L'Oréal quietly launched a DAO to explore beauty in the metaverse

23-02-13 12:06
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Original title: " L'Oréal quietly launched a DAO to explore beauty in the metaverse "
Original author: Chao, Empower Labs

On the morning of February 2, 2023, NYX Beauty, a subsidiary of L'Oréal, issued a set of 1,000 digital membership passes, and a DAO called GORJS was launched with the goal of becoming an incubator to fund 3D artists.

In just a few days since its launch, many interesting stories have been born around it. Some people are speculating, some are looking forward to the future in the digital world, it has a good start, and it has also messed up some things. All of this together constitutes a commercial brand and a community's common exploration into the unknown.

DAO – the abbreviation of decentralized autonomous organization, originally refers to a special program running on the blockchain network, which handles business autonomously according to preset and non-changeable codes, thereby realizing permissionless and trustless business operations.

But the ideal DAO does not exist yet. The DAOs that people often talk about now are mostly Internet native organizations formed by common culture, hobbies or visions. Compared with ordinary Internet communities, DAOs have clear goals, certain funds, and rely on blockchain technology to constrain and coordinate finance and governance to promote the realization of goals. L'Oreal launched such a DAO.

Who is singing?

NYX – a makeup brand under L'Oreal. Compared with its parent company, this is a young brand that is good at Internet operations. Its annual sales of 450 million euros only account for about 1% of the L'Oréal Group, but it has 14.5 million followers on Instagram (an overseas social application similar to Xiaohongshu). The main founding members of GORJS DAO are all executives from NYX Cosmetics.

Not only are there overlapping founding teams, but its subsequent operations will also be related to NYX's business. As a sub-brand of L'Oréal, this plan was launched with the support of L'Oréal's higher-level management.

Screenshot of the founding team on the official website - Translated by AI tools

What does this DAO do?

GORJS means gorgeous in English. It is a digital art incubator that uses DAO as an organizational form. Simply put, GORJS DAO will explore "beauty" in the digital virtual world by funding 3D artists in specific fields. The funded artists will not only receive financial support, but also various resource support from brands.

When the artist completes the creation of the relevant 3D artwork, part of the work will be given to DAO members, while the other part of the artwork will be sold publicly on the market, and the sales proceeds will be divided equally between the artist and the DAO. In this model, community members can continue to receive digital art works, and if the artist's creation is popular in the market, it will bring income to the DAO, so that the funding can continue.

The way to become a DAO member is very direct - buy a membership pass. Like most big brands entering the Web3 field, this membership pass has been sought after by the market. 1,000 passes were quickly sold out, bringing in about $300,000 in funds.

Why start such a DAO?

The world is gradually moving towards digitalization, and many things in the digital virtual world are very different from the physical world. How to define beauty in the virtual world, free from the limitations of the flesh, what form will beauty in this world take? NYX hopes to become a pioneer by exploring this unknown world.

At the beginning of the epidemic, NYX did a lot of exploration in games such as Animal Crossing and received very good feedback. This action can be regarded as a deepening and continuation of NYX's exploration in the digital world, using a more Web3 approach. The reason for choosing to be an artist incubator is that the NYX brand has done a lot of work to support creators and artists since its inception, but this time it has become a DAO-style support plan.

It’s clear that NYX is not trying to get some additional sales from the Web3 community. The total amount of membership passes sold was $300,000, which was not enough to pay external partners, and this figure was confirmed by the team. If we look closely at the operating rules of the DAO, we will find that all the funds from the initial pass sales and subsequent art sales will go into the community-controlled treasury, and everyone will decide how to use it together, rather than being taken away by the brand or the founding team.

I got in touch with the team and had a video call the day after the DAO was launched. During the call, the first question I asked was "Why start such a DAO?"

The team’s answer was:

We believe that Web3 is about culture, people are looking for more immersive experiences, the desire to have ownership, and the desire to be creators. The brands that will succeed are those that understand where culture is growing and where it is going. It's not about profit or short-term gain, it's about being at the forefront of culture. The great record companies and artists of history, like Universal and Andy Warhol, have successfully remained in our collective memory because they understood the power of culture and the power of change that can occur when culture meets the new generation of technology. And this is what we are super excited about

By the community, for the community

In my communication with the GORJS team, by the community, for the community is a principle that is often mentioned.

