What is Art Tokenization?


22 Aug 2023
What is Art Tokenization?

Understanding Art Tokenization

The concept of art tokenization involves transforming tangible art pieces or exclusive digital artworks into a digital token present on a blockchain. This process allows the division of ownership rights of an artwork and facilitates their trade on digital platforms. Acting as evidence of authenticity and ownership, these tokens digitalize the artwork's value. They denote a fraction of the ownership, enabling multiple people to have stakes in a single art piece. This approach not only introduces liquidity to the traditionally illiquid art market but also democratizes it by making art investment accessible to a wider audience.

Art tokenization primarily aims to connect the conventional art world to contemporary financial technology. Art tokenization enhances accessibility, simplifies transfers, and expands the market for artworks. Moreover, since these tokens reside on a blockchain, they maintain a transparent provenance or history of ownership, aiding in the prevention of forgery and ensuring authenticity.

Defining NFTs

Non-Fungible Tokens (NFTs) are distinct digital tokens authenticated on a blockchain, mainly employed to signify ownership of an exclusive digital item or content. The term "non-fungible" signifies that each token is unique and irreplaceable, as opposed to cryptocurrencies like Bitcoin or Ethereum, which are fungible and exchangeable.

NFTs gained popularity in representing digital arts, collectibles, music, videos, etc. Acquiring an NFT allows the buyer to own a one-of-a-kind piece of digital content. This ownership can be retained, sold, or transferred similarly to physical assets.

A vital feature of NFTs is their role as a digital certificate of authenticity. Utilizing blockchain technology, each NFT establishes the originality and ownership of a digital object and makes it tamper-resistant. This characteristic makes NFTs particularly attractive in the realm of art, where an artwork's value greatly depends on its authenticity and provenance.

Tokenized vs Non-tokenized Art

In the evolving landscape of art and technology, a distinct divide between tokenized and non-tokenized art has emerged. Tokenized art, represented as digital tokens on a blockchain, offers a modern approach to verifying authenticity, fractional ownership, and providing an easily transferable record of provenance. This allows for a broader audience to invest in and own portions of artworks, potentially democratizing the often exclusive world of art ownership.

On the other hand, non-tokenized art remains rooted in traditional forms of ownership and trading, relying on physical possession, conventional galleries, and expertise for its valuation and authenticity. While this traditional form provides a tangible, often deeply personal connection between the artwork and its owner, it can also be encumbered by challenges of liquidity, accessibility, and the occasional ambiguity in provenance. Both realms, though different in their operations, underscore the profound value and significance of art in human culture, each catering to varied audiences and preferences.

Steps to Tokenize Art

1. Platform Selection. Choose a preferred blockchain platform, such as Ethereum, Flow, or Binance Smart Chain.

2. Digital Depiction. Produce a top-quality digital version of the artwork (high-resolution JPG, PNG, or 3D model).

3. Smart Contract Creation. Employ a smart contract development tool like OpenZeppelin or Remix to write the contract underpinning the NFT, which establishes rules for metadata, rarity, and other aspects.

4. Contract Deployment. Launch the smart contract on the blockchain using tools like MetaMask or Truffle and possibly incurring gas fees.

5. NFT Minting. Generate the unique NFT token by invoking a smart contract function and connecting it to the digital representation of the artwork; it will be stored in a digital wallet.

6. Marketplace Listing. Offer the tokenized art for sale or auction on NFT marketplaces such as OpenSea, Rarible, or Foundation.

7. Royalty Set-up. Many platforms allow royalty establishment so that every NFT resale earns the original artist a percentage as ongoing compensation.

8. Legal Consequences. Investigate possible legal ramifications associated with copyright and intellectual property rights before tokenizing.

9. Art Promotion. Leverage social media networks, artist communities, and other forums to publicize tokenized artwork and entice buyers.

By adhering to this process, artists can capitalize on blockchain technology to diversify revenue sources, expand their global reach, and secure authentication and provenance for their pieces.

The Advantages of Tokenizing Art

1. Enhanced Accessibility. By democratizing art ownership, tokenization of art enables broader access to investments in art pieces, regardless of a person's geographic location.

2. Economic Empowerment. Artists have the opportunity to tokenize their work and sell it directly to the public, facilitating higher profits by potentially bypassing intermediaries.

3. Authenticity & Provenance. Tokenized art allows for a secure and transparent record of ownership on the blockchain, ensuring the genuineness of the artwork and its complete ownership history.

4. Liquidity. Traditional art assets are often illiquid and time-consuming to sell, whereas digital tokenized art can be easily traded on platforms, resulting in increased liquidity.

