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

Original Title: "L'Oreal quietly launches a DAO to explore beauty in the metaverse"

Original Author: Chao, Empower Labs

On the morning of February 2, 2023, NYX Cosmetics, a subsidiary of L'Oreal, released a set of 1000 digital membership passes called GORJS. The accompanying DAO aims to become an incubator supporting 3D artists.

Just a few days after its launch, many interesting stories have emerged around it. Some people are speculating, while others are envisioning the future of the digital world. It has had a good start, but also messed up some things. All of this comes together to form a commercial brand and a community exploring unknown territories.

DAO - The abbreviation for Decentralized Autonomous Organization, originally referring to a special program running on a blockchain network that autonomously processes business based on preset and unchangeable code, thereby achieving permissionless and trustless business operations.

However, the idealized DAO does not yet exist. Currently, what people commonly refer to as DAOs are internet-native organizations formed through shared culture, interests, or visions. Compared to regular internet communities, DAOs have clear goals, a certain amount of funding, and rely on blockchain technology for financial and governance constraints and coordination to advance their objectives. This is exactly the type of DAO that L'Oreal has launched.

Who is singing?

NYX - a cosmetics brand under L'Oreal, is a young and internet-savvy brand compared to its parent company. Its annual sales of 450 million euros account for only about 1% of L'Oreal Group's total sales, but it has 14.5 million followers on Instagram (an overseas social app similar to Xiaohongshu). The main founding members of GORJS DAO are all former executives from NYX cosmetics.

Not only is there overlap in personnel in the founding team, but its subsequent operations will also be related to NYX's business. As a sub-brand under L'Oreal, this plan was launched with the support of higher-level management at L'Oreal.

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

This DAO wants to do what?

GORJS takes its name from the English word "gorgeous" and is a digital art incubator that adopts DAO as its organizational form. Simply put, GORJS DAO will explore the "beauty" in the digital virtual world by funding 3D artists in specific fields. The sponsored artists will not only receive financial support, but also various resources from the brand.

When the artist completes the creation of the relevant 3D art works, a portion of the works will be given to DAO members as gifts, while the other part of the art works will be publicly sold on the market, and the sales proceeds will be shared equally between the artist and the DAO. In this way, community members can continue to receive digital art works as gifts, and if the artist's creations are well received in the market, it will bring income to the DAO, thereby enabling funding to continue.

The way to become a DAO member is very straightforward - purchasing a membership pass. Like most well-known brands entering the Web3 field, this membership pass has been highly sought after in the market. 1000 passes were quickly sold out, bringing in approximately $300,000 in funds.

Why start such a DAO?

This world is gradually moving towards digitization, and many things in the digital virtual world are very different from the physical world. How to define beauty in the virtual world, and what form will beauty and makeup take in this world without the limitations of the physical body? NYX hopes to become a pioneer through exploration of this unknown world.

At the beginning of the epidemic, NYX did a lot of exploration in games such as Animal Crossing and received good feedback. This operation can be regarded as NYX's deepening and continuation of exploration in the digital world, in a more Web3 way. The choice to create an artist incubator is because NYX has been doing a lot of work to support creators and artists since its inception as a brand, but this time it has become a DAO-supported plan.

Obviously, NYX is not trying to get some extra sales from the Web3 community. The membership pass sold a total of $300,000, which is not enough to cover the fees paid to external partners, and this number has been confirmed by the team. If we look closely at the operating rules of the DAO, we will find that whether it is the initial pass sales or the subsequent art sales, the funds received will all go into the community-controlled treasury, to be decided by everyone on how to use it, rather than being taken away by the brand or founding team.

My team and I got in touch and had a video call on the second day after the DAO launch. During the call, my first question was "Why start such a DAO?"

The team's answer is:

We believe that Web3 is about culture, people are looking for more immersive experiences, the desire for ownership, and the desire to become creators. The brands that will succeed are those that understand where culture grows and where it is headed. This is not about profit or short-term gain, but about being at the forefront of culture. The great record companies and artists in history, such as Universal Music and Andy Warhol, have successfully stayed in our collective memory because they understand the power of culture and the power of change that can occur when culture meets new generations of technology. And this is also what makes us super excited.

由社区、为社区

translates to

By the community, for the community

in English.

During my communication with the GORJS team, the principle of "by the community, for the community" is often mentioned, which means that it is created and maintained by the community.

This is reflected in many places. The team told me that they hope to establish direct contact with most DAO members, understand who they are, why they came, what support they need, and what they can do together. This is the most important reason for issuing only one thousand passes this time. Because if there are too many, it will be difficult to communicate effectively, and most of the time, the size of the community is highly negatively correlated with the intimacy between members.

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

即成功又失败的启动

translates to

Successful yet failed launch

Unlike some projects that start promoting months in advance, GORJS membership passes only began marketing two weeks before their release, which is a rather rushed schedule. It may be a last-minute change of plans, or it may be that the total quantity of 1000 is simply not much and they are not afraid of not selling out. The team only posted a few tweets and held one public Q&A, and quietly completed the pre-release promotion.

As expected, the number of people who registered in advance and hoped to buy the pass far exceeded the supply, and ultimately a portion of the purchase qualifications (white list) had to be determined through a lottery, while the remaining portion was sold out by speed after the designated time.  

However, the team still underestimated the enthusiasm of everyone and the other side of the Web3 world - the arbitrageurs hidden in the dark forest. The membership pass is issued in the form of NFT on the blockchain network, so it can be easily traded on the market. Faced with potential profit opportunities, more than one million requests flooded in the first minute of the whitelist sale, which obviously cannot be achieved by ordinary buyers. The server instantly crashed, and the sale had to be postponed to the next day, with only a few accounts controlled by code robots successfully purchasing on the first day. After the restart the next day, the remaining passes were quickly swept away.

