$RECORD Token Overview
Music Protocol intends to be a sovereign blockchain entirely dedicated to the music industry, serving as a digital environment for managing music intellectual property. The complete technological ecosystem will consist of the L1 and a series of execution layers on third-party blockchains connected with the central layer, intended to deploy intellectual property across different ecosystems.
Specifically designed as the native token of the blockchain, the $RECORD token serves the roles in the protocol's governance and maintenance, supported by a proof of stake mechanism.
Music Protocol employs an "adoption first" strategy. The Web3 Music Association team has collaborated with the music industry, targeting major players like labels and distributors and retail-level entities like independent artists and small labels. This collaboration has guided the protocol's design to align with the industry's requirements. Leveraging long-standing industry relationships, we have developed a roadmap for technology releases and a phased introduction of $RECORD token utilities. This strategic approach aims to facilitate real protocol adoption and drive widespread utilisation.
This roadmap comprises three stages. In the first stage, inflation is solely attributed to the adoption of the music industry's protocol. In the second stage, the IP Core will be moved from the Base network to the Music Protocol sovereign blockchain, with inflation allocated to maintaining the validation network and governance.
Phase 1: Adoption
Goal: Create initial IP Core management and licensing applications on the Base Protocol and promote industry-wide adoption.
Incentive: Introduce the Music Passive Reward (MPR) Token Distribution Mechanism, incentivising artists to register their Music IP on Music Protocol.
Phase 2: Expansion
Enhancement: Introduce execution layers for Music IP exploitation and licensing tokenisation on platforms beyond Base Protocol.
Continuation: Maintain $RECORD as an ERC-20 token on the Base network.
Phase 3: Sovereign Chain Launch
Establishment: Launch Music Protocol's sovereign blockchain for secure and efficient transactions.
Evolution: Complete governance decentralisation and expand $RECORD token utilities.
The $RECORD token has a multi-faceted role that adapts to the project's roadmap as it progresses. This phased approach aligns with the overall strategic vision, contributing to the ecosystem's successful growth.
Phase 1: Adoption
This phase aims to accomplish two primary objectives. First, it seeks to establish the first set of IP Core Management and Licensing applications that utilise the Base Protocol. Second, it intends to initiate the widespread adoption of the protocol among musicians and record labels in collaboration with our music partners. Central to this adoption effort is introducing the Music Passive Income Token Distribution Mechanism, which rewards artists whose tracks are registered and subsequently licensed through the Music Protocol. This incentive mechanism is envisioned to be pivotal in driving the protocol's adoption.
Technology
During this project phase, the $RECORD token operates as an ERC-20 token on the Base network. This is a vital step in the platform's development, as it allows for seamless integration with existing blockchain infrastructure and ensures the token's liquidity and interoperability.
Additionally, the IP Core technology, the technological framework necessary for the registration and on-chain management of music intellectual property, will be based on a comprehensive set of smart contracts deployed on the Base network. These smart contracts will provide:
The foundation for the platform's functionality.
Enabling secure and efficient management of music rights.
Royalties.
Other critical aspects of the music industry.
Governance
In this phase, on-chain governance will be exclusive to ecosystem partners who are part of the Web3 Music Association and serve in an advisory role, implementing an Association Governance model. This means that governance decisions will be made by a limited group of key stakeholders who are actively involved in the development and growth of the Web3 Music ecosystem. However, final decisions will still be made by the Web3 Music Association, a Swiss legal entity approved by FINMA (the Swiss Financial Market Supervisory Authority) that issues the $RECORD token and represents all ecosystem partners.
The quorum for on-chain governance will be calculated per capita among qualified members, the Web3 Music Association's ecosystem partners. This means that each member will have an equal say in governance decisions. However, the weight of each vote will depend on the number of tokens the voting partner has committed to the Music Reward Inflation mechanism. This mechanism uses technologies within the Music Protocol ecosystem to generate protocol yields that are designated for rights owners.
The Association Governance model is designed to ensure that governance decisions are made in a fair and transparent manner and that the interests of all ecosystem partners are represented.
Token Purpose
The primary objective of the token during this phase is to encourage the adoption of the protocol. This, in turn, fuels the passive income mechanism, which is distributed to authors and rights owners who register their songs' intellectual property on the Music Protocol. Within this framework, all participating artists and rights holders in the Music Protocol ecosystem are eligible for rewards commensurate with their community support.
Introducing the Music Passive Reward
Music Passive Reward (MPR) is an inflationary mechanism that allows $RECORD token holders to support artists registered on Music Protocol economically. It works by locking tokens in a smart contract. This functionality has three main uses:
Music Protocol can support artists and rights owners in registering their IP, incentivising retail adoption. From the beginning, a significant part of the $RECORD held by the Web3 Music Association will be allocated for this purpose.
