Revolutionary art collection with blockchain

It seemed inevitable that the world of art investment was now experiencing decentralization and democratization through blockchain.

In recent months, there has been an increase in the development of NFT art collector DAOs. The premise is that by sharing the cost of what would otherwise be a prohibitively expensive asset, people can form communities that allow them to co-own digital art.

Salon is a new investment fund that aims to revolutionize the art collecting industry by assembling world-class collections of contemporary art using the principles of Web3 and blockchain technology.

This is how Salon Dao works

Lounge token holders are granted stake and voting rights by the fund, which functions as a decentralized autonomous organization (DAO). Salon’s business concept is deceptively simple: investors simply need to buy and stake the Salon cryptocurrency to take part in the process of discovering, purchasing and caring for the collection’s artwork.

Salon was founded in January (2022) by social media marketing manager Jordan Huelskamp, ​​who wanted to create a decentralized, blockchain-oriented art fund with the goal of disrupting the conventional art market.

Huelskamp, ​​who previously worked for Apple, recently said she believes her interdisciplinary education will help her find macro patterns in the art industry that can be exploited and aggregated into a DAO.

With this goal in mind, Huelskamp commissioned the first tangible acquisition for Salon by purchasing a work by Hanna Hur entitled Nine (2021) via Kristina Kite Gallery.

Huelskamp has stated that she hopes Salon’s business will attract “the next generation of collectors,” many of whom do not have access to primary or secondary art markets.

“Investment-worthy acquisitions require an understanding of the art market and access to top galleries and artists,” Huelskamp stated in the Salon Whitepaper. “Conscientious investors hire experienced art advisors to help them negotiate the market, or they use the holiday season to build their social capital by visiting international exhibitions in the hope of gaining access to key works.”

Investors only (for now)

Currently, participation in Salon DAO will be limited to accredited investors only; those that do will form a legal entity known as a limited liability company (LLC) in the US state of Delaware.

By offering the token as a DAO, participants can pool their resources to propose and develop new acquisitions in return for Salon units.

It’s a new approach to doing business, but so far the results have been mixed. Since access to the art world is similar to data from the tech industry in that both can be mined for value but are challenging to scale, it stands to reason that this is the case.

Veteran art dealers may spend more time on a yacht or in the Hamptons, but it’s hard to put a price on that kind of access, much less tokenize it.

Not so easy

Critics of so-called “art-as-investment” startups like Masterworks and Otis argue that would-be art consultants quickly find out that it’s not easy to make money flipping blue-chip, investment-grade art. University of Kentucky law professor Brian Frye told Artnet News that “adding blockchain to the mix doesn’t necessarily make things easier.”

His final point was that these models do not take into account what he calls the “cartelisation” of the art market, where large companies dictate prices and shut out smaller competitors.

According to Frye, the fact that demand exceeds supply makes it impossible for non-specialists to make money on the secondary art market. In other words, the business model of buying and selling a Picasso would be a breeze if everyone had access to works priced well below market.

Therein lies the problem. Few people have access to art – mainly because individual pieces can be incredibly expensive.

The first art collective

The concept behind Salon is not exactly groundbreaking. Founded in 1904 by a group of Parisian art dealers, Le Peau d’Ours is often credited as the first private investment club in art history. In recent years, Evrim Oralkan and Jessica Oralkan’s venture Collecteurs has worked to create a platform where collectors can display and discuss their works.

The scalability problem

According to Frye, scalability is the main problem with these models. He argued that the expansion of such networks is limited by the fact that wealthy merchants within them have little motivation to share information about artworks that can be sold at a profit.

Finally, he expressed his skepticism about projects that promised huge financial returns on investments in art through the use of fintech, blockchain or other means. “Tokenizing access to a dealer’s network, thereby reducing the dealer’s own stake in what is effectively a sole proprietorship, is a necessary condition for acquiring artwork at below market value prices.”

“Imagine for a second that Larry Gagosian (a renowned American art dealer) suddenly symbolized access to his network,” Frye added. “The incentive (for Gagosian) just isn’t there.”

Huelskamp claims she will use her knowledge of online marketing and data analytics to make Salon’s user-driven community of collectors stand out.

The founder of Salon said, “While Salon’s early members truly believe in art for art’s sake, we also embrace art as an asset class, and hope to offer an innovative response to some of the art world’s various financial obstacles.”

When asked how much money Salon has raised or how many people are part of The DAO, the company is strangely silent.

Final thoughts

Art should be accessible to everyone, and tokenization and decentralized art investment are ideas that have their time. Salon has a good concept: the success of the project comes down to how well they execute. This can be a daunting task because Salon is currently only available to “accredited investors”. You have to fill out a form and then you will be asked to fill out more forms proving that you are accredited.

At least at first glance, the process does not seem very democratic. I was interested in joining and investing in art, but was rejected because I was not “accredited”. A disappointing end to researching and writing about a project that apparently has great potential.

I write about blockchain, crypto, NFT and other disruptive technologies and innovations.