# Metale Protocol: A Peer-to-Peer Publishing Protocol for Digital Publications
Metale Protocol Team
Abstract: This paper proposes a decentralized approach to digital publication distribution, leveraging smart contracts on the blockchain. Traditional reliance on centralized publishing and word-of-mouth is reimagined, allowing direct content transfer from creator to consumer without intermediaries. By employing blockchain technology, creators upload their works and manage access via smart contracts, enabling consumers to pay directly for access while ensuring rightful compensation to copyright holders. This system diminishes the role of traditional publishing houses, which lack inherent marketing capabilities, and introduces a novel mechanism: incentivizing word-of-mouth promotion through non-fungible tokens (NFTs) with embedded copyright governance rights. This approach heralds a transformative shift in the publishing industry towards a more creator-centered and community-driven model.
# I Introduction
The current framework for distributing digital publications heavily relies on publishing institutions, which act as trusted third parties managing payment and distribution. While effective for a majority of publications, this system inherently grants considerable editorial control to these institutions \[1]. Such control, influenced by the cultural stances and values of these entities, poses a significant barrier to achieving truly unrestricted distribution of content. This limitation not only elevates distribution costs but also narrows the channels available for niche works, substantially impeding the dissemination of countercultural material. Additionally, the constraints on non-mainstream content distribution inherently lead to increased costs, further restricting the diversity and reach of such materials.
As a result of the content explosion brought about by developments in artificial intelligence, traditional content review mechanisms in the publishing industry are under intense pressure. Publishing institutions, unable to decide whether the content aligns with their publishing standards, are passing these costs onto creators, who are required to provide more unnecessary information \[2]. These actions are raising the threshold for the publishing industry, and a certain percentage of false rejections are considered inevitable. While this problem can be avoided by selling physical publications in person, it is regrettable that cultural content products are either refused to be distributed via the internet due to payment issues or forgo the opportunity to generate income through internet distribution.
Over the past decade, the evolution of blockchain technology, underpinned by cryptographic principles rather than trust, has introduced an electronic payment system facilitating direct transactions between consenting parties, independent of a trusted intermediary. The immutable nature of blockchain transactions offers sellers robust protection against fraud, while the development of smart contracts increasingly provides safeguards for buyers.
This paper presents a decentralized publishing model leveraging smart contracts to manage electronic payments and restrict unauthorized multiple access to content. By employing this approach, the framework incentivizes word-of-mouth promoters, entrusting them with the responsibility of content distribution, thus heralding a new era in the dissemination of digital publications.
# II Soul-Bound Tokens (SBTs)
Soulbound Tokens (SBTs) are a novel class of digital identity tokens that encapsulate an individual's or entity's attributes, capabilities, and achievements \[3]. While they share a technological foundation with Non-Fungible Tokens (NFTs) in utilizing blockchain, their defining characteristic is non-transferability. SBTs transcend the conventional scope of NFTs, which are often associated with financial value and status, to represent unique and non-transferable identities. These tokens are intrinsically linked to a blockchain network, where they securely store a spectrum of personal and professional data, ranging from age and educational background to health records and career milestones.
# SBTs in a New Generation Publish Era
In the realm of content publication, SBTs offer a strategic solution to the challenge of unauthorized multiple access to digital works \[4]. The process involves encrypting content and storing it on a specific blockchain platform, such as Greenfield, Arweave, or IPFS. Access to this content is then exclusively mediated through designated NFTs, which in this context, are SBTs created under particular payment agreements and are inherently non-transferable.
For consumers desiring access to content, this system enables retrieval from any blockchain-based content distribution platforms via their personal wallets, available at their convenience from any location. Importantly, the non-transferable nature of these SBTs ensures that the content remains confined to the authorized wallet, effectively precluding the possibility of multi-wallet access and thereby preserving the integrity of content distribution.
Content works can be approached as unified entities, necessitating a single corresponding Soulbound Token (SBT) for access, or alternatively, segmented into pieces, each requiring an individual SBT. Users have the flexibility to acquire SBTs for all pieces simultaneously or on a per-piece basis.
# SBTs vs.Traditional Publishing Methods
The integration of Soul Bound Tokens (SBTs) in publishing presents a stark contrast to traditional publishing methods. Traditional systems largely depend on centralized entities for creator verification, copyright management, and royalty distributions. These processes can be cumbersome, time-consuming, and prone to errors and fraudulent activities. In contrast, SBTs offer a decentralized approach, providing a higher level of security and efficiency.
Creator Verification: Traditionally, creator verification has been a manual and often subjective process, involving publishers and legal entities. SBTs revolutionize this by automating and securing the verification process. An SBT assigned to a creator is a tamper-proof digital signature, ensuring that content creation is unequivocally linked to the rightful creator \[5].
