Mirror Funding Mechanisms

Show a breakdown of Mirror’s funding mechanisms on Ethereum mainnet. How much have auctions raised vs. crowdfunds? Which mechanism contributes to the most funding for the treasury?

Note : This article has been written in tandem with another article on a similar topic. the link to article is here

Introduction

What is Mirror?

Mirror is a web3 publishing platform. If you're a writer, you can start using Mirror by going to https://mirror.xyz and connecting an Ethereum wallet. This decentralized platform can be considered as a spin-off of Medium, as it provides users with the tool kit to share stories or ideas with their audience. The interesting twist is that it places the creators at the center ensuring that they are the ones profiting from generating content. Though it may appear similar to traditional publishing or blogging websites, Mirror.xyz allows you to immediately monetize your work. Mirror.xyz places an emphasis on becoming the essential web3 toolkit for sharing and funding anything — this means that it aims to ensure that the user is not simply a product, but is able to take ownership of their ideas and generate earnings (funding, royalties, etc.).

Sitting at a valuation of $100 million, the 16-month startup has continued to see exponential growth riding the crypto craze these past few months.

Objective

The objective of this article will be to analyze the trend seen in funds raised by mirror. Namely we look -

How much total funds has Mirror raised?
Breakdown of funding mechanism
amount raised by auctions and crowdfund
Comment on auction vs crowdfund

Methodology

Note: : Throughout the article, when talking about funds raised, we talk about the funds raised by the mirrors account rather than the funds raised and used by individual content creators.

Funds raised -

According to the blog posts of mirror, funds can be raised by users using 3 methods. Crowdfunding, NFT auctions and editions. 2.5 % pf all funds raised are to be deposited into the mirror treasury. We identify the source using the ethereum.core.ez_eth_transfers table.Any transaction with the mirror treasury '0x138c3d30a724de380739aad9ec94e59e613a9008' is a result of a sale/buy on the mirror website.

Identifying source.

We can identify the source type by looking at origin_function_signature. A list is given below.

when ORIGIN_FUNCTION_SIGNATURE='0x68742da6' then 'Editions'
when ORIGIN_FUNCTION_SIGNATURE='0x3ccfd60b' then 'Auction'
when ORIGIN_FUNCTION_SIGNATURE='0x24600fc3' then 'Editions'
when ORIGIN_FUNCTION_SIGNATURE='0xc149721c' then 'Mirror Open Sale'
when ORIGIN_FUNCTION_SIGNATURE='0x31a3a506' then 'Crowdfunding'
when ORIGIN_FUNCTION_SIGNATURE='0x6a761202' then 'Genosis-Safe-Proxy'
when ORIGIN_FUNCTION_SIGNATURE='0x4314a946' then 'Editions'
when ORIGIN_FUNCTION_SIGNATURE='0xbd8616ec' then 'buy-edition'

Identifying sponsors

We calculate the total number of sponsors by counting all the distinct eth_from_address ( that is, all addresses that have been debited eth for a transaction with the treasury) .

Flow of crowdfunding

Writers on Mirror can publish an intention to research and produce high-quality writing, and receive crowdsourced funding. In this model, the contributors who fund the project also receive a stake in the future financial upside produced by the work, captured by subsequent sales of the NFT. This improves considerably on existing crowdfunding platforms, such as Kickstarter.

The funders of the project should be able to trade their own currency (e.g. ETH or DAI) for an ownership stake before the project is completed. The creator should be able to withdraw pledged funds and use them to fund the production of the public good. The backers should be allowed to redeem the underlying funds (including profits) once the NFT is traded, proportional to the percent that they contributed to the fund. They can do this by provably burning their equity tokens in a single transaction that also redeems their funds.

We see that a total of 233 ETH was deposited to the treasury, and hence we could say that through its users mirror has raised a total of 233 ETH. While its users have raised a total of 233 * 40, that is 9320 ETH through mirror.

Breakup of funds

We see that crowdfunding makes up the majority of the funding raised, accounting close to 50 %, while Auctions make up 37.2 % and editions make up 11.7 %.

Under the hood, a Crowdfund is a smart contract on Ethereum. Backers deposit ETH to fund your idea in exchange for a token. The token represents a proof of patronage and a stake in the potential success of your project.

Editions are a way for creators to mint a limited supply of identical NFTs at a fixed price. If a 1/1 NFT is a Picasso at Sotheby's, Editions are like the thousands of first-edition holographic Charizards released.

Trend of funding

We now look at how the trend has been over time.

Well, this is an interesting graph. We see that while crowdfunding is the major source for mirror. The bull market of NFT in the month of November of 2021 resulted in huge income through auctions, which has since gradually tapered down. Crowdfunding seems to be erratic with highs and lows throughout the time period indicating that the crowd funding sponsors are more likely to focus on larger time periods.

Total number of sponsors.

Alright, but who is funding and what's the breakup ? That is, how many people are actually funding the programs on mirror and what are they funding.

We calculate the total number of sponsors by counting all the distinct eth_from_address ( that is, all addresses that have been debited eth for a transaction with the treasury) . We find that there are 209 sponsors.

We now look at their breakup. That is how many addresses fund a crowdfundingm how many fund editions and how many fund auctions

We see that among half of the addresses fund a crowd-fund initiative, while 41% of the addresses go for the editions and only 4% for the auctions. This is interesting as the 4% who went for auctions made up about 37% of funds while the 41 % of edition seeker bought in a revenue of only 12%. This indicates that the auction seekers are more likely to spend big while the addresses seeking editions are likely to spend small.

Discussion on Crowdfund vs auction

The questions specifically asks us to comment on auctions vs crowdfunds and the amount they generate for the mirror protocol. From the above analysis, we can clearly say that until today, crowdfunding has generated more in revenue to mirror than auctions. However, there appears to be a caveat.

During the months of Novemeber 21, the demand for NFTs were significantly high. During this brief period, the amount of revenue generated by auctions was significantly higher than that raised by crowdfunding. One could infer that most of the nft sales that occurred in November 21 were because of the bull run and not a sustainable one. However, the crowdfunding mechanism maintained a steady amount even during the bear market of may 2022. This shows that crowdfund sponsors are more interested in the long term and are invested in the project rather than viewing it as an investment.

According to me, one could definitely say that the crowdfund mechanism is a better approach than auctions or editions because of the sustainability.

Conclusion

As the article has been considerably lengthy, we now look at some concluding points.

A total of 9320 ETH was raised by the mirror users of which 233 ETH was deposited into the mirror treasury
Crowdfunding makes up the highest share for funds raised.
NFT Auctions were quite popular in the November 2021 while crowdfunding has been steady.
Most small users gravitate towards editions and huge players towards auctions and crowdfunds.

Reference

Analysis

Funds raised

We first look at the total funds raised by mirror. To calculate the funds raised, we use the Treasury address (0x138c3d30a724de380739aad9ec94e59e613a9008). 2.5 % of all funds raised are deposited into the treasury. Hence we calculate the total amount deposited to find the total amount raised,

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