🔊 NUSIC Synthetics

👷 WORK IN PROGRESS 👷

Introduction

Synthetic music assets are conceived to bootstrap liquidity for the music industry; artists and labels require capital to operate and could benefit from access to Decentralized Finance. Though real world assets are starting to enter DeFi, education is required in order to enable originators to tokenize thier assets. In order to accelerate this educational process we present NUSIC, a protocol which enables the creation of synthetic assets that track the real-world popularity of music.

By offering anyone the opportunity to particiapte in the collatoralization and trade of synthetic music assets, we may create an inclusive marketplace with cultural relevance that attracts and incentivizes a broad audience. Once a synthetic music asset marketplace has reached a sufficient level of TVL this will be attractive for real-world artists and labels to tokenize their future income. For example, an artist may swap their future music streaming income for the whole, or a portion, of a collateralized NUSIC synthetic. These can be issued in the form of fractionalized NFT bonds, with future music streaming income assigned directly to the NFT, enabling the capital providers behind the original synthetics to benefit from a share of the future income of the artist.

Real-World Music Assets into DeFi

The goal of this project is to onboard real-world music assets into DeFi, motivating primarliy artists and secondarily labels with a sufficient TVL to enable real-world asset swaps from the fungible synethtics to fractionalized non-fungible bonds.

The following prior art is a use-case diagram that represents how capital would flow to-and-from an artist, thier label or distributor, a DSP and a DeFi user via a non-fungible bond:

The frailties of the above model are:

1. Assignment at supplier level will require a real-world legally binding agreement, auditing capacity, fiat onramp and may be vulnerable to emerging regulations or compliance issues that vary between different territories. It requires the concordance of the supplier, that may be a corporation or subsidiary that follows a company specific accountancy and operational practices, re-assigning an artist payment to an NFT could also require sign-off at an executive level.

2. Requires a quarters worth of streaming income deposited as stablecoin collateral by the artist or their management in order to collatoralize the bond, determine the bond value and onboard the artist into DeFi. If rather than requiring this deposit from the artist, fungble synthetics had already been collateralized the artist would likely feel more motivated to participate in transferring their real-world assets into DeFi.

The Synthetic Solution

Though the above problems invite real-world solutions, these rely on third-parties that include artists, small & medium sized enterprises, corporations and governments; relying on these third-party actors to recognize the opportunity from DeFi, how to interface with or regulate it is antithetical to a bootstrap model. Rather than waiting for third-parties to understand or investing resources into education, there is enough TVL in DeFi to validate the appetite for music assets.

nuAssets

Drawing from the work of the Mirror Protocol which introduced synthetic stocks to DeFi, nuAssets function similarly to mAssets, but the valuation is drawn from a music oracle feed which tracks the popularity of a specific artist. The Cross-Platform Performance (CPP) is an attempt by music data aggragator Chartmetric to provide a single metric that measures an artist's performance accross music-streaming services, social media platforms and other digitial entities; including Spotify, Pandora, TikTok, as well as TV and radio broadcasts, however, Spotify's monthly listener metric alone is enough to gauge the popularity of an artist.