# MODA's Original Litepaper

### MODA DAO: Decentralised technology, governance and finance for the Web3 audio economy

Litepaper V1 - 01 November, 2021 (This is a live document)

Contributors:

* Sean Gardner
* Dr Jay Mogis
* Joan Westenberg
* Daniel Tauhore
* Lucas Cullen
* Kevin Brown

### Introduction

Welcome to MODA DAO. A technology and human network dedicated to creating a highly functional framework for the next iteration of the music industry via Web3. We call it 'Music3' and you are invited to help. MODA can see a paradigm shift coming to the music industry, one that will use Web3 technologies to improve legacy systems.

We believe that value in the music industry supply chain should flow to those who most deserve it; the creators, their loyal teams and the passionate superfans who follow them. MODA will bring that belief to life.

The foundational mechanic of MODA is the $MODA token.

Prior to launch of MODA's network and suite of products, $MODA holders may be able to provide input on where resources are directed, and stake $MODA to access the liquidity mining program (a type of 'yield farming' that has become popular with DeFi protocols where the founding members seek to decentralize the governance of the protocol).

The purpose of the liquidity mining program is to distribute $MODA from the MODA Treasury to early MODA community members in order to:

1. achieve a broad holding of $MODA tokens across more of the MODA community,
2. incentivise new people to participate in the MODA community, and
3. to enable a more liquid and transparent market for the trading of $MODA.

The greater the size of the MODA community, the greater the prospects of decentralised governance and self-regulation that discourages bad actors and mitigates the manipulation of governance and the economy.

MODA holders/stakers will receive regular distributions of MODA and can vote on everything from tokenomics related issues to grants and innovation labs projects. Our pre-launch staking and rewards program has been heavily influenced by the successful pre-launch activity of the Illuvium play-to-earn game, and its $ILV token ([www.illuvium.io](http://www.illuvium.io/)).

Through MODA, the power to redefine the future of music is redistributed to those who participate.

### A Troubled Industry <a href="#a-troubled-industry" id="a-troubled-industry"></a>

**The music industry has long been plagued with a myriad of problems. These are covered in-depth within the MODA-funded Music3 Industry Whitepaper written by Dr Jay Mogis, to be released later in November this year**

Industry processes were formed when physical distribution was largely gatekept, and recording was expensive. The internet has democratized music creation, but the processes remain archaic. Technology has only strengthened existing gatekeepers and created new gatekeepers in the form of music tech giants who offer benefits to artists at a fraction of their worth.

It's a classic middleman problem, and as such is primed for blockchain disruption. There is no shortage of blockchain music projects that have come and gone, and some fantastic products are in development now. MODA is focussed on raising the tide for all of these projects, ensuring that Web3 changes music forever, does not fade into obscurity and does not become 'The Wild West of Music'.

### The MODA Foundation <a href="#the-moda-foundation" id="the-moda-foundation"></a>

MODA DAO is being launched by the newly formed MODA Foundation. While the entity is Australian-based, the MODA Foundation has a clear global approach. MODA is a public limited liability company with a non-profit mandate, meaning that it does not have a traditional shareholder structure, but is also not eligible for charity donation or tax concessions. This is ideal for the formation of a DAO, as advised by Australian law firm Gilbert & Tobin who are also publicly known for their involvement with the Synthetix Foundation and its DAOs.

This structure allows MODA to interface with a 'real world' entity, meaning our collective is a legitimate part of the music industry, but the corporate structure free of shareholders means the foundation has no other profit mandate outside of its mission and core tokenomics. It also means the foundation can be dissolved freely when the time comes that DAOs can operate with regulatory clarity all around the world. We envision this happening within 5 years and have designed a roadmap around it. Most recently, the Australian government has announced it will take a closer look at the role of the DAO structure within finance and innovation.

#### Mission, Vision, Values <a href="#mission-vision-values" id="mission-vision-values"></a>

MODA will accelerate mainstream adoption of Web3 technology as a means to enable musicians and their audiences, as well as other industry participants to engage in the music economy directly. To support this, MODA will increase its collaborations with various other chains, initiatives, projects and companies that share a similar worldview.

One of the first items for DAO members to vote on will be to set out clear definitions of the MODA DAO Vision, Mission and Values.

To set the stage, the founding partners have proposed the following:

#### Mission <a href="#mission" id="mission"></a>

We are a multi-functional industry body that exists to actively drive innovation and adoption of Web3 technology for musicians, music fans and industry participants who wish to see a better future for music via Web3 technologies.