Labels and Web3 Music Association members can use their tokens to support their artists, promoting protocol use.
Fans can support their favourite artists in a patronage model.
The inflation rate is defined at the protocol level and can be adjusted through governance mechanisms.
The governance's methodology for determining the annual inflation rate for generating passive reward through music is dependent on the level of adoption. The rate will be regularly adjusted to ensure that artists who have registered their intellectual property (IP) on Music Protocol receive satisfactory returns while preventing excessive token concentration among early users.
Institutional token holders, including members of the Web3 Music Association, will significantly influence inflation incentives. By dedicating their tokens, including locked tokens, they can stimulate protocol adoption by artists. The Web3 Music Association will allocate a substantial portion of its treasury to incentivize independent artists or those associated with labels outside the ecosystem to use the protocol. These artists will receive rewards for a period sufficient to become stable users, after which the returns will be redirected to new artists, ensuring a continuous cycle of support and growth within the ecosystem.
During Phase 1, this dynamic will carefully calibrate the inflation level to encourage the adoption and relevance of Music Protocol within the music industry, ensuring substantial long-term value for token holders.
Milestones
In this phase, our primary focus is to foster the ecosystem by integrating stakeholders from the Web3 Music Association and prominent figures in the music industry into Music Protocol. We will also develop the validation network in preparation for subsequent phases.
We will initiate an Open Innovation Call for ideas in partnership with key music industry entities to achieve this. This initiative aims to attract companies that are innovatively exploiting Music IP. The goal is to engage various innovators, identify and incubate new projects, and encourage collaboration between traditional music stakeholders and Web3 entities.
We will complete a comprehensive Case Study on Licensing Music IP across various sectors:
Gaming: Integration of licensed music to enhance user experiences.
The Metaverse: Use of Music IP in virtual worlds to create immersive musical experiences.
Artificial Intelligence (AI): Application of Music IP in AI-driven music creation and curation tools.
Real World Assets (RWA): Utilisation of Music IP with physical assets and traditional media formats.
This case study will provide detailed analyses and develop best practices for future licensing agreements.
Additionally, we will embark on a targeted campaign to onboard many artists to Music Protocol. This initiative aims to expand our artist base across diverse genres and international talent, facilitate direct engagement between artists and audiences using Web3 tools, and promote the adoption of Music Protocol for managing and monetising music assets.
Lastly, the validation network will be developed, ensuring its robustness and scalability. This effort will establish a reliable validation mechanism, prepare the network for increased usage, and lay the groundwork for future expansions.
These milestones will ensure the successful integration of advanced technologies within the music industry, fostering innovation and collaboration while preparing the validation network for future growth.
Phase 2: Expansion
Technology
In Phase 2, Music Protocol will launch its initial execution layers for exploiting and tokenising music intellectual property. These layers will handle IP identification and registration, necessitating decentralised storage and computational resources. Music Protocol will establish these components on third-party networks like Optimism, Arbitrium, Cosmos, Solana, Avalanche, and the leading blockchain ecosystem, which has a lively community interested in music. While these execution layers will be operational from the start, their integration with Music Protocol's sovereign chain will occur in Phase 3. The $RECORD token will remain an ERC-20 token on the Base network throughout this phase
Governance
The functionalities and mechanisms established during Phase 1 remain unchanged and have experienced no adjustments.
Token Utility
The functionalities and mechanisms established during Phase 1 remain unchanged and have experienced no adjustments.
Milestones
The initial adoption phase of the protocol presents several opportunities, comprising registration of intellectual property (IP), licensing, exploitation, and financial tokenisation. During this phase, ecosystem members' catalogues will be registered in the protocol and granted to diverse partners such as gaming projects, the metaverse, artificial intelligence companies, and decentralised finance (DeFi), real-world asset ecosystems. The protocol's value chain will be established, transforming IP management and exploitation by providing a secure and transparent platform for IP registration, licensing, and tokenisation. This phase will lay the foundation for a successful transition into the third phase.
Phase 3: Sovereign Chain Launch
Technology
Music Protocol introduces its sovereign layer, a layer 1 blockchain, as a foundational element of its ecosystem. This blockchain is the settlement layer, providing secure and efficient transactions. It is thoroughly designed for scalability, handling massive transactions per second. By implementing a sovereign model, Music Protocol gains complete control over its network, offering customisation and autonomy. The blockchain facilitates the seamless transfer of music rights and royalties, empowering artists and musicians in the digital age. Music Protocol's strategic move establishes a solid foundation for its ecosystem's future growth and success.