Regarding this, community members are very dissatisfied. It is obvious that a large part of the passes were bought by arbitrageurs with technical advantages. Ironically, most of the people who are vigorously venting their dissatisfaction in the chat channels are actually speculators themselves - speculators without technical advantages.

A person who failed to buy said, "I just want to leave with profit."

From the perspective of the issuance results, it was successful. The passes were sold out and the brand did not lose face. The DAO also obtained the initial capital it needed. However, from the perspective of the purpose of launching the DAO, this was not a very successful issuance. Too many passes ended up in the hands of speculators who do not care about art, creation, and most of them do not even know what the project is about. For them, the fact that the total amount of this thing is small, the reputation is big, and it should be able to make money is enough. But such a distribution of holders will undoubtedly bring huge difficulties to the launch of a DAO.

Is price a part of the brand, or not?

The patience of speculators is not long-lasting. Within 3 days of the issuance of the pass, it was traded 400 times and 40% of buyers left.

And the first artist funding of GORJS DAO was planned for the end of March, which caused strong dissatisfaction in the community. In everyone's opinion, an NFT project should release some prepared good news immediately after a successful launch, take action quickly, and arrange peripheral funds to operate the market to push up prices. However, GROJS obviously did not plan to do so. With speculators selling off, the price continued to decline from its high point and eventually fell below the issue price.

This further led to conflicts, and many people who lost money after buying in at a high price began to suggest, even strongly demand, that the DAO use its treasury funds to support the market. The team was very clear in rejecting this proposal. The treasury funds were intended to support artists, which was made very clear before the DAO was launched, and participating in secondary market operations would pose significant compliance risks.

Did not get what they wanted, many holders began to speak impolitely in the community. The intense reaction in the community prompted the team to quickly respond. This included holding a community meeting to explain the technical issues during the sale, detailing future work plans, and why the first project will not be launched until the end of March. 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 for the first time would receive additional voting rights. This design was intended to reward community members who have been with DAO since day one. However, the team has now realized that most of them are just speculators, and many of the people who bought passes from the secondary market are the real members who are willing to participate in this community. These friends should be treated more fairly.

Due to the fact that the proposal and voting system has not yet been put into operation, this adjustment was made without communication with the community and without a vote, which is actually very inconsistent with the spirit of DAO, and has become a reason for the community's criticism.

Within three days after the completion of the sale, including several members of the NYX team, they were all working hard to respond to various community questions in real-time chat channels.

My team and I have been watching the startup process, fully aware of what is happening, watching everyone's conversations and solving various problems in real time. We have been listening to everyone's voices. We will explain these complex issues at the community meeting and share them with you. We need to hear your opinions. This is the meaning of this community and the meaning of this DAO. We are humble here, learning as we go. We need time to bring the Web2 mindset into the Web3 world.

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

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

Some community members have given constructive feedback and expressed their support. Someone said...

I am glad to see that there have been some changes here. I have seen some great ideas proposed by other members and I really hope the team can consider them. This is exactly how we provide value for web3 users, by maintaining engagement, keeping it fun, while also maintaining its seriousness. When people believe in what you are doing, they will be willing to hold on. I love this mission, artists are in NYX's DNA. Keep up your passion and let it evolve into something that excites the entire web3 world.

Some people also say.

The plan is actually good, but the timing must be considered, otherwise the effort is useless. At the same time, the price is very important, especially in the early stages of the 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 be of much help. When everyone is worried about price drops, no one talks about what we should do. Price is an indicator of the credibility of the project and its value to others.

You can see that even many rational supporters are reminding the team that "price is a part of the brand." It should be positively influenced, otherwise people will lose confidence in the project and cause damage to the brand.

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

Isn't it supposed to be decentralized? Why involve companies?

Unlike the vast majority of community DAOs, GORJS was initiated by a company and has intricate connections with the company in its subsequent operations. This seems to contradict the decentralized philosophy pursued by DAOs.

However, we should also see that from a technical perspective, neither L'Oreal nor NYX nor the founding team are controllers of GORJS DAO, but only the operating team. When the issuance of the passport is completed, control will be transferred to the community. The community can decide its own development direction through voting. But obviously, the community itself has not yet established an effective work system. For a long time, GORJS will still rely on the team from L'Oreal to promote its affairs, and community members are only responsible for the most important thing, which is to vote for their favorite artists. Mutual support between the brand and the community, and common development, constitute the biggest consensus of the current community. If this consensus changes in the future, DAO can completely separate 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 organizational work, they may eventually replace the founding team's work in the DAO, completing a progressive decentralization process. At that time, the brand will no longer directly intervene in the daily work of the DAO, but will use the resources held as a large institution to provide necessary empowerment, distribution, dissemination, business cooperation, and connection to the community.

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

Written in the end

Through GORJS DAO, NYX is exploring Web3 in a way that is different from most brands, which is an encouraging attempt in my opinion. However, exploring the unknown always comes with setbacks. Completing the sale is not the end, on the contrary, everything is just beginning. Currently, there is still a considerable percentage of token holders who are speculators, and even if future speculators gradually leave, it is not easy to activate true supporters and form a highly interactive, trustworthy, and connected community.

Only when the hype subsides, will true consensus gradually form. When beauty is created in the digital world within the community, everyone will truly understand the GORJS team's statement - "We are not selling a set of NFT collectibles, we are launching a DAO."

This is an interesting story, but a project is not just about the story. There are more details about the operation mechanism, compliance, governance, sale process, and the upcoming proposal and voting system of GORJS DAO. Considering that most friends are not interested in these specific details, this information is not reflected in the text and will be summarized into a slideshow for separate release in the next few days.

Original article link

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