5. Fractional Ownership. Dividing ownership of tokenized art into smaller shares enables multiple investors to own a portion of a single artwork, allowing average investors access to high-value pieces.

6. Worldwide Market. Tokenizing art permits artists to reach a global audience, which expands access for diverse investors and collectors.

7. Safe Transfers. Transferring ownership becomes more secure, transparent, and direct through the use of blockchain technology.

8. New Art Forms & Innovation. Artists are able to incorporate interactive components, augmented reality, and other inventive elements within their tokenized works, fostering the development of unique art genres and experiences.

The Profitability of Art Tokenization in 2023

Based on the rapid expansion of NFTs and significant interest in tokenized art, it appears that art tokenization is profitable in 2023. The following reasons contribute to its success:

  • Expanding Market. Leading up to 2023, there has been a noticeable surge in digital artists, collectors, and investors entering the NFT space—fueling market growth.
  • High-Value Sales. Numerous tokenized artworks and NFTs have sold for millions, garnering substantial media attention and reinforcing the value and potential of this sector.
  • Widespread Acceptance. Mainstream entities, galleries, and celebrities have begun to support art tokenization, bolstering demand and endorsing its importance.
  • Extended Collector Base. The digital nature of tokenized art, coupled with growth in online platforms, broadens the global collector base—artists are no longer limited to local or regional markets.
  • Technological Progress. As blockchain technology and NFT platforms evolve, creating and trading tokenized art becomes more streamlined and efficient—lowering barriers to entry.


Art tokenization, an elegant fusion of time-honored tradition and cutting-edge innovation, is undeniably revolutionizing the realm of art ownership, exchange, and admiration. With the art world poised at the intersection of technology and ingenuity, blockchain's capacity to democratize, fortify, and invigorate the art sector cannot be overlooked.

It is crucial to proceed with caution as the potential is truly enticing. As with any budding industry, challenges will arise, spanning from regulatory barriers to market oversaturation. But, the perpetual essence of art – its capacity to break barriers, motivate generations, and encapsulate human experiences – guarantees its importance whether it's in a physical gallery or on the blockchain.

Navigating the complexities and possibilities ushered in by art tokenization serves as a reminder that art, in every form, stands as a tribute to our shared culture and advancement. The merger of art and technology not only presents financial prospects but also lays the groundwork for a more inclusive, varied, and global artistic community.

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Token Engineering Process

Kajetan Olas

13 Apr 2024
Token Engineering Process

Token Engineering is an emerging field that addresses the systematic design and engineering of blockchain-based tokens. It applies rigorous mathematical methods from the Complex Systems Engineering discipline to tokenomics design.

In this article, we will walk through the Token Engineering Process and break it down into three key stages. Discovery Phase, Design Phase, and Deployment Phase.

Discovery Phase of Token Engineering Process

The first stage of the token engineering process is the Discovery Phase. It focuses on constructing high-level business plans, defining objectives, and identifying problems to be solved. That phase is also the time when token engineers first define key stakeholders in the project.

Defining the Problem

This may seem counterintuitive. Why would we start with the problem when designing tokenomics? Shouldn’t we start with more down-to-earth matters like token supply? The answer is No. Tokens are a medium for creating and exchanging value within a project’s ecosystem. Since crypto projects draw their value from solving problems that can’t be solved through TradFi mechanisms, their tokenomics should reflect that. 

The industry standard, developed by McKinsey & Co. and adapted to token engineering purposes by Outlier Ventures, is structuring the problem through a logic tree, following MECE.
MECE stands for Mutually Exclusive, Collectively Exhaustive. Mutually Exclusive means that problems in the tree should not overlap. Collectively Exhaustive means that the tree should cover all issues.

In practice, the “Problem” should be replaced by a whole problem statement worksheet. The same will hold for some of the boxes.
A commonly used tool for designing these kinds of diagrams is the Miro whiteboard.

Identifying Stakeholders and Value Flows in Token Engineering

This part is about identifying all relevant actors in the ecosystem and how value flows between them. To illustrate what we mean let’s consider an example of NFT marketplace. In its case, relevant actors might be sellers, buyers, NFT creators, and a marketplace owner. Possible value flow when conducting a transaction might be: buyer gets rid of his tokens, seller gets some of them, marketplace owner gets some of them as fees, and NFT creators get some of them as royalties.

Incentive Mechanisms Canvas

The last part of what we consider to be in the Discovery Phase is filling the Incentive Mechanisms Canvas. After successfully identifying value flows in the previous stage, token engineers search for frictions to desired behaviors and point out the undesired behaviors. For example, friction to activity on an NFT marketplace might be respecting royalty fees by marketplace owners since it reduces value flowing to the seller.

source: https://www.canva.com/design/DAFDTNKsIJs/8Ky9EoJJI7p98qKLIu2XNw/view#7

Design Phase of Token Engineering Process

The second stage of the Token Engineering Process is the Design Phase in which you make use of high-level descriptions from the previous step to come up with a specific design of the project. This will include everything that can be usually found in crypto whitepapers (e.g. governance mechanisms, incentive mechanisms, token supply, etc). After finishing the design, token engineers should represent the whole value flow and transactional logic on detailed visual diagrams. These diagrams will be a basis for creating mathematical models in the Deployment Phase. 

Token Engineering Artonomous Design Diagram
Artonomous design diagram, source: Artonomous GitHub

Objective Function

Every crypto project has some objective. The objective can consist of many goals, such as decentralization or token price. The objective function is a mathematical function assigning weights to different factors that influence the main objective in the order of their importance. This function will be a reference for machine learning algorithms in the next steps. They will try to find quantitative parameters (e.g. network fees) that maximize the output of this function.
Modified Metcalfe’s Law can serve as an inspiration during that step. It’s a framework for valuing crypto projects, but we believe that after adjustments it can also be used in this context.

Deployment Phase of Token Engineering Process

The Deployment Phase is final, but also the most demanding step in the process. It involves the implementation of machine learning algorithms that test our assumptions and optimize quantitative parameters. Token Engineering draws from Nassim Taleb’s concept of Antifragility and extensively uses feedback loops to make a system that gains from arising shocks.

Agent-based Modelling 

In agent-based modeling, we describe a set of behaviors and goals displayed by each agent participating in the system (this is why previous steps focused so much on describing stakeholders). Each agent is controlled by an autonomous AI and continuously optimizes his strategy. He learns from his experience and can mimic the behavior of other agents if he finds it effective (Reinforced Learning). This approach allows for mimicking real users, who adapt their strategies with time. An example adaptive agent would be a cryptocurrency trader, who changes his trading strategy in response to experiencing a loss of money.

Monte Carlo Simulations

Token Engineers use the Monte Carlo method to simulate the consequences of various possible interactions while taking into account the probability of their occurrence. By running a large number of simulations it’s possible to stress-test the project in multiple scenarios and identify emergent risks.

Testnet Deployment

If possible, it's highly beneficial for projects to extend the testing phase even further by letting real users use the network. Idea is the same as in agent-based testing - continuous optimization based on provided metrics. Furthermore, in case the project considers airdropping its tokens, giving them to early users is a great strategy. Even though part of the activity will be disingenuine and airdrop-oriented, such strategy still works better than most.

Time Duration

Token engineering process may take from as little as 2 weeks to as much as 5 months. It depends on the project category (Layer 1 protocol will require more time, than a simple DApp), and security requirements. For example, a bank issuing its digital token will have a very low risk tolerance.

Required Skills for Token Engineering

Token engineering is a multidisciplinary field and requires a great amount of specialized knowledge. Key knowledge areas are:

  • Systems Engineering
  • Machine Learning
  • Market Research
  • Capital Markets
  • Current trends in Web3
  • Blockchain Engineering
  • Statistics


The token engineering process consists of 3 steps: Discovery Phase, Design Phase, and Deployment Phase. It’s utilized mostly by established blockchain projects, and financial institutions like the International Monetary Fund. Even though it’s a very resource-consuming process, we believe it’s worth it. Projects that went through scrupulous design and testing before launch are much more likely to receive VC funding and be in the 10% of crypto projects that survive the bear market. Going through that process also has a symbolic meaning - it shows that the project is long-term oriented.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.


What does token engineering process look like?

  • Token engineering process is conducted in a 3-step methodical fashion. This includes Discovery Phase, Design Phase, and Deployment Phase. Each of these stages should be tailored to the specific needs of a project.

Is token engineering meant only for big projects?

  • We recommend that even small projects go through a simplified design and optimization process. This increases community's trust and makes sure that the tokenomics doesn't have any obvious flaws.

How long does the token engineering process take?

  • It depends on the project and may range from 2 weeks to 5 months.

What is Berachain? 🐻 ⛓️ + Proof-of-Liquidity Explained


18 Mar 2024
What is Berachain? 🐻 ⛓️ + Proof-of-Liquidity Explained

Enter Berachain: a high-performance, EVM-compatible blockchain that is set to redefine the landscape of decentralized applications (dApps) and blockchain services. Built on the innovative Proof-of-Liquidity consensus and leveraging the robust Polaris framework alongside the CometBFT consensus engine, Berachain is poised to offer an unprecedented blend of efficiency, security, and user-centric benefits. Let's dive into what makes it a groundbreaking development in the blockchain ecosystem.

What is Berachain?


Berachain is an EVM-compatible Layer 1 (L1) blockchain that stands out through its adoption of the Proof-of-Liquidity (PoL) consensus mechanism. Designed to address the critical challenges faced by decentralized networks. It introduces a cutting-edge approach to blockchain governance and operations.

Key Features

  • High-performance Capabilities. Berachain is engineered for speed and scalability, catering to the growing demand for efficient blockchain solutions.
  • EVM Compatibility. It supports all Ethereum tooling, operations, and smart contract languages, making it a seamless transition for developers and projects from the Ethereum ecosystem.
  • Proof-of-Liquidity.This novel consensus mechanism focuses on building liquidity, decentralizing stake, and aligning the interests of validators and protocol developers.


EVM-Compatible vs EVM-Equivalent


EVM compatibility means a blockchain can interact with Ethereum's ecosystem to some extent. It can interact supporting its smart contracts and tools but not replicating the entire EVM environment.


An EVM-equivalent blockchain, on the other hand, aims to fully replicate Ethereum's environment. It ensures complete compatibility and a smooth transition for developers and users alike.

Berachain's Position

Berachain can be considered an "EVM-equivalent-plus" blockchain. It supports all Ethereum operations, tooling, and additional functionalities that optimize for its unique Proof-of-Liquidity and abstracted use cases.

Berachain Modular First Approach

At the heart of Berachain's development philosophy is the Polaris EVM framework. It's a testament to the blockchain's commitment to modularity and flexibility. This approach allows for the easy separation of the EVM runtime layer, ensuring that Berachain can adapt and evolve without compromising on performance or security.

Proof Of Liquidity Overview

High-Level Model Objectives

  • Systemically Build Liquidity. By enhancing trading efficiency, price stability, and network growth, Berachain aims to foster a thriving ecosystem of decentralized applications.
  • Solve Stake Centralization. The PoL consensus works to distribute stake more evenly across the network, preventing monopolization and ensuring a decentralized, secure blockchain.
  • Align Protocols and Validators. Berachain encourages a symbiotic relationship between validators and the broader protocol ecosystem.

Proof-of-Liquidity vs Proof-of-Stake

Unlike traditional Proof of Stake (PoS), which often leads to stake centralization and reduced liquidity, Proof of Liquidity (PoL) introduces mechanisms to incentivize liquidity provision and ensure a fairer, more decentralized network. Berachain separates the governance token (BGT) from the chain's gas token (BERA) and incentives liquidity through BEX pools. Berachain's PoL aims to overcome the limitations of PoS, fostering a more secure and user-centric blockchain.

Berachain EVM and Modular Approach

Polaris EVM

Polaris EVM is the cornerstone of Berachain's EVM compatibility, offering developers an enhanced environment for smart contract execution that includes stateful precompiles and custom modules. This framework ensures that Berachain not only meets but exceeds the capabilities of the traditional Ethereum Virtual Machine.


The CometBFT consensus engine underpins Berachain's network, providing a secure and efficient mechanism for transaction verification and block production. By leveraging the principles of Byzantine fault tolerance (BFT), CometBFT ensures the integrity and resilience of the Berachain blockchain.


Berachain represents a significant leap forward in blockchain technology, combining the best of Ethereum's ecosystem with innovative consensus mechanisms and a modular development approach. As the blockchain landscape continues to evolve, Berachain stands out as a promising platform for developers, users, and validators alike, offering a scalable, efficient, and inclusive environment for decentralized applications and services.


For those interested in exploring further, a wealth of resources is available, including the Berachain documentation, GitHub repository, and community forums. It offers a compelling vision for the future of blockchain technology, marked by efficiency, security, and community-driven innovation.


How is Berachain different?

  • It integrates Proof-of-Liquidity to address stake centralization and enhance liquidity, setting it apart from other blockchains.

Is Berachain EVM-compatible?

  • Yes, it supports Ethereum's tooling and smart contract languages, facilitating easy migration of dApps.

Can it handle high transaction volumes?

  • Yes, thanks to the Polaris framework and CometBFT consensus engine, it's built for scalability and high throughput.