L’Oreal’s GORJS DAO: Exploring Beauty In The Metaverse

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

In just a few days of launch, many interesting stories have been born around it. Some people are speculating, and others are looking forward to the future in the digital world; it has a good start, and it also messed up some things. And it all comes together to form a business brand and a community to explore the unknown.

DAO – the abbreviation of Decentralized Autonomous Organization, which originally refers to a special program running on the blockchain network that handles business independently according to the preset code that cannot be changed at will to achieve permissionless and trustless business operation.

But the idealized DAO does not yet exist. The DAOs that people often say are mostly Internet-native organizations that are formed by a common culture, hobby, or vision. Compared with ordinary Internet communities, DAOs have clear goals and certain funds and rely on blockchain technology for financial and governance constraints and coordination to advance the realization of goals. L’Oreal is launching just such a DAO.

Who is singing?

NYX – L’Oreal’s cosmetics brand, compared to 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’Oreal 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 executives from NYX Cosmetics.

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

The GORJS team is made up of diverse experts in the space, including Amber Ward, Sebastian Borget, Brian Trunzo, Timmu Toke, Evelyn Mora, and Ashley Smith. The team will provide support for the artists and will continue to additional onboard advisors as the project progresses.

What is this DAO going to do?

GORJS means gorgeous in English, and it is a digital art incubator that adopts DAO as its organizational form. To put it simply, GORJS DAO will explore “beauty” in the digital virtual world by funding 3D artists in specific fields. Funded artists will not only receive financial support but also receive support from various resources from the brand.

When the artist completes the creation of relevant 3D artworks, some of the works will be given to DAO members, while the other part of the artworks will be sold in the market, and the sales proceeds will be shared equally between the artist and DAO. In this model, community members can continue to receive digital artwork, and if the artist’s creation is welcomed by the market, it will bring income to DAO so that the funding can continue.

The way to become a DAO member is very straightforward – buy a membership pass. Like most of the big brands entering the Web3 space, this membership pass has been sought after by the market. The 1,000 passes sold out quickly, bringing in about $300,000 in funding.

Why start such a DAO?

The world is gradually going digital, and many things in the digital virtual world are very different from the physical world. What is the definition of beauty in the virtual world? What is the form of beauty in this world without the limitation of the physical body? 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 Friends Club and received good feedback. This action can be considered as the deepening and continuation of NYX’s exploration in the digital world, using a more Web3 way. 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-shaped support plan.

Clearly, NYX isn’t trying to get some extra sales from the Web3 circles. Membership passes were sold for a total of $300,000, not even enough to pay for external partners, a figure confirmed by the team. Let’s take a closer look at the operating rules of DAO. We will find that whether it is the initial pass sales or the subsequent sales of artworks, all the funds obtained will go into the treasury controlled by the community, and it is up to everyone to decide how to use it, not by the brand or the founder.

The question was, “Why start such a DAO?” The answer given by the team is:

“We think Web3 is about culture, people are looking for more immersive experiences, a desire to own ownership, a desire to be creators. The brands that will succeed are the ones that understand where culture grows and where it goes. It’s not about profit or short-term gain, it’s about being at the forefront of culture. Great labels and artists throughout history, like Universal and Andy Warhol, have managed to stay in our collective memory because they understanding the power of culture and the power of change when culture meets next-generation technology. And that’s something we’re super excited about.”

By the community, for the community

By the community, for the community (by the community, for the community) is a frequently mentioned criterion of the GORJS team.

This can be reflected in many places. The team hopes to establish direct contact with most DAO members and understand who they are, why they come, what support they need, and what they can do together. This is the most important reason this offering has only a thousand passes. Because there is too much to talk about, most of the time, the size of the community is highly negatively correlated with intimacy among members.

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

Both successful and failed startups

It is different from some projects that start to promote and build momentum several months in advance. The marketing of the GORJS membership pass only started two weeks before it went on sale, which is a pretty rushed timeline.

It may be that the plan has been changed temporarily, or it may be that the total amount of 1,000 is really not much and there is no fear that it will not be sold out. The team only sent a few tweets, did a public question and answer, and finished the pre-release publicity work very poorly.

The facts are indeed as expected, the people who registered in advance and hoped to be able to buy the pass far exceeded the supply, and finally needed to determine part of the purchase eligibility (white list) through a lottery, while the rest will be handed out after the time is up Sell in an expedited manner.

But the team still underestimated everyone’s enthusiasm and the other side of the Web3 world – the arbitrageurs hidden in the dark forest. Membership passes are issued on the blockchain network in the form of NFT, so it is very convenient to conduct secondary transactions in the market. In the face of potential profit opportunities, more than one million requests flooded in the first minute of the whitelist sale, which is beyond ordinary buyers’ ability.

The server crashed instantly, and the release had to be postponed until the next day. Only a small number of accounts controlled by code robots were successfully purchased on the first day. After restarting the next day, the remaining passes were quickly swept away.

In this regard, community members have great dissatisfaction. Obviously, arbitrageurs with technical advantages bought a large part of the pass. But the irony is that most people who vent their dissatisfaction fiercely in the chat channel are actually speculators themselves – speculators without technical advantages.

