Story Protocol: Modernizing Global IP

Introduction

Intellectual property is a multi-trillion-dollar asset class trapped in an outdated system. However, Story Protocol looks to change all that and bring this valuable asset on-chain.

The project is led by co-founder Jason Zhao. With a Master's degree in Computer Science from Stanford University, where he conducted AI research at the Computer Vision Lab, and experience at Google's DeepMind, Zhao brings deep technical expertise to the table.

The speed of development in the crypto space attracted Zhao to blockchain technology. He realized that while the AI industry, dominated by a few major companies, can take five years to move from research to production, a crypto team can go from white paper to production in just a few months.

The next step was for Zhao and co-founder SY Lee to find ways to build a blockchain that could do something beyond money and finance. He believed blockchains could provide the substrate for a new internet and stretch beyond just currencies, and the Intellectual Property asset class stood out as having the most potential.

Despite the technical and legal complexities of intellectual property, we engage with it daily through platforms like YouTube, TikTok, and X. The average person spends significantly more time on TikTok than on Charles Schwab, highlighting the substantial impact of intellectual property on our daily lives. However, the development of intellectual property infrastructure remains disproportionately low compared to its influence.

The Antiquated Intellectual Property Asset Class

The history of crypto is about building blockchain networks that replace existing, struggling institutions. The best example is Satoshi's response to the 2008 financial crisis with Bitcoin. Blockchains have been focused on continuing that mission of decentralizing finance. But if you look at the legal system surrounding intellectual property, that system is way more antiquated and less sophisticated than Wall Street.

Intellectual property (IP) covers a wide range of areas, from scientific research and pharmaceuticals to global brands like Nike and Hollywood's diverse assets. Zhao's discussions with corporate executives revealed that potential deals are sometimes hindered by the high cost of IP due diligence. Legal teams can charge millions of dollars to determine the extent of a company's IP ownership and rights, often exceeding the value of the deal itself.

Supercharging an Inefficient Market

The intellectual property market is inefficient, with high transaction costs and accessibility issues. This creates a broader problem where only large entities with extensive legal resources can afford to navigate and negotiate intellectual property deals, highlighting the challenges of intellectual property as an asset class.

The New York Times is suing OpenAI over the unauthorized use of its articles to train AI models. At the same time, OpenAI spends millions of dollars a year on intellectual property licensing. However, even with its deep pockets, OpenAI can't afford to make millions of licensing deals per day.

In addition to the legal disputes surrounding AI companies' use of intellectual property, there is currently no efficient system for the payment or discovery of that intellectual property. Determining ownership and appropriate user fees for intellectual property remains a complex and costly endeavor.

Blockchain Comes to the Rescue

Story Protocol is revolutionizing how intellectual property (IP) is created, managed, and monetized, particularly in AI and consumer applications. By leveraging blockchain technology, it introduces a transparent, efficient, and cost-effective system for licensing IP—solving the inefficiencies and high costs plaguing traditional methods.

The founders of Story Protocol recognized blockchain’s potential for instant settlement and global payments, making it an ideal solution for the intellectual property market. By operating on-chain, Story Protocol functions as a global settlement layer, enabling seamless transactions and instant payments for IP assets. This innovation ensures that creators and rights holders are compensated fairly while streamlining the entire licensing process.

Why Story Built a Layer 1

The founders of Story initially built it as a pure smart contract protocol, but they quickly realized the limitations and decided to create a Layer 1 blockchain instead.

Intellectual property requires specific tools, such as an execution environment that can validate its uniqueness and track its usage, which a decentralized validation service can provide. This differs from other assets, like money.

Building a Layer 1 blockchain is more expensive and time-consuming, but it allows customization of every layer of the stack and virtual machine, ensuring Story's products can handle future improvements.

The founders wanted to avoid potential difficulties in making changes and customizations on someone else's Layer 1. Even launching on a Layer 2 could lead to challenges keeping up with Ethereum's changes. Despite the additional engineering costs, Zhao believes the freedom and independence of a Layer 1 blockchain are worth it.

Multi-Core Architecture

Story Protocol's multi-core architecture is designed to support a dynamic ecosystem of application integrations. Each core functions as an optimized execution environment, focusing on aspects like scalability, speed, safety, or privacy.​

• Main Core

Ensures compatibility with the Ethereum Virtual Machine (EVM), facilitating seamless integration with existing Ethereum-based applications.​

• Intellectual Property (IP) Core

Manages the registration of IP assets, transforming them into programmable entities. These assets are represented as multifaceted graphs that meticulously track licensing, rights, and monetization

Additionally, Story's architecture supports adding new specialized cores beyond Intellectual Property capabilities such as:

• Artificial Intelligence Core

Optimized for AI-related on-chain operations, improving efficiency for machine learning and data-driven applications.

• Zero-Knowledge (ZK) Core

The ZK core could enable verification of ZK proofs such as ZK-SNARKs. This specialized core could enable Intellectual Property owners to prove the authenticity of their assets without exposing sensitive data.

Exploring Story Protocol's Tech Stack

Story has a multi-layer composable stack so their devs can easily upgrade each layer as needed. The entire stack consists of a consensus layer, an execution layer, and a protocol layer.

Consensus Layer

On the Consensus Layer, Story uses a version of Comet BFT supported by Cosmos SDK. This setup makes Story developer-friendly.

