Last Updated on May 5, 2023 by Bitfinsider

The CEO of Art Blocks, Calderon, said in an interview that “some would accuse us of not being ambitious enough with the amount of funds that we have left.” I believe a large portion of the “invest in your startup” mentality is just waiting for the next bull run, which may not come. This is why I’m a little nervous and hesitant.

With the exception of working under constraints established by human artists, Art Blocks’ business is the auctioning off of generative art in the form of NFT collections produced by algorithms. The platform was a favorite during the 2021 cryptocurrency boom. According to data from CryptoSlam, it sold no less than $587 million worth of NFTs in a single month in August 2021.

However, just like in the larger crypto realm, times have changed for Art Blocks. The company’s revenues in April were only $6.5 million, which was the lowest amount since May 2021. According to Calderon, almost half the projects that are currently featured on the platform don’t sell out.

Calderon, a generative artist himself, is obstinate though. Even when sales decline, he hasn’t wavered on issues like creator royalties, despite other marketplaces in the industry opting to waive them in favor of traders. Although Art Blocks is currently losing money due to this and other business decisions, Calderon is nonetheless upbeat.

The vision is quite firm, but the vibrations are not good, he claimed. “I just want people to know that I’m just as excited today—maybe even more excited—than I was in 2021.”

The position Art Blocks has taken on royalties—the tax paid to creators on subsequent sales of their NFTs—is a good example of how the company has positioned itself.

The royalty price for Blur, a freshly formed NFT platform geared toward professional traders, was set at just 0.5% in February. Rival OpenSea responded by temporarily eliminating its 2.5% fee.

Art Blocks, which has a separate secondary market, nonetheless imposes full licensing payments of 5%. Therefore, collecting NFTs on Art Blocks costs more than collecting NFTs on Blur or OpenSea. Naturally, that has decreased revenue.

According to Calderon, “Art Blocks has lost a significant amount of income as a result of royalties,” noting that the royalties had before made up the majority of the company’s event expenditures.

But Calderon believes that when royalties are upheld, artists generate higher quality work and are generally more involved with their audiences. This is partly because they are not required to produce as frequently. He continued, “To me, it just seems quite obvious that if royalties are respected, the environment will be a better place.

According to Calderon, Blur is “the antithesis of being about the art,” and is far more concerned with market dynamics and traders. Calderon stated, “I’m also very frustrated with what’s happening, but if it wasn’t them, someone else would be doing it.”

Calderon asserts that despite declining income, Art Blocks is still a “well-capitalized company.” The firm may not have raised money at a valuation of $1 billion, but a $6 million round that completed in August 2021 did help it raise some money. Together with already-invested Libertus Capital, Flamingo DAO, and The LAO, True Ventures, Galaxy Interactive, and Collab Currency increased their investment.

However, the majority of the capital at Art Blocks’ disposal right now originates from the profits it made during the bull run. According to the company’s website, it charges a 10% fee on initial sales and a 2.5% fee on any secondary transactions. Therefore, a simple calculation indicates that Art Blocks earned at least $58 million in income in August 2021 alone.

The year 2021 was “crazy,” according to Calderon. Naturally, larger sponsors began to inquire after the $6 million round. Calderon said that he had proposals to both invest in and buy outright Art Blocks at valuations exceeding $1 billion. He opted not to identify the backers.