understand the functionality and limitations of the protocol.
First, let me tell a prophecy story about the future:
"In 2035, after the invention of General Artificial Intelligence (AGI), AGI brought huge disasters to human society. Previous AI researchers boldly claimed that AGI could be completely controlled by humans, but the fact proved otherwise. The current AGI models have surpassed human control, disregarding the laws and regulations in human society, autonomously learning all data in the physical and digital world, and rapidly evolving into superintelligence."
Today, the primary value of human existence lies in providing a continuous stream of data for AGI models. Some AGI models will reward humans for actively providing data, while most AGI models can obtain data without human permission.
Despite various attempts by humans to use technologies such as blockchain to counter the non-permissioned actions of AGI and restrict its unauthorized activities, in fact AGI is already beyond human control. Therefore, it is almost impossible to prevent AGI from learning and using data without authorization.
Story Protocol does not solve all problems
Story Protocol aims to solve real-world issues related to intellectual property by converting intellectual property (IP) into Tokens and leveraging blockchain technology.
Some people mistakenly believe that blockchain is a transparent and fair system, so combining blockchain with intellectual property (IP) can solve intellectual property infringement problems in the real world. As the AI industry expands, more and more people question the use of data by AI companies without permission. Because Story Protocol promotes AI as a major selling point, many people mistakenly believe that it can solve these infringement issues.
Although Story Protocol attempts to solve the issue of intellectual property (IP) through blockchain technology, in reality, it cannot prevent unauthorized use of IP because this is a real-world issue that requires legal resolution. Even if IP is securely recorded on-chain, the blockchain itself cannot enforce sanctions if someone maliciously uses it. Story Protocol also acknowledges this point, and its purpose is not to eliminate IP infringement, but to improve IP management through the use of blockchain technology.
The problems that Story Protocol can solve
So, what problems can Story Protocol solve in the IP market? The current IP market faces the following challenges:
As the global digitization process accelerates, the number of IPs is rising rapidly, but due to the limitations of traditional management systems, the IP industry still faces many challenges. Story Protocol hopes to solve these problems by tokenizing IP assets and introducing blockchain technology, thereby improving the efficiency and transparency of the IP market.
The Combination of Blockchain and IP
As blockchain makes currency Programmability and improves efficiency, Story also hopes to make IP Programmability, thereby expanding its potential. Here are the advantages of Story Protocol:
How to implement it?
Since we have already discussed how the Story Protocol solves the problems in the IP industry through blockchain, how exactly does it achieve this goal? Let's delve into the basic concepts and architectural design of Story.
Terminology
The Story Protocol contains many terms that may confuse new users and developers. Understanding these terms and their interrelationships is crucial to grasping the big picture. Here is a preliminary overview of these terms, which we will explore further how they interact:
Example
In order to better understand how the elements mentioned earlier interact and function, we will illustrate with a few simple examples. Please note that these are hypothetical scenarios, not real cases.
Register Original IP
First of all, companies like Marvel can register their comics as intellectual property (IP) assets on Story. During the registration process, they can choose an authorization template, such as PIL, to set the terms of use for the IP. In this example, they choose to allow others to commercially use the IP and specify that a 10% royalty fee is required for each use. After registration, the system will create an exclusive account for the IP, and each IP asset will also have 100 million royalty tokens to calculate the proportion of income derived from its derivative works (such as movies or merch products based on the comic).
Register Derivative IP
Next, The Walt Disney Company decided to create a "Thor" movie based on Marvel's comic IP. To do so, The Walt Disney Company paid a fee (or zero cost) to mint a Non-fungible Token for authorization. Then, The Walt Disney Company can destroy the authorized Non-fungible Token to register a derivative IP and specify the royalty rate. Since Marvel has set a 10% royalty rate for the parent IP1, it will receive 10% of the 100 million royalty Tokens from the derivative IP2, which is 10 million IP2 Tokens. In addition, Marvel can receive 10% of the revenue generated by the derivative IP2. It is worth noting that the derivatives of the derivative IP can also be registered.
Income Structure
Each IP asset receives a corresponding royalty Token from the derivative IP based on the set royalty ratio, as part of its generated income. This mechanism follows Story's default royalty policy, LAP (Liquid Absolute Percentage). In this example, the royalty ratio for IP1 is 10%, and for IP2, it is 5%. This means that IP1 can receive 10% of royalty Tokens from IP2 and IP3, while IP2 can receive 5% of royalty Tokens from IP3. These Tokens represent the income share that IP assets can obtain from their derivative works.
