Burnt Finance, who offers a decentralised non-fungible token (NFT) auction platform, have closed an $8 million Series A funding round. The round was led by Animoca Brands, and joined by names including DeFiance, Valor Capital Group and Figment. Multicoin Capital and Alameda Research, who contributed $3 million to a May 2021 seed round also joined the Series A, increasing their investment in the platform.
Crypto, and the NFT market, has seen significant growth over the past few years, and is increasingly entering the mainstream. According to DappRadar, there was a $22 billion market in NFTs in 2021, with the top 100 NFTs of all-time holding a collective valuation of $17 billion. The tokens, which are an asset in their own right, have hit headlines, with NFTs based around other assets selling for record amounts. Even traditional auction houses have got in on the act. Christie’s and Sotheby’s sold $165 million worth of NFTs in 2021, representing over 5% of their contemporary art sales.
Replacing physical art with NFTs
Burnt Finance started with the ‘Burnt Banksy’ campaign. The campaign saw a piece of Banksy art burned and replaced with an NFT. Burnt Finance’s founder, who also goes by the name Burnt Banksy, told TFN the purpose was not just about headlines but challenging what art is. When he discussed NFTs with others, they would suggest the value was in the physical art. “If we had both the digital and the physical, the value would, of course, still be in the physical. It was, of course, an experiment, to see if the value would still hold into the digital.”
The experiment was successful. The physical Banksy piece had previously sold for $95,000. The NFT that was created sold for 229 ETH, a cryptocurrency, worth about $400,000 at the time. For Burnt Finance’s founder, the success was not just about the NFT’s value. “We were here to start a conversation and it got a lot of people talking, which we were happy about.”
However, the auction raised a lot of issues about how NFT auctions work. The process faced challenges, ranging from the expensive ‘gas fees’ charged for Ethereum transactions to bad actors attempting to manipulate the bidding process.
The result was Burnt Finance, an open and transparent marketplace, offering low fees and protection against manipulation, that would have made the Burnt Banksy sale much easier. Burnt Finance is a fully decentralised platform, offering English, Dutch and Buy Now actions. However, following the public launch, additional features will be added, including NFT lending, liquidity mining, and fractionalisation.
The founder hopes the platform will continue the acceptance of NFTs into the mainstream. The funding will be used to continue the platform’s growth, and the additional features will help owners leverage their digital assets. “NFTs sit in your wallet,” they told us, “but in the traditional world, we want people to be able to utilise them as collateral.” The platform will also help the NFT market continue to expand into new areas. “There are so many unique applications for NFTs. They can provide amazing utility and communities. There are so many use cases.”
The sense of community is, perhaps, the most important aspect of Burnt Finance’s model. Although looking to expand their team, their focus is on getting the right people. “Maintaining, the air of friendship throughout everything is my most important thing. If you love what you do, it doesn’t feel like work,” Burnt Banksy told us. “We look for curiosity, wanting to solve our problems. That needs genuine curiosity, eagerness to learn and grit.”
Using crypto to democratise auctions
Burnt Banksy also believes that crypto and NFTs can have a democratising effect. The decentralised model means that people can access markets and communities that they would have previously been locked out from.
“Look at something like Sotheby’s, where you need to have made it to just get in. The idea with Burnt Finance is to provide access for everyone. That’s the spirit of crypto,” Burnt Banksy said. The decentralised design of Burnt Finance means that it is not just buyers and sellers that have easy access to a secure marketplace. Creators can also easily sell their work, without needing to establish a reputation as a valuable artist to begin.
Burnt Banksy is ambitious about how Burnt Finance’s decentralised platform will empower everyone. “Decentralisation is removing the barriers to entry that have been set up for hundreds of years,” they said. “Truly allowing everyone to do what they love, and profiting from it, is so incredible.”