This can be reflected in many places. The team told me that they hope to establish direct contact with most of the DAO members to understand who they are, why they come, what support they need, and what they can do together. This is the most important reason why there are only 1,000 passes issued this time. Because if there are too many, we can't keep up. Most of the time, the size of the community is highly negatively correlated with the intimacy between members.

As an incubator, the core of GORJS's business is to nominate artists through proposals, and then decide who can get funding through voting. Proposals are completely open and anyone in the world can submit them, but only community members can vote to decide who gets funded. Funding and corresponding creations will be promoted on a quarterly basis to ensure that funded artists can get more help and display opportunities.

A successful and failed launch

Unlike some projects that started to promote several months in advance, GORJS Member Pass started marketing only two weeks before the release, which was a rather hasty schedule. It may be that the plan was changed temporarily, or it may be that the total number of 1,000 was really small and there was no fear of not being able to sell out. The team only sent a few tweets and did a public Q&A, and completed the pre-release publicity work very low-key.

As expected, the number of people who registered in advance and hoped to buy the pass far exceeded the supply, and finally a lottery was needed to determine a part of the purchase qualifications (white list), and the rest were sold by hand speed after the time was up.  

But the team still underestimated everyone's enthusiasm and the other side of the Web3 world - the arbitrageurs hidden in the dark forest. Member passes are issued on the blockchain network in the form of NFTs, so they can be easily traded on the market. Faced with potential profit opportunities, more than one million requests poured in in the first minute of the whitelist sale, which was obviously not something that ordinary buyers could make. The server crashed instantly and the sale had to be postponed to the next day. Only a small number of accounts controlled by code robots successfully purchased on the first day. After the restart the next day, the remaining passes were quickly swept away.

Community members were very dissatisfied with this. It is obvious that a large part of the passes were bought by arbitrageurs with technical advantages. But ironically, most of the people who vented their dissatisfaction fiercely in the chat channel are actually speculators themselves - speculators without technical advantages.

One person who failed to buy said, I just want to leave with a profit

From the results of the issuance, it was successful. The passes were sold out, the brand was not embarrassed, and the DAO also obtained the initial funds it needed. But from the purpose of launching the DAO, this was not a very successful issuance. Too many passes went to speculators who didn't care about art or creation, and most people didn't even know what the project was about. For them, it was enough that the total amount of this thing was small, it was famous, and it should be able to make money. But such a distribution of holders will undoubtedly bring huge difficulties to the launch of a DAO.

Is price part of the brand, or not?

Speculators’ patience is not long. Within three days after the pass was issued, it was traded 400 times, and 40% of the buyers left the market.

And the first artist funding of GORJS DAO was planned at the end of March, which caused strong dissatisfaction in the community. In everyone’s opinion, an NFT project should release some good news prepared in advance immediately after the successful issuance, take quick action, and arrange external funds to conduct market operations to push up the price. But GROJS obviously did not plan to do so. As speculators sold off, the price continued to decline from a high level and eventually fell below the issue price.

This further led to conflicts, and many people who lost money after taking over at high prices began to suggest or even strongly demand that the DAO use the treasury funds to protect the market. The team clearly rejected this. The treasury funds are used to support artists, which has been made very clear before the launch of the DAO, not to mention that participating in secondary market operations will lead to great compliance risks.

Not getting what they wanted, many holders began to speak very impolitely in the community. The fierce reaction in the community prompted the team to respond quickly. This included holding a community meeting to explain the technical failures in the sale, explaining in detail the future work plan, and why it would take until the end of March to launch the first project. At the same time, the team also announced adjustments to the rights of members who purchase passes through the secondary market.

In the original design, members who purchased passes through the initial issuance will receive additional voting rights. This design is to reward community members who have been with DAO from day one. Now the team has finally realized that most of them are just speculators, and many people who later purchased passes from the secondary market are the members who are truly willing to participate in this community. These friends should be treated more fairly.

Since the proposal and voting system have not yet started working, this adjustment was made without communicating with the community and voting, which is actually very inconsistent with the spirit of DAO, so it has become a reason for being scolded by the community.

