Provenance Mining
An in-depth look at the Provenance Mining concept and potential outcomes from the experiment
Provenance Mining is really a test in prod, but the hope is that exploring this concept will lead to interesting conclusions and discoveries.
This is a more theoretical look at provenance mining, for more practical info see Mining VIBES.

Abstract

Provenance Mining is a mechanism that allows an NFT to mine tokens over time that the owner of the NFT can claim. VIBES has built this as a way of exploring potential use cases and ramifications of such a system:
  • A new approach to token distribution, empowering artists to play the crucial role of deciding how network equity can be distributed to a group of people
  • A novel form of value instrumentation, creating a crypto primitive that tokenizes that act of holding a non-fungible asset over time
  • A cyclical economic system allowing collectors to capitalize on the provenance of owned NFTs before selling them at a lower price point, increasing accessibility to premium art
  • A socialized value mechanism that allows a collective of artists to evenly distribute demand across artists with varying degrees of popularity and success
  • A solution to NFT illiquidity where collectors can sell, trade, or pool the more flexible mined fungible tokens, even while retaining the original NFT

Token Distribution

An artist can distribute or sell NFTs among their collectors, community, or fans. Each NFT acts a "portal" that continuously streams mined tokens that can be claimed by the NFT owner. This allows an artist to distribute network equity among people who are interested in the art or project in a very tangible way.
Infusing the NFT can only occur once, but it can occur much later than the token was minted. An artist could chose to infuse the distributed token only after the NFTs have been fairly distributed, "switching on" the provenance mining at a later time.
The mining rate and total lifetime value of each token can be set, creating more valuable or important tokens, and allowing for a diversity of equity distribution options for the artist.
The artist or collective responsible for infusing the NFTs plays the most crucial role in a provenance mining ecosystem: how will capital and network equity be distributed?

Instrumentation of Value

Crypto, and specifically programmable blockchains, offer equitable and democratized access to powerful coordination technology. Provenance mining may be a new way of instrumenting (i.e. representing / tokenizing) the value of holding an artist's work over time in way that was not possible in the past.
Traditionally, the only way to capture value has been with money, which is at best a lossy abstraction of value. With the composability of on-chain protocols and standards, we now have the ability to instrument all types of value that we couldn't before.
Once you can effectively instrument something abstract like "the value associated with holding art over time", you can now "tether" it to other forms of value via markets and or other on-chain mechanisms.
This is important, as it allows what would otherwise be an isolated, illiquid concept (tokenized representation of holding art over time) to be connected to other more liquid forms of value (currencies, other fungible assets).
Provenance is not a new form of value -- but provenance mining is a new way of instrumenting something we couldn't before. This allows artists and collectors capitalize on this value in novel and potentially rewarding ways.

Value Circulation

A collector could hold art for a while and thus mine a lot of tokens over time. The art would have intrinsic value as a piece of artwork minted by the artist, but its provenance is directly represented by the mined tokens inside of it.
The collector could decide to claim all of the mined tokens, and then resell the art. This would allow the collector to capitalize on the value of holding art over time (by selling the claimed tokens), while reselling the art to another collector, potentially at a more accessible price point, since all mined tokens are claimed.
This may create an interested cycle of value where collectors mine provenance over time, capitalize on that provenance, and then re-sell the NFT to somebody else to do the same thing.

Collective Value Socialization

If more than one artist is minting NFTs that provenance mine the same token, the token now represents the amalgam of value associated with holding that collection of artists' art over time. This can be a way of socializing the value (and thus potential revenue / demand) of art across a group of artists, potentially with varying degrees of existing demand or revenue-generating potential.
This allows more successful artists in a collective to increase the demand for smaller or lesser known artists' work, since all of the art mines the same token.

NFT Liquidity

NFTs can have liquidity challenges for smaller artists, and collectors run the risk of holding illiquid assets as market conditions fluctuate or trends shift.
Fungible tokens are far more flexible and interoperable. Collectors always have the option of claiming the mined tokens in order to sell or further capitalize on the purchased art and established provenance, even while retaining the original NFT.
Provenance mining turns the intrinsic value of art and holding it over time into a fungible and flexible digital asset that alleviates NFT illiquidity.