Story uses Proof of Stake (PoS) consensus with a Genesis set of 64 validators, with plans to ramp up to 80 or 100 in the first year. The validators are a mix of professional validators (who also secure other major blockchains), validators from the Story community, and others independent validators from around the world. Presently, there are 20 to 30 community validators, with the goal of growing more from those ranks.

Execution Layer

The Execution Layer serves as the network's computational foundation, handling transaction and smart contract executions. The team started with the Ethereum Virtual Machine (EVM) to be completely compatible, but they have made many changes to solve problems specific to intellectual property.

A key innovation within this layer is the Proof-of-Creativity Protocol, a smart contract system natively integrated into the Execution Layer. This protocol enables creators to register their IP as IP Assets (IPAs), represented as on-chain NFTs linked to ERC-6551 IP Accounts.

A fundamental function of this protocol is to establish a standardized set of metadata for each IP asset, ensuring uniformity across different regions and organizations. This standardization applies universally, whether the IP originates from large entities like OpenAI or individual creators, thereby promoting consistency and interoperability in IP management.

Proof of Creativity and Programmable Intellectual Property

The protocol also allows each intellectual property asset to be programmable. Thus, it's not just static information stored on-chain; owners can set programmable terms for automatically enforcing their intellectual property.

Let's take music, for example. A songwriter can register their intellectual property on Story so that anyone can remix their song provided they pay the owner $5 upfront. Moreover, the owner can stipulate that should the song generate a lot of revenue for the remixer, they would have to pay a 10% fee.

Users can register terms like these on the smart contract through the Proof of Creativity protocol, which makes the Intellectual Property programmable. So, whenever someone uses that song, Story enforces the payment up front and collects 10% of the future revenue flow for the original music creator.

Some experts predict that 90 to 99% of content will be AI-generated or at least AI-assisted by the year 2035 or sooner. So, Story is looking to embed its protocol at the AI model level to plan ahead for when AI will produce most of the world's intellectual property content.

To sum up, Story Protocol allows every intellectual property asset to have its own terms and programmable parameters enforced automatically on-chain.

Validation Service

The final item on Story's stack is the validation service, which checks every Intellectual Property asset registered on Story to ensure its uniqueness.

For users, the entire Story stack is seamlessly wrapped in a simple API, making integration effortless. Whether a developer is building on Solana, another blockchain, or even off-chain, they can simply call the API and let it handle the complexities behind the scenes.

Onboarding Intellectual Property to Story Protocol

Story Protocol offers two primary methods for integrating intellectual property (IP) into its ecosystem:

1. Onboard Existing Off-Chain IP: This approach allows creators to register their pre-existing IP assets onto the Story Protocol, enabling them to manage and monetize their work within a decentralized framework.

2. Register New IP Assets on Story: Creators can directly develop and register new IP assets natively on the Story Protocol, taking advantage of its programmable IP features from inception.

Notably, the Story Protocol team dedicates a significant portion of its efforts—approximately 80%—toward encouraging and facilitating the creation of new IP assets directly on their platform. This focus underscores their commitment to fostering a robust ecosystem where IP can be seamlessly managed and monetized.

Enforcing Intellectual Property Rights on Story

Story Protocol employs a two-tiered system to enforce intellectual property (IP) rights: the Information Signal Layer and the Dispute Layer.​

1. Information Signal Layer: This layer utilizes multiple IP partners to scan the internet, assessing the uniqueness of assets submitted for registration on Story Protocol. It aggregates these assessments to calculate the likelihood of infringement. For instance, if someone attempts to register a well-known asset like "Game of Thrones," this layer would likely flag it as a high-risk infringement.​

2. Dispute Layer: This layer allows any user to challenge the legitimacy of an IP asset registered on Story Protocol. If an asset is flagged by the Information Signal Layer, the rightful owner—such as the "Game of Thrones" legal team—can file a dispute. Upon validation of the claim, the disputed asset is demonetized and excluded from Story Protocol's indexing, preventing the infringing party from profiting.​

This structured approach ensures that IP rights are protected, maintaining the integrity and trustworthiness of the Story Protocol ecosystem.

Conclusion - Story Protocol

Story Protocol has made significant strides in bringing traditional intellectual property (IP) assets onto the blockchain. They have partnered with Justin Bieber to tokenize royalties from his song "Peaches" into $RWIP tokens and have done the same with a Miley Cyrus song.

The team is also in discussions with the U.S. and other governments about standardizing copyright registration on Story Protocol. This would enable global access to copyrighted material while ensuring that creators receive royalties, no matter where their work is used.

A vast amount of intellectual property remains underutilized, and Story Protocol aims to change that by onboarding as much IP as possible onto their network. The team sees 2025 as a key year to collaborate with copyright and patent offices, many of which still operate on outdated systems that could greatly benefit from Story Protocol’s modernized approach.

About Luganodes

Luganodes is a world-class, Swiss-operated, non-custodial blockchain infrastructure provider that has rapidly gained recognition in the industry for offering institutional-grade services. It was born out of the Lugano Plan B Program, an initiative driven by Tether and the City of Lugano. Luganodes maintains an exceptional 99.9% uptime with round-the-clock monitoring by SRE experts. With support for 45+ PoS networks, it ranks among the top validators on Polygon, Polkadot, Sui, and Tron. Luganodes prioritizes security and compliance, holding the distinction of being one of the first staking providers to adhere to all SOC 2 Type II, GDPR, and ISO 27001 standards as well as offering Chainproof insurance to institutional clients.

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