A Deep Dive Into Sotheby's Metaverse
Metaverse

A Deep Dive Into Sotheby's Metaverse

9 months ago

Iconic auction house Sotheby's embrace of non-fungible tokens and Web 3.0 gave rise to the Sotheby's Metaverse — an immersive platform for purveyors of curated digital art.

A Deep Dive Into Sotheby's Metaverse

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The promise that artists could bypass auction houses is arguably the main reason digital artists are considering using non-fungible tokens (NFTs). Not to be left behind, auction houses have begun to embrace the NFT craze by providing ecosystems where digital artists and collectors can sell their artworks. 

Sotheby’s, in particular, has launched a new platform called Sotheby's Metaverse, purposely built for curated auctions of digital art as NFTs.

What is Sotheby’s Metaverse?

Since 2021 began, Sotheby’s, the British auction house founded in 1744, has moved ever closer to stamping its presence in the digital art space. And so, it comes as no surprise that it is heavily involved with non-fungible tokens (NFTs), considering digital artists tend to adopt blockchain technology and hop on the NFT trends. While this is a given, Sotheby’s took things up a notch by launching an NFT-focused platform — Sotheby’s Metaverse — where artists, collectors and art lovers alike can sell, buy and view some of the most prestigious NFT arts. 

Sotheby’s Metaverse was launched on Oct. 14, 2021, to accommodate all of Sotheby’s future NFT sales. The platform is said to feature some of the technological advancements that enable seamless NFT auctions and offers the same level of experience associated with more established NFT marketplaces like OpenSea and Nifty Gateway. The goal is to create an immersive NFT ecosystem while still preserving the high operation standards expected of a blue-chip auction house. 

More specifically, the platform supports crypto payments. As such, it is safe to say that Sotheby’s is going all out to capitalize on the NFT boom and play a pivotal role in the emerging digital art space. 

How Does Sotheby’s Metaverse Work?

As mentioned earlier, Sotheby’s Metaverse operates as an NFT marketplace, just like OpenSea. The only difference is that, unlike OpenSea, Sotheby’s offering does not conduct its auctions on-chain. Like any NFT marketplace, new users have to create an account to become eligible to buy NFTs on Sotheby’s. As part of the requirements imposed on buyers, you will have to fill a declaration statement where you are expected to provide a billing address, along with the appropriate documentation that proves your claim. Once all the documentation, including a government-issued ID card, has been verified, Sotheby’s will issue an invoice as well as a payment link for the NFT you intend to buy.  

What Makes Sotheby’s Metaverse Unique?

Below are some of the unique features that set Sotheby’s Metaverse apart. 

Centralized Framework

Since buyers are required to undergo an extensive identity verification process and auctions are conducted off-chain, there is absolutely no doubt that this NFT marketplace utilizes a centralized framework where Sotheby’s take up the role of an intermediary between the artists and the buyers. 

Hybrid Payment Infrastructure 

On Sotheby’s Metaverse, buyers can either make payments with fiat currency or cryptocurrency. The supported cryptocurrencies are Bitcoin, USDC and Ether. It is worth noting that the platform does not receive payments from self-hosted wallets. To make crypto payments on Sotheby’s, you must send your coin from exchange wallets maintained by any of the following companies:

  • Coinbase Custody Trust

  • Coinbase, Inc. (including Coinbase, Coinbase Pro and Coinbase Prime accounts)

  • Fidelity Digital Assets Services, LLC.

  • Gemini Trust Company, LLC

  • Paxos Trust Company, LLC.

Those looking to bid with fiat currencies could make payments with any of the conventional systems listed below:

  • Wire transfer

  • Credit card up to $50,000 (Visa, AMEX, or Mastercard)

  • China UnionPay

  • Check 

Buyer’s Premium

For each winning bid, the bidder is expected to pay a Buyer’s Premium and a 1% Overhead Premium — except in cases where these fees are being exempted. Depending on the location of the buyer and the hammer price of the NFT in question, the Buyer Premium usually ranges between 13.9% and 25%. You can check the Buyer’s Premium chart here for more details.

Responsive Bidding 

Sotheby’s enables a responsive bidding system that automates the bidding response of buyers up to their predefined maximum bid price. In other words, if you have the highest bid for an NFT and you are suddenly outbid by another buyer, the system will automatically raise your bid to ensure that you remain as the lead bidder. Note that this responsive bidding infrastructure will not exceed the highest amount you are ready to pay for the NFT. 

Natively Digital 1.2: The Collectors

Following the launch of the Metaverse, Sotheby’s announced that the first set of NFT auctions that will be conducted on the platform will take place between Oct. 18, 2021, to Oct. 26, 2021. 

These sales featured 53 lots of prestigious artworks — including a CryptoPunk, Bored Ape Yacht Club, Rare Pepe trading cards, Chromie Squiggle, and a few Cool Cats — owned by 19 collectors and artists. Some of the well-known collectors and artists are Paris Hilton, Pranksy, Steve Aoki and j1mmy.eth. Interestingly, each new user is gifted with an avatar created by popular NFT artist Pak.

The 8-day auction successfully concluded with a total of $17 million in sales, with the highest being a rare Pepe NFT that went for $3.6 million.

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