An Introduction to MetaFactory

4 min readDec 31, 2019

EDIT 2/22/2020: The MetaFactory platform and process has changed considerably from the description outlined below. Thanks to all the testers who provided feedback and have helped us to refine our vision. We will be providing a revamped description shortly.

UPDATE NOW LIVE!

https://medium.com/@themetafactory/metafactory-rearchitecting-culture-for-the-digital-metaverse-df2693b7ec3b

What?

MetaFactory is a crowdfunding platform for the creation of community-owned brands with an initial focus on fashion/apparel. It curates and manages the brand ownership (IP) and product auction marketplace, as well as handling product production and fulfillment on behalf of its brand partners.

Why?

MetaFactory aims to solve incentive misalignment between fashion designers, labels and their customers. Apparel pricing is often set by perceived value, driven primarily by emotion, hype and information asymmetry around material/production costs and product quality. This has contributed to weak retail sales, struggling brands and dissatisfied customers. By representing products as tokens and selling them along a bonding curve, we enable organic price discovery based on free market dynamics.

Additionally, consumers are starved for meaningful, authentic relationships with brands — particularly those that reflect their lifestyle and culture. Brands that have focused on building robust, inclusive communities or ‘belonging’ have seen significantly greater brand loyalty and growth in recent years. In fact, ‘more than half (58%) of consumers aged 25 to 34 say they’d be likely to spend more money on a brand’s products and services if they are part of meaningful brand communities.’ Through direct incentive alignment, enabling individuals to participate financially in brand success, as well as help to govern future brand product direction, MetaFactory believes it can cultivate more successful brands through higher-engaged communities.

How?

MetaFactory hosts bonding curve auctions where brand creators auction off fractional ownership of brand IP / governance, as well as dedicated product auctions for the apparel produced by each brand. MetaFactory acts as a curator, only selecting brands that we believe have the creative skill and operational leadership to succeed. In addition to facilitating brand and product auctions, MetaFactory also manages the relationship with product fulfillment / logistics / shipping partners, allowing artists to focus on creating great designs and developing their label.

We work closely with the label designers and/or creators to define the auction parameters including starting price, ending price, number of participants, as well as initial genesis product line. Designers designate how much of the original brand IP to retain and how much they are willing to sell to auction patrons. With all the parameters defined, the brand and its assets are put up for auction including a claim to the genesis product(s) of that brand. The auction is conducted via a reverse bonding curve with earlier buyers receiving a higher share of both the label IP and claim to future governance, but at a greater premium.

This is achieved through the use of DAOs (decentralized autonomous organizations). MetaFactory will deploy a dedicated DAO that will represent each brand. Each DAO will own its respective IP and its auction participants are actually purchasing a portion of the voting shares (and proportionate claim to profits) in that DAO. In this way, the patrons also get to participate in governance and vote on the future direction of the label including new product releases, additional designs and potential licensing opportunities (specific details are at the discretion of each brand). Buyers who participate earlier in the auction receive a greater percentage of the DAO shares and respective vote weight, along with a claim to their share of the brand IP. Each auction participant will also receive the brand’s genesis product(s) to be listed in the MetaFactory marketplace after the brand auction ends. MetaFactory itself is also a brand DAO and will be auctioning off membership shares in early 2020. Additionally, MetaFactory will receive a small share of each subsequent brand’s DAO shares for managing the auction platform, vendor relationships and product fulfillment. As a result, participation in the MetaFactory Brand auction is a bet on the future success of the MF platform and all of its brand partners.

Most brand products/apparel items are also sold at auction and represented by their own unique, digital $TOKEN. Each product $TOKEN is listed on the MetaFactory marketplace and sold on a bonding curve. $TOKENS may be freely purchased and sold with each exchange increasing or decreasing the price accordingly along that product’s bonding curve. In the case of product auctions, the $TOKEN price will start low (close to product cost) and increase with every purchase. Ownership of a $TOKEN entitles the owner to one (1) of that specific product including shipping. The MetaFactory marketplace is likely to offer a combination of both product auctions (as explained above), as well as direct product sales (with price potentially determined via the results of the auction).

When a $TOKEN is redeemed, the product is produced and shipped to the buyer along with a representative NFT (with special benefits). Product $TOKENs can be burned by the brand DAO (reducing supply and increasing the value of each remaining $TOKEN) or sold back to the market with any profit deposited to the respective label’s DAO bank. Label DAOs can choose how many product auctions to host and the specific parameters for each. In order to capitalize on the profits of a label, DAO members must sell their shares (also known as ragequit), effectively exiting the DAO. This reduces the brand’s DAO bank balance, but also subsequently increases all remaining DAO members proportionate claim to both IP/profits and governance.

What’s Next?

MetaFactory will begin by hosting various one-off product auctions to seed its marketplace and identify its first potential brand partners. We anticipate the first product auctions to begin in early 2020 with brand IP auctions occurring shortly thereafter.

Join our community here: https://t.me/joinchat/FyFDjFd1vHfdrvusKrJ81w

Interested in launching a brand and selling products, reach out here: https://metafactory.typeform.com/to/MC5Rxb