First came Christie’s, then Sotheby’s, and then on Friday it was Phillips’s turn.
After 67 bids, the auction house closed its first NFT auction with a US$4.1 million sale of an artwork by Michah Dowbak, who goes by the artist name Mad Dog Jones. The work has set a record for a living Canadian artist at auction, according to a Phillips spokesperson, besting the photographer Jeff Wall’s previous high of US$3.7 million.
While Christie’s auctioned a single work, a mosaic of images by Beeple that sold for US$69.3 million, and Sotheby’s organized a three-day, intensely convoluted sale of thousands of nonfungible tokens by the anonymous artist Pak that brought in a total of US$16.8 million, Phillips opted for something somewhere in the middle.
Technically, Jones’s Replicator is a single artwork attached to an NFT, a digital smart-contract that runs on blockchain technology. As the name suggests though, it was designed to create more versions of itself as time goes on. “The idea of Replicator is of a tree branch, creating multiple timelines that are self-replicating on an exponential scale,” said Dowbak, in an interview before the sale concluded.
And so, the first image of a copy machine will create a second generation of six more, slightly different images tied to their own NFTs, and those images will create yet another, and so on until seven generations have been minted.
There won’t be tens of thousands of NFTs, though. Phillips estimates that the entire cycle will produce about 220 unique NFTs, though there’s some ambiguity, because each generation is designed to randomly “jam” multiple times in order to stem exponential growth. Additionally, there’s a descending “print limit” for each generation; each NFT in the second generation can produce a maximum of five NFTs, the third can produce a maximum of four, and so on. When the output is modeled, a Phillips spokesman says, the total number of NFTs produced usually ranges between 75 and 300. “It’s about a passage of time,” says Dowbak, of the artwork.
Collector Demand
The artwork was minted on April 11, and bids opened on April 12. The starting bid was US$100, and within the first 24 hours, “we’d landed at US$2.4 million,” says Rebekah Bowling, a senior specialist at Phillips.
Overall, Bowling says, between 150 and 200 people registered to bid on the work, and, less than 24 hours before the sale ended, “we had 15 active bidders,” she says. Of those 15, she continues, “three were previously known to us,” meaning they’d purchased, or at least bid on, physical artworks at Phillips before.
Over the sale’s 10 days, cryptocurrencies fluctuated drastically. Given that many of the biggest NFT collectors are heavily invested in cryptocurrency, there was some concern that it could dampen enthusiasm, but in the final 10 minutes, the number of bids increased from 62 to 67, and the price, which was US$2.6 million (before premium) just 30 minutes before the close of the sale, climbed to US$3.4 million.
Payment will be accepted in fiat currency or Ether, which was as of 12:24 p.m. New York time Friday was trading at 2,338 ETH to the dollar.
‘An Amazing Success’
There’s been a significant amount of chatter, even after the Sotheby’s Pak sale, about the decline in volume and value of NFTs, and though the Mad Dog Jones sale certainly didn’t exceed the record set by Beeple, “financially, it’s already been an amazing success for me,” Dowbak says.
He’s structured the subsequent generations of Replicator’s NFTs to also give him 10 per cent of the resale value on the secondary market, which is an industry standard. Should the market for these works continue or increase, Dowbak could see returns well after Friday’s sale.
(Dowbak notes that there are ways around paying the royalty: “Someone could just transfer the file and do a bank transfer” outside of the Open Sea marketplace and still have it recorded in the NFT, for instance, “but I can’t really control that, and we’re just trying to keep up with the precedent of implementing those royalties.”)
Although the world of NFT collectors is fairly tightknit, before the sale closed, Dowbak said he didn’t know who was bidding on the work.
“I hope whoever buys it appreciates it for the art that it is,” he says. “A lot of people in this space are kind of collecting for the sake of collecting, or collecting for flex, and I really like the idea of the person who owns it really loving it.”
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