Governance
The protocol's governance undergoes a significant transformation, shifting from a centralised structure to a fully decentralised model managed entirely on-chain. This enables the community to participate in decision-making through on-chain voting mechanisms, ensuring transparency, accountability, and community empowerment. Key features include on-chain voting, transparency, community empowerment, long-term sustainability, and adaptability. Decentralised governance promotes a more engaged, transparent, and sustainable ecosystem, aligning stakeholders' incentives with the protocol's success.
Token Utility
With the launch of the sovereign chain, the $RECORD token gains all its intended utilities. It will be the native token of the chain used for validation in a Proof-of-Stake consensus scheme. The inflation generated by the validation mechanism will be used to reward validators, fuel a decentralised governance ecosystem fund for adoption (aiming to create protocol yield for right owners who decide to move their IP to Music Protocol), and finance technological development grants. All fees for transactions on the sovereign chain will be paid in $RECORD and will go towards rewarding validators and the creators of the Attribute Standard Templates of the IP Core Asset Library.
In this phase, since the initial adoption will have already taken place and the ecosystem will have entered a phase of organic growth, the MPI mechanism will gradually be abandoned to maintain the inflationary dynamic, which will be entirely dedicated to the maintenance of the validation network, as controlled as possible.
Becoming an Industry Standard
The integration of Music Protocol with music platforms has created a symbiotic relationship, offering remarkable benefits to the music ecosystem. It enables seamless integration for artists, labels, and fans, making it easy to upload music, manage rights, and connect with fans. The protocol status is gained organically as more artists, labels, and fans adopt the protocol, solidifying its position as the de facto standard for managing music IP. Streamlined music distribution eliminates intermediaries and reduces costs, while enhanced fan engagement opportunities allow fans to interact with their favourite artists and provide valuable insights. This integration also transcends geographical boundaries, allowing artists to reach a global audience and fans to access a diverse range of music worldwide.
Token utility deep dives
Deep dive: Token locking for boosting protocol adoption
The Music Passive Income (MPI)'s distinctive yet simple mechanism necessitates a clearer explanation, particularly in light of its connection to ecosystem adoption.
Our token mechanics aim to enhance the engagement of all ecosystem stakeholders. Unlike traditional DeFi, where token locking is used for yield farming, our token locking serves as a distribution mechanism. By locking tokens, stakeholders can include artists into the ecosystem. This setup promotes a collaborative environment where artists, stakeholders, and the platform mutually benefit from participation and contributions.
Stakeholders are encouraged to lock their tokens, demonstrating their commitment to the ecosystem. This allows them to distribute tokens to artists they work with, seamlessly onboarding them into the network. This token locking becomes a crucial step in facilitating artists' entry, empowering them with governance capabilities and active ecosystem participation.
By utilising this token locking strategy, stakeholders transition from passive involvement to active facilitation. They enable artists to become key contributors and decision-makers within the ecosystem.
This is particularly important for creating an industry yield that is generated by the protocol and returned to artists and creators. This incentivises them to adopt Music Protocol's technological paradigm by registering their intellectual property on it, thus contributing to the protocol's industry adoption.
Deep dive: Transitioning to blockchain governance
The shift from the Association Governance adopted in Phase 1 to Music Protocol Blockchain Governance adopted in Phase 3 marks a crucial transformation within the ecosystem. It highlights our move from an off-chain decision-making model towards a decentralised, participatory governance framework.
The core aim of this transformation is to create a governance model that balances fairness with efficiency, skilfully merging direct democracy with technocratic leadership. This will ensure alignment among all participants and minimise the risks posed by private interests to the system. It is paramount to undergo this transformation to promote a more inclusive and resilient governance model.
The ultimate goal is to establish a governance model that is both equitable and efficient, effectively bridging direct democracy with technocratic leadership and aligning the interests of all participants so that private interests do not represent a vulnerability of the system.
The Blockchain Governance Smart Contract will initiate on-chain governance among Association members as a preparatory step for full blockchain deployment.
Deep dive: $RECORD token upgrade
As we progress in the Music Protocol blockchain development, the existing $RECORD token will undergo an essential adaptation to become a fully-fledged Sovereign Blockchain token. This progression signifies a technical upgrade and the integration of an incentive system tailored for blockchain validators and collators. In this renewed economic model, $RECORD serves as the anchor.
Transition to Gas Token: As we progress in our blockchain development journey, the existing $RECORD token will undergo an essential transformation to become the token of a Sovereign Layer 1 blockchain network. This progression signifies a technical upgrade and the integration of an incentive system tailored for blockchain validators and collators.