#### Vision <a href="#vision" id="vision"></a>

We want artists to have a more direct relationship with fans and more control of their music rights with less gatekeepers in the industry. We see a future where the value of music as an artform has been rediscovered via digital collectibility.

#### Values <a href="#values" id="values"></a>

We value diversity and open thinking, sustainable growth over speculation, and innovation to challenge the status-quo. MODA aims to break-down barriers to entry for artists into the blockchain world.

### HiFi meets DeFi <a href="#hifi-meets-defi" id="hifi-meets-defi"></a>

MODA will help create an infinitely sustainable Web3 music industry ecosystem that offers and replaces the benefits of the legacy industry, within an autonomous, fair and transparent environment. Decentralised Finance (DeFi) apps have provided possibly the best example of a traditional industry being restructured around Web3, and we have seen impressive growth and rapid development in the last 2 years. MODA will address what learnings can be taken from DeFi and translate them into Music3.

Many blockchain music projects today exist in something of a silo, small islands of innovation, testing the waters of what might be possible in future. But the future of music does not look like a series of disconnected NFT marketplaces, stand-alone NFT projects and a choice of streaming platforms disconnected from the rest of the industry. Rather, Music3 will be an interconnected system with bridges between products and with the legacy systems themselves.

In the way that DeFi has offered up interconnected 'money legos', a new Music industry ecosystem in Web3 also needs to be interconnected.

MODA and the MODA DAO partners aim to develop Web3 music ownership, rights transfer, publishing, advances, pre-release sales and promotion, distribution, label services, management services and streaming all within an open, distributed, smart-contract-based platform.

In this way, MODA is a 'Chainlink for music' with both human and technology components connecting the legacy music industry to the emerging Web3 world.

### Access vs Ownership <a href="#access-vs-ownership" id="access-vs-ownership"></a>

Society's concept of ownership has changed in the last decade, from cars to accommodation. It has become clear that in many cases we'd rather rent, lease or subscribe to an often depreciating asset/liability than purchase it outright. But the same cannot apply to scarce items, collectibles and art such as music; we still have a desire to collect items of emotional or aesthetic value, as has been proven by the NFT boom of 2020 - 2021. Music is not a service, music is art.

Platforms like Spotify have given us access to almost every song in the world for a cost equivalent to about 30 minutes minimum wage work in most countries, but in turn the music consumption experience has been homogenised to the point where a super-fan's consumption of a song is no different to a passive playlist browser. If easy access to music is a minimum 'service' that we all require, then we need a good framework for a societal shift towards making music collectible again. Private 1-to-1 playback may as well be free at today's streaming rates.

_Have you recently thrown out thousands of CDs or records?_

_How long have you been working on your top playlists?_

_Where do your playlists go when you die or when Spotify closes down?_

_How do you trade your MP3 collection?_

NFTs bring ownership, scarcity and specialty back to the music, and it's time to turn that into a sustainable trend for the future, not a passing fad.

### NFTs <a href="#nfts" id="nfts"></a>

An NFT, or non-fungible token, is a crypto token representing a verifiably authentic, and sometimes, unique entity. The most common NFT, ERC-721, is built on the Ethereum network with several EVM-compatible options now available on chains like Polygon, Fantom, Avalanche and bridges being built for chains like Near, Solana and Telos.

NFTs first became popular with the launch of CryptoKitties in 2017, but have gathered pace throughout 2020 and 2021, resulting in an explosion of art, music, creativity and gaming in 2021. [Reuters](https://www.reuters.com/technology/nft-sales-volume-surges-25-bln-2021-first-half-2021-07-05/) have reported over $2.5 billion in NFT sales in the first half of 2021 already; to put that in perspective it's almost double the value of global music downloads and is approaching the value of 2020's sync licensing market.

NFTs have transformed the lives of savvy digital artists and animators in 2021, even game developers and of course the collectors who were early enough to beat the crowd. This transformation has already begun in the music world, and it is about to blow up.

MODA aims to define how NFT collection can become the number one way to buy and collect music in the near future, as well as a modern framework for licensing and micro-licensing in a global interactive marketplace. Not just one product, not just a new market; an entire ecosystem and a reformed industry with MODA DAO token holders voting on the standards. Why is MODA placed to steer this course? Because we are neutral, we are not part of a private corporation, we do not have shareholders. We are free to add value wherever it is needed.

### Operating Model <a href="#operating-model" id="operating-model"></a>

The MODA Foundation, of which the DAO is a driving force, is founded on three main pillars of operation. The goal of the pillars is to provide sustainable economic development, rapid innovation and true music industry transformation to put creativity and artist wellness back at the centre of everything.

#### Pillar 1 - MODA Publishing <a href="#pillar-1---moda-publishing" id="pillar-1---moda-publishing"></a>

MODA is designing a publishing entity that takes to aspects of music publishing that are proven to make money, but flips it into a system that benefits the artists and ecosystem over external shareholders. This will mean, in most cases, that songwriterss will control their rights and only use MODA Publishing services to maximise the earnings on the music. MODA will be the only publishing entity in the world focussed on Web3 music royalties.

MODA Publishing will bring human creativity to MODA DAO and will ensure not only revenue for the project, but also an ongoing stream of new music and talent on the MODA Technology. Publishing Admin and Sync services will help fuel the Web3 Sustainability Loop.

#### Pillar 2 - Music3 Tools and Standards <a href="#pillar-2---music3-tools-and-standards" id="pillar-2---music3-tools-and-standards"></a>

We believe that there is a paradigm shift happening in the music industry right now; in order for us to move forward effectively, the change makers and creators need to come together. MODA is proposing and building a series of open-source projects that will offer an evolution on the legacy industry standards like DDEX, IRSC and ISRW married with ERC20, ERC721, and ERC1155 token standards to create a new paradigm in music access and ownership.

Additionally, through the first MODA innovation projects we are building a custom audio-fingerprinting and data-extraction algorithm that will be used to hash immutable music ownership on-chain at the time of creation. We believe that this piece of technology will be one of the most powerful tools in an artist's artillery as we move into the exponential age. From there, an NFT Aggregator that will align global media and data storage standards to create a Audio NFT swarm that is standardised enough for NFT music streaming to become possible and for developer to tap into a network of sounds.

#### Pillar 3 - Innovation Lab <a href="#pillar-3---innovation-lab" id="pillar-3---innovation-lab"></a>

The MODA Lab is designed to rapidly deploy innovative new products and features into the market that can be tried and tested in a live environment. Many of the Lab projects will go on to form part of the core MODA network, some will be open sourced and others exposed via APIs for commercial purposes to ensure the long-term viability of the MODA Foundation. In each case, $MODA tokens will likely be required for interaction to ensure legitimacy, authenticity and to prevent spam and malicious intent. Project 1 is our audio finger printer, Project 2 is the NFT Aggregator. There will be many more projects to come and each will have its own technical documentation here at [https://docs.modadao.io](https://docs.modadao.io/) as it comes together.

### Technology <a href="#technology" id="technology"></a>

Aside from bringing together the most forward thinking and influential group of music industry leaders for a transformative Web3 DAO, MODA is also a technology network, designed to bring the sort of autonomy, transparency, fairness and efficiency that will be required to properly monetise music in the exponential age. Each of the sections below is an area of interest, with some specific innovations already underway.

#### Multichain & Scalability <a href="#multichain--scalability" id="multichain--scalability"></a>

We recognise that artists gravitate towards different blockchain communities of their choice. We don't believe that music rights should be housed within any one marketplace or store, but rather managed at the chain level, ideally on Layer 1. Additionally, the MODA team is well aware of the current Ethereum scaling issues, resulting in gas fees which at times can make the Ethereum main net unusable. For this reason, MODA embraces integration from various chains. MODA will build out Ethereum and Polygon integrations as a priority stage 1. Further, MODA's first innovation lab projects will be deployed to Polygon as well as Ethereum and we will be making use of the Polygon bridge to enable low-fee trading for entry-level participants. Other EVM chains will be approached for partnership and it is our belief that chains with the most users, best technology and highest trading and TVL levels will succeed.

MODA is also participating in the ImmutableX Sandbox partnership program and will be looking to utilize true L2 solutions as needed for NFT marketplace minting and trading. As the ecosystem matures and develops, so will we. Keeping pace with innovation whilst delivering on our own roadmap.

#### NFTs <a href="#nfts-1" id="nfts-1"></a>

NFTs can unlock the future value of a song, which is usually only realised over the course of several years. While the legal framework for fractional ownership of a song does not exist in some countries (most notably the USA), we can begin to build a technical framework for these systems, relying on the collectibility and tradability of the NFT medium while we invest heavily into the legal side of fractional ownership. A legal framework for fractional ownership would mean writers could divest portions of songs, or even portions of whole catalogs to shareholders of their size and choosing. As of November 2021, MODA has identified one possible partner for fractionalised ownership and we will make this public as soon as possible.

NFTs may replace MP3 in the near future, not as an audio format but as an avatar for the tangible representation of a song. MP3s are not tradable, and they require continuous maintenance for access and back-up related issues. We envision a scenario where everything will and can be stored in a distributed network, making access easy, back-up automated and ownership the new focus over cheap access. Our contribution to this will be making Audio NFTs easy to mint, sell, buy, trade and stream.

