Story Protocol, a blockchain platform focused on the tokenization of intellectual property, announced yesterday that it has raised $80 million in a funding round led by a16z Crypto. To date, the company has raised $140 million to build a project that aims to be for intellectual property what Bitcoin is for money.
The protocol uses blockchain technology to facilitate the registration and protection of tokenized intellectual property. In this way, it allows the construction of a network of tokenized assets and licenses that authorize their commercialization, remixing and use according to personalized rules.
Learn what Story Protocol is, its tokenization model, and how it aims to protect intellectual property with blockchain in the era of artificial intelligence (AI).
HOW BLOCKCHAIN AND NFTS CAN PROTECT INTELLECTUAL PROPERTY
What is the History Protocol?
Story Protocol is a platform which uses smart contracts and blockchain technology to facilitate the issuance, management and monetization of tokenized intellectual property. With the transparency of blockchains, the company can offer a model to protect creators’ intellectual property, program it, automate royalties and monitor its exploitation by third parties.
Story Protocol’s goal is to bring intellectual property to the blockchain and connect it to Web3, transforming it into a liquid, accessible and programmable digital asset. With the protocol, it is possible to register both real-world (offchain) intellectual property, as well as tokenized intellectual property: NFTs.
For this, the protocol has the Story Network, a layer 1 blockchain built with the Cosmos SDK and fully compatible with the Ethereum Virtual Machine (EVM). Thanks to this compatibility and its features that allow the execution of complex data structures, the blockchain will enable the implementation of tools and applications focused on intellectual property. The main Story Network is expected to launch in late 2024.
WHAT IS ZORA NETWORK AND ZORA, BLOCKCHAIN FOR CREATIVITY CULTURE
Protect Intellectual Property with Blockchain
Story Protocol refers to intellectual property as the largest asset class in the world, including movies and advertising, memes, voices, AI models, gaming assets, and more. This represents a multi-billion dollar asset class with great potential for tokenization.
In a context where artificial intelligence is increasingly used in the field of creation, blockchains and smart contracts offer protection of intellectual property. For Chris Dixon, head of a16z, bBasically, Story is a blockchain protocol that allows creators to register their intellectual property in order to track and monitor its use, ensuring the protection of their legal and economic rights.
This means that creators of original content are rewarded regardless of how their content is used and distributed. In the meantime, he says, intellectual property licenses become less complicated and standardized, encouraging widespread sharing and collaboration.
For Dixon, Story’s goal is to create a fundamental infrastructure capable of supporting a new economic pact between creators and platforms. In fact, he presents it as the tool that will repair the rupture of the existing economic pact between creators and Internet platforms.
Dixon says advances in generative AI could break that pact. “A new wave of AI-powered search engines are offering comprehensive answers instead of guiding users to websites. Social media is increasingly populated with AI-generated images and videos. These AI systems were likely trained on original, human-created content, but they often don’t credit or cite their sources. If there’s no attribution or compensation, what incentive will there be to publish original creations on the open internet?”
AI THREATENS INTELLECTUAL PROPERTY, BUT NOT CIVILIZATION
Creativity test
At the heart of its blockchain infrastructure is the Proof of Creativity protocol. The protocol is a system integrated into Story Network that facilitates intellectual property management, including permissionless licensing and automatic royalty payments.
A key component of the protocol are IP assets, which are ERC-721 formatted NFT assets that represent real-world intellectual property. The protocol supports multiple formats, such as image and video, allowing multiple forms of intellectual property to be recorded.
Story Protocol also introduces its Programmable IP License (PIL), a universal licensing agreement associated with each IP asset responsible for integrating intellectual property into the blockchain, allowing creators to establish rules for licensing, commercializing and remixing their works. This programmable license has a standard that provides a legal framework under U.S. copyright laws and its written code includes the terms associated with the license.
In this way, IP owners record and represent a legal contract on-chain (i.e. off-chain IP) with all the conditions of the license, including parameters such as whether its commercialization is allowed or not. In addition to transferability or the percentage of royalties in case of commercial exploitation, among other parameters.
Intellectual property owners can issue license tokens, an NFT in ERC-721 format that is used to grant permissions for the creation of derivatives, commercial exploitation and reproduction on different platforms of the intellectual property. In this way, interested parties can create derivatives of said intellectual property by creating the NFTs, thus accepting the corresponding license conditions.
WHY INTELLECTUAL PROPERTY TOKENS (IPT) ARE IMPORTANT IN MEDICINE
Tokenization of intellectual property
These license tokens can also be issued privately and may or may not be transferable, depending on the terms of the IP owner. On the other hand, they also open the door to use cases such as license token trading. The protocol includes a royalty module, in which the owners of the tokenized IP address can manage, schedule and automate the payment of royalties. For this, the figure of royalty tokens arises. This is a type of ERC-20 token associated with an intellectual property asset (the IP asset), which gives the right to claim 0.000001% of the profits obtained by said tokenized IP.
Each IP asset is associated with 100 million royalty tokens. Finally, users use these royalty tokens to claim their earnings with “revenue tokens,” which refers to any token given to make payments from the tokenized IP earnings. For example, ETH, USDC, or any other ERC-20 token approved by Story Protocol.
Story Protocol’s default royalty system is based on a Liquid Absolute Percentage (LAP), where the royalty stream branches downward. In other words, each tokenized IP enters a derivative chain where royalties are paid hierarchically via ownership of royalty tokens. IP assets are thus organized into a derivative chain, where anyone can define how royalties are distributed among derivative works.
TOKENIZATION IS THE SECOND REVOLUTION OF OWNERSHIP
Ecosystem
Currently, over 200 projects, gathering over 20 million IPs, are developing early-stage applications and solutions based on Story Protocol. The protocol’s use cases range from content mixing and management applications, to IP licensing platforms, AI-powered asset marketplaces, DeFi and RWA applications, among others.
Some of the projects using Story technology include:
- Magma: An online collaborative design platform that allows multiple users to work together in real-time, it uses Story technology so that artists receive proper credit and compensation when others use their work. With tokenized intellectual property, these terms are automatically enforced and anyone interested can accept and license the work with a single click, ensuring that artists are properly compensated.
- Sekai– Story creation platform powered by generative artificial intelligence, which builds a community and collaborative economic model thanks to Story technology.
- Mahojin– Uses Story to tokenize intellectual property related to AI training data, the AI models themselves, and the results they generate. On this platform, data owners can register their works as assets on the Story blockchain, defining the terms of use they prefer and accessing monetization.