Copyright Management: In conventional publishing, managing copyrights is a legal and administrative challenge, often requiring intermediaries and resulting in delayed royalty payments. With SBTs, copyrights are digitized and encoded into smart contracts, ensuring immediate and transparent management. This not only simplifies the process but also reduces the potential for disputes.
Royalty Distributions: Traditional methods involve complex agreements and manual tracking of sales for royalty calculations, leading to delays and inaccuracies. SBTs, integrated with smart contracts, automate royalty distributions based on predefined criteria. This ensures immediate, accurate, and fair compensation for creators \[6].
# Traditional Piracy Implication
In scenarios where a consumer’s wallet key is compromised, thus potentially allowing unauthorized access to the content, the issuing entity retains the capability to revoke the relevant SBT. This mechanism enhances security and mitigates risks associated with lost or compromised wallet keys.
Considering the ease of replicating digital content, traditional concerns of piracy are not a primary focus of this protocol. Piracy predominantly impacts users at lower consumption levels, who are not the central demographic of the publishing industry \[7]. Instead, this protocol is devoted to facilitating decentralized distribution of content works, leaving piracy to be addressed by real-world legal frameworks. A key premise underpinning this approach is that enhancing the availability of legitimate distribution channels inherently strengthens the fight against piracy. One contributing factor to the consumption of pirated content is the lack of accessible, legitimate content access opportunities; addressing this gap can significantly mitigate piracy.
# III Decentralized Smart Contracts
The paradigm wherein consumers remunerate to acquire SBTs as content access credentials necessitates the implementation of decentralized smart contracts \[8].
Originating as an innovation of Ethereum, decentralized smart contracts are capable of autonomously executing intricate behaviors related to the generation and transaction of Non-Fungible Tokens (NFTs) through programming. This domain has experienced substantial growth, with numerous public blockchains now equipped with the capability for programmable smart contracts.
The deployment of these contracts is not restricted to any single blockchain. Instead, they offer the flexibility to be operational on various blockchains, thus enabling creators to elect their preferred chain for publishing their works. This approach allows creators to manage consumer payments and dispense SBTs as authorizations for content access. Consequently, consumers are empowered to access specific content utilizing these tokens.
A critical feature of this decentralized smart contract system is its inherent functionality to process payments and issue soul-bound tokens, serving as verifiable content access credentials. This characteristic is pivotal in facilitating a seamless and secure content consumption experience within the blockchain environment.
# IV Tokenization of Real-World Assets in the Cryptocurrency Space
The concept of tokenization in the cryptocurrency space refers to the process of converting rights to an asset into a digital token on a blockchain. This emerging trend is a pivotal part of the financial evolution, merging traditional asset classes with modern blockchain technology.
Tokenization involves creating a digital representation of a tangible or intangible asset on a blockchain. These digital tokens reflect the ownership, value, and rights associated with the asset they represent \[9]. The process uses the principles of distributed ledger technology (DLT) to ensure transparency, security, and immutability.
# Legal and Ethical Considerations of Tokenization \[10]
As the tokenization of real-world assets gains momentum in the cryptocurrency space, it brings with it a host of legal and ethical considerations. These factors are crucial for maintaining the integrity of the system and protecting the interests of all stakeholders.
# Legal Considerations:
* Regulatory Compliance: The foremost legal challenge is ensuring compliance with the existing financial regulations, including securities laws, anti-money laundering (AML) standards, and Know Your Customer (KYC) protocols. Since tokenization blurs the lines between different asset classes, it often falls into a gray area of financial regulation.
* Jurisdictional Variances: Tokenization operates on a global scale, but legal frameworks vary significantly across jurisdictions. Navigating this fragmented legal landscape is complex, especially when it comes to cross-border transactions.
* Smart Contract Legality: The legal status of smart contracts, which are essential in tokenization, is still under debate. Issues arise around enforceability, jurisdiction, and legal recognition of these digital agreements.
# Ethical Considerations:
* Transparency and Disclosure: Ethically, there's a responsibility to ensure full transparency and disclosure in tokenization processes. Stakeholders must be fully informed about the nature, risks, and benefits of the tokenized assets.
* Asset Valuation: Ethical valuation of assets is critical to prevent inflation of value and market manipulation. This involves accurate and honest assessment of the asset's worth.
* Data Privacy and Security: Tokenization deals with sensitive financial data. Ethically, it's imperative to ensure the highest standards of data privacy and security, protecting stakeholders from breaches and unauthorized access.
# Content copyrights application
Upon successfully addressing the challenges of electronic payment and authorized content access through decentralized means, it becomes feasible to recognize content copyrights as assets within a decentralized blockchain framework. This development paves the way for the decentralization and tokenization of content copyrights.