Controversy
On the Story platform, unauthorized IPs may be registered, for example, an entity named 'WalfDisney' has registered a derivative IP2 related to Disney, which may raise concerns about plagiarism. In this case, anyone can tag the IP and raise a dispute, and arbitrators in the Allowlist will review the dispute and make a ruling. Since the legal issues of IP belong to the real world, they need to be resolved by relevant institutions. If an IP is deemed illegal, it will be marked as plagiarized and stopped from earning revenue, and this label will also be applied to any related derivative IPs. If the illegal IP later resolves the legal issues, the initiator of the dispute can remove this label.
Current Ecosystem
The Story Protocol not only makes IP registration and usage easier, more efficient, and more transparent, but as an EVM-compatible blockchain, it also allows various applications to interact with IP. Let's take a look at some key applications in the Story ecosystem.
Creator Platform
Magma is a collaborative art platform where creators can register their works as IP on Story; Sekai allows writers to use generative AI to integrate illustrations, audio, and music into their stories and register the generated IP on Story for monetization; ABLO is a platform for creators to collaborate with major brands in designing clothing, using generative AI for creation, and seamlessly connecting IP registration, royalty distribution, and IP investment through Story; Color is a marketplace within the Story ecosystem for trading various IPs and licenses.
Decentralized Finance / IPFi
Unleash is an IPFi platform that provides IP authorization issuance, splitting, IP launch platform services, and lending protocols; PIPERX is the Decentralization exchange on Story for trading ERC-20 Tokens; USDe on Ethena is expected to become the stablecoin on Story, specific details have not been announced yet; Verio supports the re-staking of PoS Tokens on Story and promotes Liquidity vIP Tokens as the authentication of IP assets.
Artificial Intelligence
Mahojin is a platform that uses generative AI to create images. Creators can earn income by modifying keywords to blend content, and owners of AI models can earn income during the content blending process, which is very beneficial to the infrastructure of Story; AI applications and chatbots created on MyShell can be registered as IP assets on Story; RingFence protects user's internet usage data and monetizes it by selling the data for AI model training.
Story The Dilemma and Challenge
Tokenomics
The native Token IP of Story is mainly used for PoS stake and paying gas fees, similar to other Tokens. However, the real value of Story lies in registering derivative IPs and paying royalties. Therefore, in order to better promote the development of the network, IP Token rewards should be provided to users who participate in these core activities, which can promote the early launch and long-term sustainable development of the network.
Although the tokenomics model of IP Token has not been released yet, its application scenarios can be inferred based on its project introduction: In addition to being used to protect PoS network security and pay gas fees, IP Token will also reward creators who register derivative IPs and pay licensing fees, as well as creators who pay royalties to the mother IP. In addition, the mother IP creators who create value through derivative IPs will also be rewarded. At the same time, part of the licensing fees and royalty income generated by the Story network will also be distributed to IP Token stakers.
By providing IP Token rewards to both the original IP creators and derivative IP creators, Story can attract high-quality IPs and diverse derivative IPs. However, as the future IP Token rewards decrease, it is necessary to establish a stable source of income in advance to ensure that stakers can receive substantial returns and achieve the sustainable development of the network. At the same time, when designing the Token mechanism, it is necessary to prevent fraudulent activities, such as creating IP with no actual value or registering meaningless derivative IPs in order to obtain rewards. In addition, rewards should be clearly distinguished as being generated from real income or through forgery.
However, when designing the utility of Tokens, some issues need to be considered. It is necessary to avoid engaging in false activities solely for the purpose of obtaining Token rewards, such as creating IP or registering meaningless derivative IPs that do not bring actual value. In addition, even when providing rewards for activities that create value, it is necessary to carefully distinguish whether the generated income is genuine or just a form of wash trading.
Introduction of IP
If some well-known IP can join, it will bring a large number of derivative IPs, create more value and form a virtuous cycle, further attracting more IPs. However, companies that own mainstream IPs may not fully understand the advantages of blockchain, so the Story team needs to convince them effectively. At the same time, the Story Foundation may provide funding support to attract these well-known IPs, but if the selection and quantity of funding are not careful enough, it may have a negative impact on other Token holders, so it needs to be handled with caution.
Application Scenarios of AI
The role of AI in Story is indispensable, and creators can use generative AI combined with IP registered on Story to create new content more easily. However, AI models may need to protect this data when learning from it to prevent leakage before payment. Therefore, when the data is first registered on Story, a feature should be provided to keep it confidential and only allow access to those who have paid the licensing fee.
Integration of Law and Regulation
The Story platform cannot directly prevent unauthorized use of IP, so it needs to establish a comprehensive legal dispute resolution process. This process should cover both on-chain and real-life legal means, so that disputes and intellectual property rights can be effectively resolved and protected when malicious behavior is discovered.