In this blog series, we tackle the investment and technology thesis for one of our partners at Lavender.Five Nodes so that you don't have to. It's an overview that assumes industry knowledge from the reader so we can move through material quickly. However, we provide extensive guidance along the way. Grab a cup of coffee, set the timer to 5 minutes, and learn about Intellectual Property on the blockchain with Story Protocol.
The Overview
Story Protocol is a cosmos x EVM chain that changes how intellectual property (IP) is managed, licensed, and monetized. The legacy IP rights and registration systems are still adjusting to the digital age, AI and the abundance of piracy that it creates. Protecting and fairly compensating creators for their work has become increasingly challenging. Story Protocol aims to solve this by tokenizing IP and making it programmable, sovereign, and liquid.
Sovereign - IP is tokenized and can be transferred and traded on any blockchain but has clear rights and references assigned to the creator. Bounded in the real world through clear licensing all a creator needs is a ledger and an internet connection to safeguard and interact with their own creations.
Programmable - One can not just use smart contracts to define usage rights, licensing terms and royalties for the IP but also utilize the tokens in money-markets, price them through AMMs or fractionalize them to create new communities.
And just from having these two properties, liquidity follows.
Founded by two incredible entrepeneurs Story has closed over 100 million in funding from the biggest in crypto like a16z, and polychain. Working in Journalism and AI before Jason and Seung-yoon know what creators struggle with and have aligned them with a global team to change the game.
The Assumptions
- The rise of AI and the attention economy creates a world where not base-creators but those that use the assets are rewarded, an unfair balance.
- Current IP management systems are outdated, illiquid, and inaccessible to many creators.
- Ledgers are not just for financial data and you believe RWA connections through legal wrappers are safe and legal.
- A product that needs both creators and users of IP, a 2-sided market, will thrive as long as the incentives are correct and the bar of adoption is low.
- There is value in the IP and the rights to it.
- Cosmos remains a solid and secure foundation for building scaleable blockchain.
- The EVM has staying power as a programmable layer.
- Bootstrapping an ecosystem is done from a developer first approach.
The Execution
Story Protocol's approach to changing how IP is managed and where value accrues is centered around two key primitives and a third execution point that is just as important:
1. Proof-of-Creativity Protocol
The proof-of-creativity protocol is: Story Protocol's Proof-of-Creativity Protocol tokenizes intellectual property, enabling creators to define and enforce usage rules through smart contracts. With permissionless licensing Story simplifies the process for creators to bring IP on-chainwith ready-to-use contracts and license tokens. Creators set their terms, obtain rights, set royalty payments and ensuring transparent and reliable distribution for their work into the future. Licensing is traditionally a complex and costly process as there is a lot at stake when providing rights to use your work to other people. Story's permissionless licensing revolutionizes this by providing a ready-to-use licensing contract, akin to a Y-Combinator SAFE template for IP licensing, that covers all media types. Furthermore, it introduces the concept of license tokens, allowing licenses to be managed as digital assets. This innovation not only streamlines the licensing process but also opens up new possibilities, such as license token trading in the realm of IP finance (IPFi).
2. Programmable IP License (PIL)
The PIL serves as a bridge between the legal world and blockchain technology, providing a robust legal framework that aligns on-chain actions with real-world legal backing, while offering a customizable universal license agreement template that covers various IP types and usage scenarios; this foundation is further enhanced by simple out-of-the-box configurations, such as Non-Commercial Social Remixing, Commercial Use, and Commercial Remix, allowing creators to easily tailor their licensing terms to their specific needs. On a high level, the PIL is designed to be the Y-Combinator SAFE for IP, providing a backstop to the on-chain asset and allowing intellectual property to be onramped to the blockchain. It's a single legal framework, using US copyright law, that allows IP owners to set rules for permissionless licensing, commercialization, and remixing of their original creations. The parameters outlined in the license are enforced on-chain via Story, truly bridging code and law. This close integration between the protocol and the license unlocks the benefits of transparent, autonomous, and permissionless smart contracts for the world of intellectual property, while still maintaining a strong connection to established legal systems.
3. Building an Application Ecosystem with Cosmos and EVM
Story Protocol is building a vibrant ecosystem that empowers creators and developers alike. At its core is the Story Academy, a builder program that educates and inspires the next wave of IP innovators. By encouraging developers to create innovative applications across various creative fields, Story is fostering a culture of innovation. For creators, the protocol offers user-friendly tools that simplify the complex world of IP management.
The best aspect for builders in Story's ecosystem is IPFi—IP Finance. This initiative explores new frontiers in intellectual property, envisioning a future where IP can be traded as a liquid asset, potentially revolutionizing how creators monetize their work.
Powering this ecosystem is the Story Network, a purpose-built blockchain that combines the strengths of EVM and Cosmos SDK. This unique architecture efficiently handles complex IP relationships while maintaining compatibility with existing developer tools and practices.
Story's functionality is built on a set of key modules:
- The Dispute Module facilitates fair arbitration in IP conflicts.
- The Licensing Module streamlines the creation and management of IP licenses.
- IP Accounts serve as secure vaults for permissions and data associated with each IP asset.
- The Story Protocol Gateway simplifies complex processes into single, user-friendly actions.
Together, these elements create a comprehensive platform that isn't just protecting creativity—it's unlocking new possibilities for how IP can be valued, shared, and monetized.
The Impact
"Magma, the "multiplayer Photoshop" with over 2 million users, found Story Protocol to be the perfect solution for protecting and compensating artists in their collaborative environment. With Story, artists can register their work as an IP Asset, set pricing and permission terms using the Programmable IP License, and allow others to instantly license the work with a single click. Each IP Asset on Story has its own token-bound account, enabling automated royalty payments and pay-as-you-go licensing. This integration empowers Magma users to protect their creations while fostering a collaborative environment that respects IP rights. - The first real world use-cases are coming to live."
By integrating with platforms like Magma (and hopefully growing that to the Figma's and Photoshop's of the world), Story Protocol is transforming how creators protect and monetize their work. This blockchain-based solution addresses the growing challenges of IP management in the AI era, providing a more transparent, efficient, and accessible system for creators of all sizes.
As the creative industry continues to evolve, Story Protocol's innovative approach to IP management could become the new standard, ensuring that creators are fairly compensated and their rights are protected in an increasingly digital and collaborative world.
With a stellar team, a well documented and orchestrated developer architecture and the security and familiarity of CometBFT and EVM it will still be a hard, but atleast, slightly easier road to a thousand IP securing and monetizing applications.
