NFT Auctions by SamaSystems: The Kusamarian and Peer Effects
Project Overview
Started by Jobo Sama (@jobo_chao), SamaSystems is a project in the Polkadot ecosystem building a system of tools and analytics directed at optimizing social network connections. SamaSystems runs on the Kusama blockchain using RMRK’s NFT 2.0 standard.
SamaSystems has a work-in-progress tool that constructs a topography of Twitter’s social network (focusing on Polkadot-related accounts) and provides analytics that make it possible to, for example, identify communities and understand both the “breadth” of reach (e.g., interactions within and across communities) and the “depth” of each connection (e.g., one-way vs reciprocated interactions).
SamaSystems recently launched its Progenitor ANON(SAMA) NFTs, which takes advantage of Polkadot’s (and Kusama’s) built-in Twitter integration to connect NFT ownership with the owner’s on-chain Twitter account. The “ANONSAMA OFFICIAL” list (on Twitter) is comprised only of verified owners of ANON(SAMA) NFTs (on Kusama). In this way, members of the NFT community can be assured that their conversations within the list are with authentic members.
Link to ANON(SAMA) NFT Collection: https://singular.app/collectibles/kusama/04fe4e472ecb5a8d46-ANON
According to SamaSystems, “ANONSAMA NFT members will have their own dedicated branch, and be able to see the visualization of community network topography. This allows members to connect, explore, and understand their place within the community.” The Progenitor NFTs are also slated to have a number of additional benefits, including spawning into future generation ANON(SAMA) NFTs. (See the SamaSystems’ Twitter thread below for more information).
The Kusamarian
From October 2 through November 5, 2022, 49 ANON(SAMA) NFTs were launched using auctions on Twitter. NFT #1 is held by Jobo.
During the launch period, there were two content videos covering SamaSystems.
The first was a 45-minute AMA video on WagMedia (@thatMediaWag) with Jobo on October 11th. WagMedia produces content created by the community.
The second was a 10-minute Kusamarian (@TheKusamarian) video by PNin (@BalanceBorn) describing the project on October 18th. The Kusamarian produces content created by a team of professional journalists and video producers.
Auction prices increased by 2.5x to 5.3x “overnight” after The Kusamarian video.
Figures 1 and 2 report the auction prices over time (in KSM and USD). The blue dots correspond to auction prices before The Kusamarian video. The pink dots correspond to prices afterwards. One dot can correspond to one or more auctions as multiple auctions ending on the same day have sometimes closed for the same prices. (USD conversions are made based on the USD-to-KSM exchange rate as of the auction date).
Interestingly, members of the Kusama Kingdom (@KusamaKingdom) NFT community won 92% of auctions (12 out of 13) held after the AMA but before The Kusamarian video (discussed in more detail in the Peer Effects section below).
Table 1 shows the range of auction prices on the last day before (October 17th; 4 auctions), and first day after (October 22nd; 2 auctions), The Kusamarian video.
Table 2 reports the auction prices (median and range) of all auctions before (39) and after (10) The Kusamarian video. Median prices increased by approximately 5x after the video.
Notably, the auction prices did not increase immediately after the AMA and the post-Kusamarian prices still persist today, with the current floor at 25 KSMs and no resales recorded on Singular to date (December 3, 2022), indicating that The Kusamarian’s professionally produced content had a persistent impact in revealing the value of the NFTs (i.e., rather than simply creating hype without substance or a “pump and dump” scheme).
While the figures and tables above report just the raw data and do not conduct analyses to account for any potential confounding factors, it is hard to imagine that alternative factors can explain an immediate price increase of 3x to 5x. To quantify the causal impact of The Kusamarian video, however, we would need to properly control for any confounding factors that could have caused the prices to jump right after the video.
Peer Effects
Product purchases and investments are sometimes influenced by those made by friends, colleagues, family. Such “peer effects” can be driven by people learning from their peers (“social learning”) and/or the added utility from owning the same/similar thing (“social utility”). For example, word of mouth advertising is quite common within NFT communities, and it can be a lot more fun to get into an NFT collection with friends.
As evidenced by the timeline and identities of the auction winners, ANON(SAMA) generated substantial peer effects within one NFT community, the Kusama Kingdom (@KusamaKingdom). The open format of the Twitter auctions made it easy see that members of the Kingdom were increasingly bidding and winning the auctions. Credit to OG King TheFVK (@TheFVK) for noticing the trend early and raising it in the community.
Figure 3 shows the cumulative number of ANON(SAMA) NFTs purchased by Kusama Kingdom members over time.
Figure 4 shows the cumulative number of (unique) Kusama Kingdom members who have purchased the NFT over time.
On the first day of auction (October 2nd), 4 different members of the Kingdom purchased 6 out of 11 NFTs (Figure 3). By the last day of auction (November 5th), 18 different members of the Kingdom, including me with 5 NFTs, had purchased 29 out of 50 NFTs (Figure 4).
Given that there are roughly 120 members of the Kingdom, the share of “peers” in this community who own an ANON(SAMA) NFT increased from 3% (4 out of 120) to 15% (18 out of 120) in just one month.
This example highlights the potential for NFT artists and projects to generate substantial peer effects by reaching out to selected NFT communities (or certain members of the community) based on shared interests and affinities (e.g., for abstract art, early-stage investment opportunities in Polkadot, etc.) Some ways that have worked in the past include being a guest speaker to present the art and project followed by AMAs and holding private auctions of rare and early access NFTs within the community (e.g., private channel in Discord). SamaSystems tools could also be used to identify and reach social networks that are particularly relevant to the artist and project.
Link to my previous article on the Kusama Kings: