Sailing in Rough Seas

Dear Future Whales,

In today's note, I recognize the volatility in the markets and the concerns many in the Web3 space have. In light of this, and in an attempt to build more in the public view, I share our experiences of building in these markets over the last two years, the challenges we've faced, and the future state of what we're striving to build. Let's dive in.

My note touches on:

• Innovative Fractional Ownership
• Market Adaptation
• The Future Vision

Navigating the Shifting Sands of Web3 Collectibles

• In a world of extreme volatility, where tremors of uncertainty ripple through global markets, it’s crucial for builders in the Web3 space to adopt a long-term vision. This is especially true given the recent tumultuous landscape affecting not only the crypto world but broader financial markets as well.

• With the worry expressed on social media outlets like x.com, I'll share insights into our journey with SegMint.io, the challenges we've faced, and how we've adapted to the ever-changing environment over the last 18 months. I hope this encourages those of you building now and the rest who are participating in the growth of Web3 in general.

A Challenging Beginning

• At the request of my CEO in late 2022, I embarked on a journey to create something truly innovative for our firm during one of the most challenging times for the industry. Emerging from the NFT boom of 2021, the environment got truly ugly and started the downturn for our beloved JPEGs. With the market awash in hype and speculation, I sought to create a new Web3 business model centered on the concept of shared ownership.
• My goal was to explore how participants could have trustless, shared ownership of high-value NFTs—a concept that promised to redefine the way digital assets are managed and traded.
• This vision led to the creation of SegMint.io, a platform designed to solve the complexities surrounding fractional ownership of NFTs. We introduced a novel approach through a series of smart contracts that we dubbed the “Lock and Key” model. This protocol aimed to address the challenges faced by similar platforms and offer a more intuitive and secure way for users to fractionalize their NFTs.

The Lock and Key Model: Innovation Meets Practicality

• Our "Lock and Key" model was built around two core components: the Vault and the Keys. The Vault allowed NFT owners to securely store their high-value NFTs while retaining control over their Web3 wallet by default. This self-custody solution enabled NFT owners to fractionalize their assets without sacrificing security or utility.
• The Keys, on the other hand, were ERC-1155 tokens—semi-fungible clones of the vaulted assets. To access the full value of the Vault, a user needed to own all the Keys. This innovative approach allowed for the sharing of NFT ownership and experience without requiring liquidity. The Keys held the same visual representation of the vaulted assets, making it easier for users to engage with, flex, and benefit from the fractional ownership model.

• Despite the innovation, we faced an uphill battle. The concept of fractionalization was still niche, and it took time for the Web3 community to fully grasp and embrace it. We still have a lot of work to do but are committed to our vision and continued to develop and refine our platform.

Navigating Market Shifts and Technical Challenges

• Our journey took an unexpected turn right from the start, when SegMint.io launched in February of this year. The day after our launch, Ethereum gas fees surged due to migration activities, prompting us to pivot to Polygon. Within a month, we successfully deployed our platform on Polygon, but the market sentiment surrounding digital collectibles was shifting. The enthusiasm that had characterized the NFT boom was giving way to a more cautious outlook.

The State of the NFT Market

• The NFT market has undergone significant consolidation, with a few projects continuing to thrive despite the overall downturn. Blue-chip collections like Apes and Punks, once considered safe havens, have lost some of their luster. The intrinsic value of these primarily art and gaming-based projects has come into question, leading to a reassessment of their long-term potential. In fact, even as I write this blog, there are posts on x.com asking if anyone is still buying art. Given the chance for a global meltdown, my guess is not right at this moment.

• In contrast, Real World Assets (RWAs), particularly tokenized collectibles, have emerged as a beacon of stability. Items like tokenized rare wines, hard-to-find watch models, and trading memorabilia offer tangible value that resonates with both traditional and Web3 collectors. These collectibles are less prone to sudden fluctuations.

Adapting to New Realities: SegMint's Refocused Vision

• In light of these market shifts, SegMint.io has pivoted its focus towards offering the world’s best tokenized collectibles. It’s a lofty goal, but my hope is that SegMint can become the Web3 equivalent of eBay, with a curated selection of highly sought-after collections.

• I see a future where our platform provides a place where collectors can trade and engage with the finest tokenized assets, leveraging our fractionalization model to enhance accessibility and liquidity.

Where We’re Going

• I’m committed to continuing to build and find the right partners that allow collectors of all types to gain access to the most unique items. Just this week, David Garrett from @dvinlabs brought over a 12-pack of Egon Muller wine, arguably among the best Rieslings in the world. Through SegMint, collectors have the chance to potentially or wholly own this 12-pack, which at the moment is the only one offered on any global marketplace. So, when I say the best and most unique items, I mean it.

• Going forward, we will continue to work with platforms tokenizing various collectibles with the idea of bringing them into the light for a global audience, while at the same time adapting with the times and skating to where the puck is headed.

In Conclusion

• Our journey with SegMint.io has been marked by innovation, adaptation, and resilience. As we continue to navigate the evolving landscape of Web3, we remain committed to our vision of redefining fractional ownership and offering exceptional tokenized collectibles. Stay tuned for more updates and developments as we push forward into the future.

Authored by Matt Bartlett, CAIA. Follow Matt on x.com @MattBartlettVE

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