Logan Paul’s New Website Will Take Collectibles, Lock Them In A ‘Vault’ Then Sell Tokens

Logan Paul’s New Website Will Take Collectibles, Lock Them In A ‘Vault’ Then Sell Tokens
Photo: Gaelen Morse, Getty Images

Internet person Logan Paul, fresh off wearing a $US6 ($8) million Pokémon card to Wrestlemania — a sentence I am reeling from having had to type — has also this week opened a site called Liquid Marketplace, which claims to be selling stakes in physical collectibles, but in reality sounds like a disaster waiting to happen on every conceivable level.

Teaming up with Ryan Bahadori and Amin Nikdel, and having raised $US8 ($11) million to open, the site says:

We want to make high-valued collectibles accessible to anyone interested in building their collection. To create a level playing field where those who truly appreciate these unique items can own something legendary.

Ah yes, an egalitarian rallying cry from technocrats, cool. The idea behind the site is that it will take collectibles, break them up into tokens, then sell a limited number of those tokens. Once the tokens are all purchased directly from the site, they’ll then be able to be bought and sold on a secondary marketplace.

They’re doing this with digital collectibles, like NFTs, but more interestingly — and much more precariously — they’re also doing it with actual, tangible collectibles, which must be shipped to their vault–whose name and/or location is not disclosed–and locked away, after which ownership will theoretically transfer to holders of the site’s tokens.

NFTs are dumb and worthless, but they’re also relatively easy to deal with on a conceptual basis, since they exist purely in a digital space. Trying to split up an actual thing into digital pieces and somehow reach a consensus on who owns it is a disaster waiting to happen. The site has rules for this, of course, but they’re fraught with loopholes for exploitation and/or peril, as The Block report:

Another tricky issue regarding tokenizing assets — whether physical or digital — is about what happens at the end of the process. Once an item has been split up into thousands or millions of pieces and these tokens are possessed by thousands of people, how do you piece it back together in order to reclaim ownership?

In this case, there’s a buyout system. If one person manages to acquire a certain buyout percentage (not stated in the platform’s terms and conditions) then they are able to trigger a buyout vote. If 80% of the token holders vote in favour of a buyout at a given price within 72 hours, then that person is able to buy everyone else out. In this case, they are then able to claim the item and have it physically delivered to them.

There’s only one way this is going to end, and it’s:

Screenshot: The SimpsonsScreenshot: The Simpsons

As we just saw yesterday with the licensed F1 game, this NFT/crypto/blockchain stuff always looks so utopian on paper. And every time the rubber meets the road in a real-world scenario, it completely falls apart. In this case, what happens if the actual collectibles in the vault are damaged (Note: I’ve reached out to the site for more information on this)? Or stolen? Or the site goes bust and the physical items are lost while people still own their digital tokens? Or users have their tokens hijacked?

It’s all just so…complicated and unnecessary. A solution looking for a problem, the same way every other piece of blockchain “innovation” has always been.

Comments

  • I feel dumber reading this article. Is he sub-dividing NFTs into more NFTs to sell them to just trigger hostile market place buyouts to create artificial price fluctuations. Stick trading in ownership of NFTs not enough speculative pricing so let’s add another layer and watch it implode when users start options and short selling trades.

    • I think he’s selling “ownership?” of physical goods as a limited set of NFTs then locking the thing itself away so that nobody can enjoy any aspect of the thing that they “own?” apart from the actual “owning?” part. Presumably they just have to take it on faith that it’s actually in a vault and that he didn’t sell the thing to someone else, burn it, wipe his ass with it, or any combination of the three.

  • Taking an asset, splitting it into parts, selling said parts and then allowing the owners to trade those parts….it’s called a ‘share’ and people trade them on a ‘sharemarket’. Seriously, anyone who puts any money into this dumb-ass thing should be issued a free sticker to put on their forehead: I’ve got money to burn; steel from me.

  • Unbelievable….

    When it all falls apart he’ll keep all the money and the assets before starting up ANOTHER grift.

    • Actually the opposite might happen, a lot of these NFT collapses and rug pulls often can’t get their money back cause there was NOTHING to begin with… since he is holding the assets, and a US Citizen he could be fully liable. Logan Paul could just end up Bernie Maddoxing himself into jail.

      • We can only hope but I imagine the problem will end up being something he can or will pretend is outside his control.
        Hackers, third parties or other outside influences.

  • Can’t believe I am commenting on another NFT story. So usual disclaimer, I do not plan to buy any or ever be involved in these in any way. The following brief sentences are only a comment on the above, and may or may not even be factually correct.

    Rich people buy expensive art not to put it on the wall, it’s too valuable. They put it in a secure vault, then sell it later. Usually for more money. Why? well its tax free, you don’t pay tax when selling a personal asset.

    In that respect it could work out, a limited number of shares (and that’s what this is)
    that can be sold and traded is not a new idea.

    Ensuring that the item is what they say it is, and is where they say it is, is troublesome.

    I can’t figure out though if you would need to disclose the income from the sale of your share as a dividend income. If so then you should just buy regular shares. Probably more reliable than a “Glitter first edition, black limited run Pikahu”

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