#### Provenance <a href="#provenance" id="provenance"></a>

MODA's first Innovation Lab project is the creation of a customised audio-fingerprinting engine which extracts information about a song with the capability of improving efficiency and complexity over time using machine-learning. MODA Audio Fingerprints will be cryptographically signed onchain and connected to the originator.This technology will be a key component of MODA, likely moving straight out of the innovation lab and into the artist tool set enabling:

* Verifiable creative output signature
* Verifiable rights exchange
* Provable music provenance
* Sale of Music Genesis NFTs

#### Storage <a href="#storage" id="storage"></a>

MODA is in discussion with a large decentralised storage project, expected to be announced in November. Through this, we will offer up to a petabyte of IPFS storage with cold-storage backup and an integrated CDN for music streaming. This is enough storage for 2000 years of continuous MP3 streaming.

#### Sonic Data <a href="#sonic-data" id="sonic-data"></a>

Using our audio fingerprinting tool, the first piece of innovation from MODA Labs, MODA is investigating the potential of an open, public and transparent music-data network in combination with decentralised storage as a network solution to the various royalty blackbox issues that plague the music industry. The potential of this opportunity is enormous, but needs much further validation and is indicated on the roadmap towards 2023/2024.

### Governance <a href="#governance" id="governance"></a>

#### MODA Board Council <a href="#moda-board-council" id="moda-board-council"></a>

The Genesis of the MODA project was to create an open and interoperable Music3 project that would bring together the entire Web3 music space in a common goal. Our founding members have long-believed that the legacy music industry is flawed at its core and that ultimately, technology will form part of the longer-term solutions.

Here we outline the mechanisms by which the community of $MODA holders will increasingly govern and maintain the project, and what changes can be proposed.

#### DAO Structure <a href="#dao-structure" id="dao-structure"></a>

While the MODA Foundation does have a board of directors, the DAO entity itself is somewhat separate; this allows for freedom of movement over funds on-chain without real-world bureaucracy. It also paves the way for eventual dissolution of the foundation in favour of fully on-chain governance. The DAO will be made up of Custodians, Ambassadors, Creators and Members.

### MODA DAO Custodians <a href="#moda-dao-custodians" id="moda-dao-custodians"></a>

9 individuals will hold the keys to the $MODA Token contract multisig; they will be responsible for executing the release of funds and enacting changes on the blockchain. This will initially comprise of all 8 members of the MODA Foundation board and 1 new custodian to be assigned in the early stages. 4 out of 9 signatures are proposed for the initial governance, meaning that the board alone can make decisions at launch.

Over the following 5 years, one board member will drop off the multisig, to be replaced by a community voted custodian. Board members can also voluntarily step out of a custodian role or be voted off by a member supermajority.

Eligible custodians must hold at least 10,000 $MODA tokens personally, or be an ambassador and recieving equivalent ongoing votes of support from the community.

### Ambassadors <a href="#ambassadors" id="ambassadors"></a>

MODA invites ambassadors to participate in the global MODA DAO footprint. Ambassadors will represent either a significant individual artist or band, record label, music business or music industry collective.

A collective is a group of individuals within a creative or technical community who wish to participate in MODA. A collective could form around a certain blockchain community, a genre of music, musicians from a particular country or any other interest group.

In the case of a collective, not all members of the collective need to be MODA DAO members or creators, but the collective must have an elected ambassador and therefore, the group as a whole must stake a minimum of 10,000 $MODA Tokens.

### Creators <a href="#creators" id="creators"></a>

Creators will become one of the most influential groups within the DAO as we foresee the size of the group growing rapidly, and voting actively. At launch, creators will need to hold at least 10 $MODA tokens.

### Members <a href="#members" id="members"></a>

In order to access staking and rewards, $MODA holders must sign the participation agreement and hold at least 5 MODA tokens. Additional functionalities may open up for Members only in the future.

### Collectives <a href="#collectives" id="collectives"></a>

The music industry has seen a boom in 'music collectives' in recent years. These collectives are often a modern alternative to label, offering shared resources, community and release support. Collectives are now becoming DAOs, and in the way MODA may become a 'DAO of DAO's'. MODA will design a framework to allow collectives to place an ambassador into MODA to represent the community.

### Custodian Vote <a href="#custodian-vote" id="custodian-vote"></a>

To elect DAO Custodian members, holders of $MODA have the ability to nominate an individual for a DAO seat as well as delegate their vote to a nominee. Candidates for council members must be proposed before the due date of the election, followed by a formal voting period to elect the 7 individuals best suited for the role of governing the platform.