Judging from the release results, it was a success. Passes were sold out, the brand was not disgraced, and the DAO received the initial funding it needed. But judging from the purpose of launching DAO, this is not a very successful launch. Too many passes are in the hands of speculators, who don’t care about art and creation, and most don’t even know what the project is about.

For them, it is enough that this thing has a small amount, a great reputation, and should be able to make money. But such a distribution of holders will undoubtedly bring great difficulties to starting a DAO.

Is price part of the brand, or not?

The patience of speculators does not last long. In the 3 days after the pass was issued, it was traded 400 times, and 40% of the buyers left the market.

The first artist funding of GORJS DAO was planned at the end of March, which caused strong dissatisfaction from the community. In everyone’s opinion, an NFT project should release some good news prepared in advance immediately after the successful issuance, take action quickly, and at the same time arrange peripheral funds for market operations to push up the price.

But GROJS apparently had no plans to do so. As speculators sold off, prices continued to slide from their highs and eventually fell below the issue price.

This further led to conflicts. Many people who lost money after receiving orders from high positions began to suggest and even stronger demand that DAO use treasury funds to protect the market. The team clearly rejected this. The treasury funds are used to support artists, which was made very clear before the launch of the DAO, not to mention that participating in the secondary market operation will lead to great compliance risks.

Not getting what they wanted, many holders started speaking out in the community very rudely. The intense reaction in the community prompted some swift responses from the team, including holding a community meeting to explain the technical failures in the sale, the future work plan in detail, and why the first project needs to be launched at the end of March.

At the same time, the team also announced the adjustment of members who purchased passes through the secondary market rights and interests.

In the original design, members who purchased passes through the initial issuance will receive additional voting rights. This design rewards community members who have been with the DAO since day one. And now the team finally realizes that most of them are just speculators. Instead, many people who bought passes from the secondary market later are members who are really 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 for approval. This is very inconsistent with DAO’s spirit, 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, including 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 everyone’s conversations, solving various problems in real time, and we have been listening to everyone’s voices. We will explain these complex issues in community meetings, we will share with you, and we need to hear your perspective. That’s what this community is about, and that’s what this DAO is about. We are humble here and learn by doing. We need time to bring the Web2 brain to the Web3 world.”

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

The price drop is not completely useless. Some friends who really want to participate in DAO finally have the opportunity to buy a pass, even at a lower price than the original issue.

Some community members gave sound comments and expressed support. Someone said:

“I’m glad to see some changes have been made here. I’ve seen other members come up with some great ideas and really hope the team will take these into consideration. This is exactly how to provide value to web3 users, keep it engaged, keep it interesting, but also keep it serious. When people believe in what you’re doing, people will want to hold onto it. I love this mission, artists are in NYX’s DNA. Stick to your passion and let it evolve into something that excites the whole web3 world.”

They also said:

“The plan is actually good, but you must consider the issue of time, otherwise the effort will be useless. At the same time, price matters, especially early in a project. Pass prices are like stock prices in web2. If the company’s stock price plummets, even well below its IPO price, other efforts won’t help much. When everyone is worried about falling prices, no one talks about what we should do. Price is an indicator of an item’s credibility and value to others.”

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

Isn’t it decentralized? How come you still have a company?

Unlike most community DAOs, GORJS is initiated by the company and will be inextricably linked with the company in the subsequent operation process. This seems to be contrary to DAO’s pursuit of decentralization.

However, we should also see that technically speaking, no matter whether L’Oreal, NYX, or the founding team, they are not the controller of GORJS DAO, but only the operation team. Control is handed over to the community when the pass sale is complete. The community can decide its development direction by voting. But the current community itself has not built an effective working system.

For a long time, GORJS relied on the team from L’Oreal to promote the affairs, and community members were only responsible for the most important thing, voting for their favorite artists. Mutual support and common development with the brand constitute the greatest consensus in the current community. If this consensus changes in the future, DAO can break away from the brand and go its own way.

As the community matures in the future, if enthusiastic participants can emerge and gradually participate in the organization’s work, they may eventually replace the founding team’s work in DAO and complete a gradual decentralization process.

At that time, the brand will no longer be directly involved in the daily work of the DAO and will use the resources held by a large organization to provide the community with the necessary empowerment, distribution, communication, and business cooperation connections.

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

Conclusion

Through GORJS DAO, NYX is embarking on a Web3 exploration that is different from most brands, and it is an attempt worth encouraging, in my opinion. But exploring the unknown always comes with setbacks.

The completion of the sale is not the end; on the contrary, everything has just begun. At present, there are still a considerable proportion of pass holders who are speculators, and even if speculators gradually leave in the future, it will not be easy to activate real supporters and form a highly interactive, trusting, and connected community.

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

It’s an interesting story, but a project isn’t all about stories. More details about GORJS DAO’s operating mechanism, compliance, governance, sale process, and the proposal and voting system will be launched soon. Considering that most of my friends are not interested in these specific details, this information is not reflected in the article and will be compiled into slides and released separately in the next few days.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.

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Harold

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