In the 3 days after the sale was completed, many members of the NYX team worked hard to respond to various questions from the community in real time in the chat channel.

The team and I have been watching the launch process, fully aware of what is happening, watching the conversations, solving various problems in real time, and we are always listening to everyone's voice. We will explain these complex issues in the community meeting, we will share with you, and we need to hear your point of view. This is what this community is about, and this DAO is about. We are humble here and learn by doing. It will take time for us to bring Web2 brains to the Web3 world.

NYX Global Vice President Matthieu Guerin's speech in the community chat channel

The price drop is not completely without benefits. Some friends who really want to participate in the DAO finally have the opportunity to buy passes, even at a lower price than the original issuance.

Some community members gave pertinent opinions and expressed support. Some people said

I am very happy to see that some changes have taken place here. I see some great ideas from other members and really hope the team will consider them. This is exactly how to provide value to web3 users, keep it engaging, keep it fun, but also keep it serious. When people believe in what you are doing, people will be willing to hold on. I like this mission, and artists are the DNA of NYX. Stick to your passion and let it evolve into something that excites the entire web3 world.

Some people also say

The plan is actually good, but you must consider the time issue, otherwise the effort will be useless. At the same time, price is important, especially in the early stages of a project. The price of the pass is like the stock price in web2. If the company's stock price plummets, even far below the IPO price, other efforts will not help much. When everyone is worried about the price drop, no one talks about what we should do. Price is an indicator of the credibility of the project and its value to others.

It can be seen that even many rational supporters are reminding the team that "price is part of the brand." The price should be influenced in a positive way, otherwise people will lose confidence in the project and it will also cause damage to the brand.

I have different thoughts on this statement, but I will not discuss it in this article. For a long time in the future, when brands want to try Web3, how to effectively promote and suppress speculation, how to gather community members with consistent values and activate real brand supporters, and if it involves secondary market transactions, how to form price support in a reasonable and compliant way will be the most important issues facing all brands.

Isn't it decentralized? Why is it tied to a company?

Unlike most community DAOs, GORJS was launched by a company and will be inextricably linked to the company in the subsequent operation process. This seems to be contrary to the idea of DAO's pursuit of decentralization.

However, we should also see that technically, whether L'Oreal, NYX or the founding team, they are not the controllers of GORJS DAO, but only the operating team. When the sale of the pass is completed, the control is transferred to the community. The community can decide its own development direction through voting. But it is obvious that the current community itself has not yet built an effective working system. For a long time, GORJS will still rely on the team from L'Oreal to advance affairs, and community members will only be responsible for the most important thing, voting for their favorite artists. Mutual support and common development with brands constitute the greatest consensus of the current community. If this consensus changes in the future, DAO can completely break away from the brand and go its own way.

In the future, as the community matures, if enthusiastic participants continue to emerge and gradually participate in the organization, they may eventually replace the work of the founding team in the DAO and complete a process of gradual decentralization. At that time, the brand will no longer directly intervene in the daily work of the DAO, and use the resources it has as a large organization to provide the community with necessary empowerment, distribution, dissemination, business cooperation connections, etc.

If this model is successful, GORJS will become an example of a symbiotic system between commercial companies and communities. Everyone comes together because of a common culture, and the company helps individuals in the community. And the innovation born in the community will in turn drive the company's business.

Written at the end

Through GORJS DAO, NYX is embarking on a Web3 exploration that is different from most brands, an attempt that I think is worth encouraging. But exploring the unknown is always accompanied by setbacks. Completing the sale is not the end, on the contrary, everything has just begun. At present, a considerable proportion of pass holders are still speculators, and even if speculators gradually leave in the future, it is not easy to activate real supporters and form a highly interactive, mutually trusting and connected community.

Only when the noise of hype gradually fades away will the real consensus gradually gather. When the beauty in the digital world begins to be created in the community, everyone will truly re-recognize this sentence of the GORJS team - "We are not selling a set of NFT collections, we are launching a DAO."

This is an interesting story, but a project is more than just a story. There are more details about the operation mechanism, compliance, governance, sale process, and the proposal and voting system that will be launched soon of GORJS DAO. Considering that most friends are not interested in these specific details, this information is not reflected in the article and will be summarized into a slide show and published separately in the next few days.

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