The MODA board will then collate all proposed members to be voted on within Snapshot.

### Quadratic Voting <a href="#quadratic-voting" id="quadratic-voting"></a>

This mechanism will be used to reduce the voting power of large $MODA holders and reduce plutocracy. This system is used successfully by a number of other protocols such as Gitcoin Grants and we believe it is the fairest way to manage voting weights in favour of end-users.

#### Grants <a href="#grants" id="grants"></a>

Individual creative and technical grants can be progressed by any Ambassadors/Partner level member. Individual creators who wish to apply for a grant can initiate their own proposal and submit it via a Collective.

### Specification Overview <a href="#specification-overview" id="specification-overview"></a>

There are two major components of the governance system:

1. The MODA Custodians will consist of the founding board members, replaced increasingly by nominees who are voted in by the $MODA token holders, enabling the community to influence changes while also not directly allowing large $MODA holders to control the outcome of proposals.
2. MODA DAO Proposals which are submitted will be posted on the MODA Proposal space. Proposals must reach a supermajority agreement to be enacted.

### Tokenomics <a href="#tokenomics" id="tokenomics"></a>

At a macro level, MODA DAO tokenomics are designed around the [Web3 Sustainability Loop](https://blog.oceanprotocol.com/the-web3-sustainability-loop-b2a4097a36e), originally designed by Ocean Protocol in September 2020.

#### Membership tokens <a href="#membership-tokens" id="membership-tokens"></a>

Membership tokens are required to play particular roles in the DAO. Different levels of engagement or responsibility require different token holdings. These amounts are set at launch but will fluctuate if the price of the DAO tokens changes enough to warrant an adjustment.

#### Level 1 - MODA Network Layer <a href="#level-1---moda-network-layer" id="level-1---moda-network-layer"></a>

At the most basic level, community members who wish to join MODA DAO can purchase $MODA tokens in order to access the MODA technology and network. MODA members who wish to increase the weight of their membership can signal their support via staking to participate in governance which may result in additional MODA tokens being added to a member's wallet.

#### Level 2 - The Artist Layer <a href="#level-2---the-artist-layer" id="level-2---the-artist-layer"></a>

Moving deeper into MODA DAO, members can signal their support of certain artists on the platform by staking $MODA tokens behind the artist themselves. Artists may choose to offer certain privileges to the members who support them, these could take the form of MODA rewards sharing, artist tokens, exclusive music, NFT drops, merch drops and more. By staking behind an artist, members help their discoverability, trust and reputation which will usually help an artist to earn more from their creativity and helps with the mission of the MODA Foundation.

#### Level 3 - The Music Layer <a href="#level-3---the-music-layer" id="level-3---the-music-layer"></a>

MODA DAO members who consider themselves tastemakers, influencers or music industry people who work close to new music on a regular basis, may benefit from purchasing music NFTs or staking $MODA behind music releases. This signals support for that song, gives access to pre-release music, grants the member NFTs and positions them for other benefits. This interaction from the community members helps improve the quality of music that is visible and assists towards the mission of the MODA Foundation.

### Roadmap <a href="#roadmap" id="roadmap"></a>

The MODA DAO roadmap is fluid, the foundation board will guide the development roadmap in the early stages, with increased input from the community and DAO voting. The following initial roadmap has been drawn up as a guideline, based on the combined music and Web3 industry experience currently harboured within the launch partners:

#### 2021 <a href="#id-2021" id="id-2021"></a>

* Outlier Ventures Basecamp - MODA DAO inception
* Private fundraising and industry recruitment
* MODA Foundation incorporation
* Contract creation and audit
* Creative grants program initiation
* TGE Event
* DAO launch
* Publishing entity established
* Music3 Blueprint and Pilot releases
* Staking and rewards contracts live
* Voting commences
* On-chain audio fingerprinting showcase

#### 2022 <a href="#id-2022" id="id-2022"></a>

* Audio NFT Launchpad released
* NFT aggregator / streaming
* DDEX review
* ISRC / ISRW onchain proposal
* Meta-data proposal
* Media Storage proposal

#### 2023 <a href="#id-2023" id="id-2023"></a>

* Onchain DDEX MVP
* ISRC / ISRW MVP
* Meta-data network MVP

#### 2024 <a href="#id-2024" id="id-2024"></a>

* Fractionalised ownership frameworks

#### 2025 <a href="#id-2025" id="id-2025"></a>

* Music rights fund / member catalogue buyback

#### 2026 <a href="#id-2026" id="id-2026"></a>

* Fully autonomous DAO
