As Sales Exploded on Art Blocks, Its Founder Looked for Ways to Cool the Fervor

As Sales Exploded on Art Blocks, Its Founder Looked for Ways to Cool the Fervor

Erick Calderon was in the ceramic tile business up until last year. Then he decided to focus on his passion for generative art. So he founded one of the most successful NFT platforms to emerge since the NFT craze started in early 2021. It’s called Art Blocks. What seems like a whiplash transition to outsiders was quite natural for Calderon. He has balanced his interests in business, art, and coding for years. 

“I’ve always wanted to be an artist,” Calderon said, “but I could never draw anything with my hands.” That was part of the reason  Calderon—a natural entrepreneur—started a tile business. The contact with design was fulfilling, but not enough. Around ten years ago, with the encouragement of his wife, he started to explore his old hobby of coding, something he had done on and off since he was 7 years old. “I started programming visual outputs and found them to be pretty pleasing,” Calderon said. “I realized that I didn’t have to know how to use a paintbrush to create something that I, at least, thought was cool.” 

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Exploring ways to make art with code, he was exposed to projection mapping, 3D printing, and finally, generative art, where code produces a unique images each time it runs. Calderon thought it was incredible that he could “do something once and get a million outputs.” The generative artists he followed on Instagram became his heroes, but it was frustrating to see that these pieces would manifest themselves only once as social media posts. He wondered then if there could be a better way to make and sell generative art. Then his family began to grow, and he had to put away these hobbies and concerns for a time. 

In 2017, somewhere between running his business and taking care of his young children, Calderon began lurking on Reddit, eager to learn more about  cryptocurrency. Even more exciting to him was all the talk about non-fungible tokens, which he suspected might be a way to create value for generative art. Then one night, he stumbled across a Reddit thread where Matt Hall and John Watkinson, the founders of Larva Labs, were encouraging people to come claim assets from their new project, CryptoPunks. 

At the time, CryptoPunks were free. So Calderon went ahead and claimed a few for $35 in transaction fees. He thought the zombie types were particularly interesting.  “As a generative artist, I thought CryptoPunks were a brilliant example of generative art,” Calderon said. “Somebody wrote an algorithm that within a 24-by-24-pixel image was able to create 10,00 unique characters with a story.” He never imagined that he had a multimillion dollar asset in his possession.

But Calderon did sense that this was the beginning of something big. “It was my first time owning a digital image,” he said. “That felt revolutionary.”

Calderon continued to watch as NFTs tried and failed to make their way into the mainstream with projects he felt were interesting but not truly taking advantage of the blockchain. “Ninety percent of the projects that were released between 2017 and 2020 were ‘square peg, round hole,’” Calderon said. “Projects that could use blockchain but were better off using legacy systems.” 

In 2018, Calderon began selling off his CryptoPunks zombies for $200 each to pay developers to help him work out his idea. He had a vision for an NFT minting platform for generative art. He called it Art Blocks. On Calderon’s platform, a generative artist could upload an algorithm and then sell unique iterations as NFTs. Buyers would come onto the site, select an algorithm they liked from examples in a gallery, and press ‘mint,’ not knowing what specific piece they would get. Upon minting, the blockchain would preserve a record of the algorithm and the specific way it ran to create a one-of-a-kind piece. This represented an innovative way to create provenance for a generative art work, while also recording the specific artistic process of the code itself.

Making generative art that is of consistent quality yet unique isn’t as easy as it sounds. Generative artists used to run their algorithms hundreds of time and just select the best iterations. With Art Blocks, the artist and buyer both accept whatever is randomly generated from the algorithm upon selecting to mint. This has completely elevated generative art. “Because Art Blocks forces the artist to accept every single output of the algorithm as their signed piece, the artist has to go back and tweak the algorithm until it’s perfect. They can’t just cherry pick the good outputs.”  Also, the number of iterations is capped–once the algorithm has run a specified number of times, it is supposed to never be used again.  

Calderon was incredibly proud of his idea. But it didn’t work the first time. The first prototypes disappointed, and the project floundered.  Then the pandemic struck. Calderon found himself with an extra four hours a day that he hadn’t had since his children were born. He used that time to teach himself Javascript so he could build Art Blocks exactly as he envisioned it. “There was very little action anyways,” he said, “in the tile world.”

A couple of Code Academy bootcamps later, the first version of Art Blocks launched. That was November of 2020, well before most people even knew what NFTs were. A few weeks later Calderon hired consultants and developers to help him manage the massive flow of traffic to his new minting platform. By February of 2021, Art Blocks had become a corporation; by April, Calderon had hired a full-time staff. 

And then August came. In that month alone, Art Blocks saw nearly $600 million (184m Eth) in sales across 51,000 transactions involving more than 12,000 buyers. On August 23, Art Blocks had a peak selling day where $69 million in transactions occurred. NFT traders drove up all this traffic as they sought to flip pieces.

Internet entrepreneur and crypto guru Kevin Rose bought works from Tyler Hobb’s Fidenza collection in June for $3,000 (1 Eth), and by late August he sold it for $2.5 million. Calderon found the response overwhelming. On one hand, it was good business. Art Blocks gets 10% of the purchase price of each NFT sold on the platform, and retains a 2.5% commission each time a piece resells. On the other hand, the phenomenal success, though exciting, lowered the quality of works available on the site. Demand was so high people would buy anything. Calderon says, “There’s stuff that I’m mad sold out.”

Art Blocks has a tiered curation structure. There is a Curated category that features special projects selected by Calderon’s team. Artist Playground allows those who have had their work chosen for the Curated category to release new un-curated projects. Then there’s Factory. Anybody can upload work there.

At one point, the buying frenzy had made it nearly impossible for the average person to go on Art Blocks to buy a piece. Flippers were minting works so quickly, often with the help of bots, that works quickly became inaccessible. Calderon wanted Art Blocks to be a source for reasonably priced generative art works. “That can’t happen today,” he said. “It’s just not good. It’s not the future of Art Blocks, by any means.”

To put off the flippers, Calderon switched to a Dutch auction where the price for a piece starts high and then drops by fixed amounts at regular intervals. The hope was that this would limit the market to serious buyers.

Trading volume on Art Blocks plummeted from August 23rd’s $70-million peak to $2 million on September 9th. While the Dutch auction model might have been a factor, this sharp downturn in trading volume was also seen on other platforms, such as OpenSea, which saw a 70% decrease in transactions. The general trend is largely attributed to the incredible rise in transaction fees, often called gas prices, due to the unprecedented demand on the Ethereum blockchain. 

Despite the downturn in trading, Art Blocks is in a better place now. Sales have stabilized; the community is strong and active; and Calderon is in constant communication with participants on Discord and other social media. Calderon and his team respond to Art Blocks fans and collectors at all hours of the day, troubleshooting as well as discussing new projects and artists.

Looking forward, Calderon is focused on building a sustainable business. “We are trying to build something that transcends the localized ups and downs of the market,” Calderon said.  “We have something special here – a concoction of incredible art, collectability, community, permanence, and technology – that is focused on a very long term horizon.”

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