Content copyrights inherently exist as natural rights, independent of any centralized authority or requirement for formal registration. These rights, inherently intangible and not tethered to any physical entity, are among the earliest forms of digital consumer goods. This virtual nature of content copyrights renders them ideally suited for transformation into decentralized assets. By encrypting these rights onto a blockchain, they effectively transit from real-world assets into secure, on-chain entities, thus embracing the potential and benefits of a decentralized digital environment.
The steps for decentralizing content copyrights are as follows:
1. The creator uploads the content to a storage blockchain and simultaneously issues a notice. The notice irrevocably transfers the governance rights of the work's copyright to a decentralized autonomous organization (DAO).
2. DAO issues copyright governance NFTs based on its charter.
3. Anyone can qualify to participate in copyright governance by obtaining copyright governance NFTs.
4. Copyright governance NFTs can be traded.
# V DAO Charter
When setting up the DAO initially, the creator should establish a charter for the DAO and utilize DAO tools for decentralized governance.
The DAO charter specifies the total supply of copyright governance NFTs and restricts it through smart contracts. The creator retains ownership of the rights to NFTs until they are sold. As a result, the total supply of NFTs may decrease if the creator destroys unsold NFTs, but it cannot increase. The creator can increase the ownership ratio of each NFT through this mechanism but cannot decrease it. The community and users can also achieve this by repurchasing and destroying NFTs.
Each NFT has equal governance rights, primarily voting rights, to avoid conflicting with regulatory requirements for the securitization of real-world assets. NFTs do not have dividend rights. All income generated from copyrights can be rewarded in the form of staking rewards for staking NFT behavior. NFT holders benefit from staking NFTs rather than copyright income, which helps mitigate potential issues.
The DAO has the authority to grant external authorizations. All cooperative matters related to copyright are initiated by a certain number of NFT holders and approved by a certain percentage of NFT holders, which is equivalent to obtaining external authorizations. Authorization revenue should be used to reward staking NFT behavior. The DAO can also authorize real-world institutions and individuals through this process for copyright cooperation in the real world.
The DAO can decide on the issuance mechanism for copyright governance NFTs, such as using the Bonding Curve model.
# VI Bonding Curve
The Bonding Curve represents a distinctive mathematical model where the supply of Non-Fungible Tokens (NFTs) is directly correlated with their price through a one-to-one function relationship. This model is operationalized via a Bonding Curve contract, which facilitates the issuance of NFTs through predefined buy and sell functions.
To acquire NFTs under this system, purchasers are required to transfer a specified quantity of anchor tokens to the contract's buy function \[11]. This function then calculates the prevailing average price of the NFTs in terms of the anchor tokens and dispenses an appropriate quantity of NFTs to the buyer. Additionally, the model allows for the redemption of anchor tokens at any given time by returning the NFTs to the contract. This flexibility ensures a dynamic and responsive relationship between the supply of NFTs and their market value, governed by the principles of the Bonding Curve.
In content copyright governance NFT distribution for niche audiences, addressing liquidity, stability, and NFT price growth is vital. Traditional NFT issuance methods, in small-audience contexts, often face liquidity issues and diminishing floor prices. The Bonding Curve model effectively resolves these challenges, providing a more stable issuance mechanism for long-tail NFT collections.
Considering the diverse market values of creators' works, a singular buy and sell function curve could lead to market inconsistencies. Allowing creators to initially mint a limited number of NFTs at a higher price, followed by a subsequent increase in price for all users, can maintain market balance. This approach tailors the issuance process to the unique value of each creator's work, ensuring market fairness and sustainability.
In the Bonding Curve model, within the same collection, the demand for anchor tokens increases as more NFTs are minted later on. This mechanism ensures the liquidity and price growth of NFTs. However, if the goal is not just to release a single collection but to create an infinite number of content works, the shortage of anchor tokens may become a problem. To address this issue, different collections can have different buy and sell function initial prices, taking into account the price of anchor tokens.
Suppose the buy and sell function for the required amount of anchor tokens for minting copyright governance NFTs for a content work is denoted as f(x). In that case, you can simply introduce a price p for anchor tokens at the time of the work's release, so that the buy and sell function for the required amount of anchor tokens becomes g(x) = f(x)/p.
In this case, different works will have different initial prices. If the protocol gains widespread acceptance and the price of anchor tokens continues to rise, this approach can ensure the market price of NFTs for new content works. It can also encourage users to redeem early-invested anchor tokens for older works as their prices follow the rise of anchor tokens, thereby diverting support to new works and maintaining the protocol's attractiveness. If the protocol is not well-received and the price of anchor tokens falls, this approach can attract new works by offering a higher quantity of anchor tokens, ensuring the protocol's appeal to new works.