Added features: The $RECORD token will be the primary gas token of the Music Protocol Blockchain. It will drive all actions, from simple transactions to complex smart contract executions. Its role will be pivotal in covering operational costs, validating actions, and ensuring the network's smooth operation. Beyond its utility, the token will play an integral role in the network's incentive framework, offering rewards to validators and collators who fortify and optimise the network.
Continue regulatory approval: With this evolution, the Web3 Music Association will engage in a comprehensive regulatory approval process. The objective is to ensure that the renewed $RECORD token retains its status as a utility token. This will include rigorous legal and compliance evaluations, ensuring the alignment with existing regulatory benchmarks and offering protection and clarity to all stakeholders.
Deep Dive: $RECORD Dynamics in Phase 1
In Phase 1, the protocol has four interconnected smart contracts to cover all the functionalities needed during the token generation event. These are:
MusicProtocolRecordToken
MusicProtocolRecordDAO
MusicProtocolRecordTokenManagement
ArtistStaking
The details about their mechanics are covered in the GitHub repository documentation. All the processes covered by the smart contracts are mentioned as well as more technical topics for those who want to use the token.
Governance
During Phase 1, a select group of whitelisted token holders who are also members of the Web3 Music Association can participate in governance. This is reserved for active players in the music industry who share the vision for the future of music. The Web3 Music Association includes the largest independent labels and the leading music distributors worldwide.
There are two levels of governance:
On-chain governance - which comes with an advisory role
Association governance that own the admin role on the main smart contract of the protocol and act according with the result of the on-chain consultation and with the decision of the Association assembly
In Phase 3, after the sovereign chain's launch, the protocol's governance will be fully decentralised.
In on-chain governance, the quorum will be calculated on a per capita basis, while the voting power will depend on the number of tokens the voter has staked in the Music Reward Mechanism (through the smart contract named "FanToArtistStaking").
The reason for having two levels of governance is to compare the outcome of votes that take place in the Web3 Music Association assembly, where the associative principle stipulates that each member can cast only one vote, with the theoretical result of votes that instead involve a voting power dependent on the number of tokens the voter has staked in the Music Reward Mechanism, a true measure of their commitment within the ecosystem.
Furthermore, since on-chain governance is an informal process, members can use it to introduce new discussion topics and gauge consensus within the community before deciding whether and how to advance these issues within the Web3 Music Association assembly.
In the following sections, the on-chain voting processes are described in further detail.
Governance - Proposal submission/execution process
Any whitelisted user can propose instances in the on-chain governance. To do this, they have to connect the whitelisted wallet to the DAO smart contract DAO and follow the procedure for creating a new proposal that can then be put to a vote.
Voting process
Any whitelisted user can participate in voting. Depending on the subject of the vote, a different quorum may be applied. However, with the on-chain governance only being an advisory role, the quorum levels will be generally low. The quorum calculation will occur per capita, while the voting power will depend on the number of tokens the voter has staked in the Music Reward Mechanism (through the smart contract named "FanToArtistStaking").
Updating the governance whitelist
The governance whitelist can only be updated by the admin wallet owned by the Web3 Music Association board. When a new member joins the association, their wallet is added to the whitelist.
Deep Dive: Music Passive Income (MPI)
This is managed by the "ArtistStaking" smart contract. Any token holder can lock a number of tokens in favour of one (or more) artist(s). The locked tokens produce inflation accrued in the artist's wallet - enabling them to claim it at any time.
Artists who want to be eligible to participate in the reward mechanism must join the protocol by using some technology of the Music Protocol ecosystem. In this case, their wallet will be added to the Artist Whitelist for them to become eligible to be chosen by the user as a beneficiary of the reward generated by the locking position.
The inflation rate is set at the protocol level and can be changed by governance. Every time the inflation rate changes, we enter a new period, each characterised by a different level of the inflation rate in force. The open locking positions generate the reward for the artists based on the inflation rate in force in that period. If the inflation rate is changed, this impacts all open locking positions. From a technical point of view, the calculation of the reward and the creation of the tokens are all done together when an artist claims the rewards they are entitled to. This means that, at that moment, the smart contract calculates the reward amount considering the development of the number of tokens locked since the last time the claim was made (or since the wallet was added to the Artist Whitelist) and considering the evolution of inflation rates in various periods.
Due to a technological limit of the smart contracts, the maximum number of periods that can be considered in this calculation is equal to 52. This means that if an artist fails to complete the reward claim for over 52 periods at the time of the claim, no necessary information for calculating the rewards accrued in the periods beyond the 52nd is available. Therefore, these rewards will be lost.
This should be acceptable because we expect the inflation rate to remain the same for many months, i.e., the single periods to have a very long duration. This means that the 52 periods could span several years. This concept must be clear to the artists so they can claim according to timing.
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