The use case implies the business model of an NFT platform that can dock to any existing ad network, both legacy and crypto-native ones, based on the plug and play principle. The innovative feature of the platform grants users, who monetized their digital products with the ad network, the possibility to list them on an internal marketplace to tokenize (ERC-721) and sell future ad-based revenue streams. Effectively, this will create a new type of NFT with dynamic properties and simultaneously the first NFT with an actual financial underlying. These NFTs will be displayed on a native NFT marketplace which seeks to provide the infrastructure of a secondary market, where NFTs & their fractions can be exchanged effectively.
An alternative approach to reach mass adoption, is the securitization of Tokertize's NFTs by an investment bank or a hedge fund that offers this service (see point 6). In this case, the business case would need to be adjusted accordingly.
In order to better understand the whole construct, the following illustration will help to break it down into single components.
Hence, figure 1 showcases the example of a crypto-native centralized ad network with the digital product being a website and the monetization method being ad units.
As for the ad network functionality, two services will be offered.
Firstly, to give businesses and individuals the option to create ad campaigns. These parties will pay for the placement of their advertisements on websites that are monetized with the ad network. More specifically they will upload advertisements of different formats and data sizes into the storage/blockchain of the ad network. Therefore, the advertisers will pay accordingly, choosing one of the existing cost models such as CPC (cost per click), CPM (cost per 1’000 impressions) etc. Hence, their advertisements will be displayed as long as the campaign has funds.
Secondly, to give website owners the option to monetize their websites with the ad network, essentially providing inventory for the placement of advertisements. In the first step, this process will involve website owners creating ad units for which the ad network will automatically generate the according ad unit code. The website owner then can insert this ad unit code into the HTML code of the respective website. Once the monetization process is approved by the ad network, the website owners start to earn ad revenue.
For the digital product of a website there are several monetization methods such as ad units, banners, affiliate programs, data monetization, subscriptions, donations etc. The NFT platform seeks to establish compatibility with all monetization methods for all digital products, such as videos, social media accounts, digital billboards, apps etc. This is feasible because all the relevant data can simply be extracted from the inbuild analytic tool of the respective ad network.
Beginning with crypto-native ad networks, the integration of the NFT platform would not necessarily require a coin selection, instead could adapt to the used crypto currency of the ad network, such as BTC in the case of Bitmedia.io. When it comes to the integration with a legacy ad network, such as AdSense, an on-and-off ramp solution from a financial institutional partner could establish the bridge, most likely using stable coins.
Given the functionality of the NFT platform and the example of point 1, the website owner can now list his websites on the internal marketplace. In this case, websites and relevant information will be automatically displayed in a straightforward way for anyone to browse through, to analyze and to invest.
The displayed stats and design in general would obviously be adjusted for the intended business case and will serve the function to facilitate the sale of a website’s ad-based revenue streams. In this context, the website owner will have the freedom to choose what percentage of his revenue streams he would like to put on sale as well as select which monetization methods should be considered for that. Utilizing Chainlink’s oracles, we not only will be able to display this data on the internal marketplace, but also inside the NFT itself, updating it on a daily basis to further facilitate the secondary market trading. In that case, investors could simply access relevant financial data of the underlying website by clicking on the NFT.
In a first step, the sale process will be an auction, triggering a 1-to-1 transaction. In other words, investors will buy a complete NFT. The goal however, is that the sale process will be a crowdfund mechanism, which will allow investors to own a fraction of the NFT based on the percentage of personal funds within the crowdfund. Consequently, the percentage of payout will also be based on the same principle. This mechanism will assure fair market conditions excluding the privilege of having access to more lucrative assets given higher financial power of certain individuals. Furthermore, acquiring pricing data of NFT transactions over time, the platform will be able to automatically suggest a pricing range for future NFT transactions based on a comparative analysis of the underlying websites and their specifics.
At the end of the sale process or when the desired price is matched, the website listing will expire and an NFT with dynamic properties will be minted. A smart contract will feed the NFT with relevant data of the underlying, updating it on a daily basis, such as revenue/clicks/impressions etc., and redirect all future revenue streams originating from the website’s monetization to current NFT owners.
Following the minting process, five things happen in regards to the transfer of coins: