A conceptual and technical writeup of terra0’s contribution for Sotheby’s Nativey Digital: A Curated NFT Sale
terra0 has minted an NFT (ERC721 Token) which depicts a LiDAR scan of a German forest, and created an ‘Oracle’ smart contract which stores the average annual temperature rise as decided by NASA. When this value crosses the threshold of 2 degrees centigrade, the token is able to be burned by anyone who wants to call the smart contract function and do so. The NFT will premiere for sale in Sotheby’s ‘Natively Digital: A Curated NFT Sale’, June 3–10, 2021.
terra0 is an artwork and research group centered around decentralized technologies built on the Ethereum network, aiming to provide automated ecosystem resilience frameworks. We founded it in 2016, and it has since been exhibited in a wide range of exhibitions and congresses. Important works, apart from the original White Paper, include Flowertokens (2018), Premna Daemon (2018), and Morphology Panels I — III (2020). We have always investigated how relationships to living ecosystems can be mapped in a blockchain and how this mechanism can operate autonomously. One specific question which arises from these investigations is how physical realities are connected to existing token economies.
Art as a contingent claim
When Elie Ayache proclaims that “there is no better presentation of the thing than its trading” we might first read him in the context of the traditional financial system. Derivatives — put and call options, futures, and synthetic assets — were developed in various strains of TradFi (a term now describing the old world of financial markets), and are essentially the building blocks of every sophisticated financial system.
These asset types have now crept into decentralized ledgers, and are being created and mediated in a (supposedly) trustless environment. Ethereum — the narrative of which has evolved over the years from building a World Computer to that of DeFi (Decentralized Finance) dominance — as a platform always had the potential to disrupt the TradFi system with turing complete programs able to describe an unlimited variation of assets unbound from legislative processes. This, compounded by the recent market upswing pushing teams to rapidly iterate on prototypes and novel inter-protocol strategies, has led to the emergence of exotic and increasingly abstracted derivatives in DeFi. Exoticism aside for the moment though, what does a claim denote within the DeFi space?
Simply put, a claim is speculation on a future price; a hedge against a certain outcome. A la Gertrude Stein: a derivative is a derivative is a derivative is a … [ad infinitum]. The interconnectivity of contracts and following claims create not just a marketplace for currencies and tokens but also for claims themselves: an infinite recursive stack of DeFi derivatives is appearing before our eyes.
Although it might be tempting to focus on assets such as crvSTETH or crvRENBTC, discussion of whether any token is already a derivative a la Ayache is perhaps more interesting: aren’t governance tokens already derivatives of a certain type, being bets or a form of Ayache’s “continuous claims”? Isn’t any token already a claim?
The leap from tokens to artworks is only a small one: to attempt to situate a piece of art outside of an economy of speculation — an inherently continuous claim — is at best naive, and at worst blinded by folk theory. The current discourse around NFTs centering on their serving as a mechanism merely for the further commercialisation of artistic practices unfortunately seem to overlook how the majority of the art economy already operates. As Brad Troemel noted in his recent video essay about NFTs, the virtualisation of art — the trading of art pieces without even changing their physical location, because they are locked in freeports — was pioneered by the commercial art market long before the first specification of the NFT standard was even proposed. Rhea Myers describes how NFTs are a continuation of this historical development:
To own a piece of NFT art is to possess something unique with cryptographic certainty backed by a sizable percentage of the Earth’s computing power. It is to possess it more securely than if it was stored in a vault (en-crypt-ed) at a maximum security freeport facility, and for the object of that possession to be a more uniquely identified object than the Mona Lisa.
(Welcome To The Dessert Of The Real, Rhea Myers)
To summarize the approach more bluntly: maybe art pieces have been financial instruments since at least the emergence of non-local markets (or the World Market, a la Fernand Braudel). Indeed, artists have long been engaging with the conditions of the art economy: in 1959, Yves Klein gave Jacques Kugel a receipt for the sale of his invisible zone de sensibilité picturale immatérielle, which stated that the work could only be sold by its owner for twice the price he had originally paid for it. Ten years later, Les Levine offered Profit Systems I, a artwork consisting of the purchase of 500 shares of common stock in Cassette Cartridge Corporation for $2,375 and the sale of the same shares for $7,481.25 a few months later. In the same year, Robert Morris offered himself as an investor for the Whitney Museum, on the condition that the profit would be shared between him and the institution, and Lee Lozano created the Investment Piece, which consisted of investing $983.25 in highly speculative warrants and turning the investment itself into a work of art.
These artists were reacting to an environment in which buying art was suddenly seen as and used interchangeably with stock investment, an environment best summed up with collectors Robert Scull and Leon Kraushaar frequently cited quote that “General Motors has done a little better than Cézanne, but not as well as Renoir.” (Robert Scull, quoted in ‘At Home with Henry,’ Time, February 21, 1964, 68)
Two degrees — a hedge against annihilation
We deeply favor a materialist reading of tokens as always entangled with their site and event of production. In earlier experiments with the medium of unique non-fungible tokens we explicitly bound tokens to manual and artistic work as additions to the already existing computational labour involved in the Proof of Work system in which they were embedded. The relation between existing token economies and the related externalities was already present in Flowertokens and the original terra0 contracts, and in Two Degrees we continue the line of thought with an NFT consisting of image data generated in the summer of 2019 with the help of a LiDAR scanner operating in a forest in southern Germany. The resulting point cloud shows 3-dimensional space with its machine-read depth planes.
Two Degrees addresses the relationship between global warming and the critical survival of the imaged (eco)systems in an obvious manner: just as the real forest will disappear as soon as a certain threshold in global climate change is passed, so will the NFT. Via an oracle on the Ethereum blockchain, the annual average temperature increase will be monitored (using NASA’s annual report as a data source), and once it rises above a certain threshold, the NFT token can be ‘burned’, or removed from circulation by anyone. The work will thus exist only as long as the global average temperature stays below the tipping point.
Through this simple condition, the work will exist only as long as the global average temperature stays below the two degree celsius ‘tipping point’; the NFT and the spatial record of the forest will disappear when the real forest disappears. The work also addresses the speculation of the art world in the context of an increasingly rapidly changing world and deteriorating environmental conditions, and thus can be seen as a blueprint for how artists can use their agency to gain political influence through the creation of potential assets and speculative objects. Although this is to be understood as a metaphor in a single case, it is at the same time a proposition for mechanisms to incentivize owners to act consciously in the future.
When we follow Ayache, we can recognize that the market can be the place where the event is situated. Following a tradition of artists looking at organisational structures we can also answer this: It might also be the place where collectivity, interdependence and autonomy can be organised.
Technical details — the best oracle might be a DAO / multisig
A short technical write up of the two ‘2 Degrees’ smart contracts:
This is an ERC721 compliant token deployed at 0xabf5c7c066a48a06524438f6f51bdceb6e670dad (view it on etherscan). This is the token which is sold. It implements a standard ERC721 interface and uses mostly OpenZeppelin standardized functions. On top of this there is a small access control layer which allows the TemperatureOracle contract to burn the minted token if the annual average temperature increase is 2 degrees or higher.
This contract holds the temperature in two variables: the temperatureDenuminator and the temperatureNumerator. The annual average temperature increase is calculated using both of these numerators — for example, if their values were 101 and 100, this would resolve to 1.01, the current average temperature rise. This contract is deployed at 0x14e0061CFF890F422Ab5e7C95a6a1ce4AC02De77 (view it on etherscan).
How does the temperature update process work?
The contract holds an additional state variable named ipfsDocker which is an ipfs hash of a docker container. The contract has a public function which can be called and updates the temperatureDenuminator. Once the function is called an event with the docker hash gets emitted and caught by our oracle node, which fetches the docker container from ipfs. The docker container (which is public) fetches the temperature from NASA and the oracle node sends this to the contract if the value differs from the saved one. This function is supposed to be called only once a year, as the average temperature increase data is only updated annually.
How does the burning process work?
Once the temperature is updated the contract checks against a hardcoded value of 200 (which would resolve to 2.00°C current average temperature rise). If this condition becomes true a variable, the state variable of isburnableIpfs is set to true. This is the first of two checks made before the token can be burned.
This mechanism has a layer of verification in the form of the terra0 Gnosis Safe. In case something goes wrong with the temperature checking transaction (value error, some other error, etc) there is still another state variable which has to be set to true before the token becomes burnable — isBurnablesafe. This variable can only be set true by the safe, which works as a form of final human verification, as only in the case that both variables are true will the token become burnable.
The code is published at the terra0 github repository.