When this whitepaper is released, a new NFT issuance standard called ERC404 emerges on the market. Based on the currently available information, this standard possesses the uniqueness of tokens under the ERC721 standard, as well as the divisibility of tokens under the ERC20 standard. It allows for enhanced transactional liquidity while retaining functionality and collectible value of tokens. These new issuance standards can all be utilized within this protocol. The protocol is entirely open in its selection of NFT issuance standards, catering to the diverse needs of different creators.
# VII Public Issuance and Trading Platform for Content Copyright Assets
The decentralization of content distribution revenue, tokenization of content copyrights, and the incorporation of the Bonding Curve model with automated market maker functionality make this protocol not only a content distribution platform but also a platform for issuing and trading content copyright assets.
With a broad consensus among consumers, a clear revenue model, and virtually zero marginal costs for digital publications, this protocol transforms copyrights, a crucial real-world asset, from the closed and monopolistic traditional publishing industry into the public domain. This allows the reevaluation of copyright assets in front of a new group of investors. Moreover, as everything operates through a decentralized protocol, it can directly serve various types of digital publication copyright assets and global investors.
The positioning of the asset issuance and trading platform can also address the issue of the Bonding Curve model not directly benefiting issuers from NFT sales. The protocol will charge fees when users mint/redeem copyright governance NFTs and allocate a portion of these fees to the creators. This practice ensures creators' long-term income and incentivizes them to contribute continuously rather than selling and leaving.
# VIII Co-creation Platform
The value creation of publications is not solely the original creator's work. Content generated through collaborative efforts, such as comments, adaptations, annotations, and continuations, may also have commercial value. However, in traditional publishing, creating such content receives no commercial returns and may trigger the original creator's copyright protection mechanisms, hindering collaborative creation \[12].
Works published on this protocol, with the issuance of copyright governance NFTs, provide a convenient channel for co-creators to participate in the distribution of commercial value. As long as co-creators mint a copyright governance NFT, they can directly enjoy the economic benefits resulting from the increased commercial value of their contributed content.
The protocol will provide tools to facilitate various collaborative actions by co-creators and seamlessly integrate the formed content with the original work for paid content consumption.
Of course, co-creators can also independently publish their created content. The protocol will allow co-creators to share the commercial benefits of their content copyright assets with the copyright governance DAO of the original work.
# IX Incentives
This protocol requires a designated token for the minting/redeeming (trading) of copyright governance NFTs. As the number of content works issued under the protocol increases, the demand for the designated token will also grow, creating substantial economic value.
This designated token can incentivize the builders of the entire ecosystem, attracting more individuals to publish content works on-chain and participate in the decentralized word-of-mouth distribution process.
# X Privacy and Attribution
This protocol allows creators to publish and earn income from content without relying on centralized third parties. They can even tokenize content copyright and attract more users to build copyright influence collectively. During this process, creators can remain completely anonymous.
Since creators are anonymous, how can we ensure that a particular creator creates a work? We do not seek substantial correctness for this issue, which is very difficult to achieve. We will consider this issue from a decentralized perspective:
1. Consensus mechanism is a very suitable solution.
2. Creators can choose to be non-anonymous or semi-anonymous. If creators do not wish to be anonymous but rather want to avoid relying on centralized third parties for content publishing, they can introduce their real-world identity verification, social media account verification, and other third-party verifications for self-verification. All of this is aimed at increasing consensus.
3. For completely anonymous creators, they need to bear the consensus damage caused by anonymity.
# XI Conclusion
We have proposed a digital publication system that does not rely on centralized institutions for electronic payments and authorized content access. Initially, we address authorized access to the content using soul-bound tokens and then resolve encrypted payments using smart contracts. Based on this, we explore the business and technical possibilities of encrypting real-world assets such as copyrights. Any creator can publish any content in this system and earn income. Works can be transferred directly from one person to another without the involvement of any centralized third-party institutions. Anyone can freely select content for distribution and sale, earning commissions in the process. Simultaneously, individuals can also gain incentives by governing NFTs holding copyrights. This will bring a whole new dynamic to the curation economy in the content consumption sphere. The anchor token of this system provides incentives for the initial development of the system. Consensus mechanisms entirely safeguard the privacy of creators and the attribution of works.
This distribution system entirely lacks content censorship, naturally bypassing any scrutiny for the existence of Artificial Intelligence Generated Content（AIGC）. In an increasingly AIGC-centric future, it may potentially supplant existing centralized distribution systems, freeing itself from the constraints of traditional copyright protection mechanisms to become a more significant content distribution system.
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