Author: Deep Tide TechFlow
The recent cryptocurrency market has gradually given a sense of both ice and fire.
On one hand, the online track of AI Agent is experiencing a collective cooling, while on the other hand, classical infrastructure projects are gradually gaining new momentum.
In addition to the recent launch of the Berachain mainnet and token release, Story Protocol, another highly anticipated intellectual property protocol, has also updated its white paper, detailing its design and changes.
Last year, the project received a whopping $80 million in Series B funding led by a16z crypto, bringing the total funding to $140 million. Community players have high expectations for ‘Da Mao’, and the interactions during several rounds of testnet were also very popular.
And the update of the white paper may also indicate that the project’s main network and token listing are not far away.
If you are not familiar with the Story Protocol, we have provided a more accessible interpretation of this latest whitepaper, hoping to provide you with some reference.
Why do Story Protocol and what problems does it solve?
We both understand that the narrative of a cryptocurrency project is crucial.
What is the narrative of Story Protocol? This needs to start with intellectual property.
The cryptocurrency community always talks about “killer applications”, but the reality is that the real killer market has long existed, it is just locked in the cage of Web2.
For example, intellectual property (IP) is a good example.
The global intellectual property (IP) market is valued at over trillions of dollars, covering all creative outputs such as film, music, patents, AI datasets, etc. However, this market also faces the “impossible triangle”:
Problem 1: The ‘greed tax’ of centralized intermediaries
Whether you are an independent musician or a research institution, if you want to commercialize your creativity, you have to pay a huge “toll” to the platform:
Case: When Spotify pays royalties to record companies, less than 15% [industry data] actually reaches the hands of the creators, while the Story white paper points out that centralized platforms ‘increase transaction costs’.
Contradiction intensification point: In the AI era, the threshold for creative production is lowered, but the centralized platform’s profit-sharing model cannot support the micro-payment needs of ‘long-tail creators’.
Issue 2: The ‘No Man’s Land’ of AI Training
When Stability AI was sued for unauthorized use of artist’s works to train models, it exposed a fatal problem: the existing IP system is fundamentally incompatible with the large-scale production of AI.
Data: Training GPT-4 requires 45TB of text. If negotiated through traditional authorization process, the legal costs alone would exceed the training cost of the model [estimated].
Insights from the white paper: ‘AI companies cannot generate hundreds of millions of individual licensing agreements’ → the result can only be that infringement becomes the norm, with creators receiving zero income.
Issue 3: The ‘desertification’ of IP liquidity
A DEMO of African folk music was used by a popular single, which should have led the original creators to obtain continuous income, but the reality is:
Derivative tracking inability: Lack of automated royalty distribution tools in scenarios such as secondary creation and cross-border licensing;
Value Waste: The white paper describes the current situation as a ‘non-interoperable island’, making it difficult for IP assets to generate compounding effects like DeFi.
If you want to solve these problems, going through the legal process is costly, time-consuming, and cannot cover AI-generated content (such as the spread speed of Deepfake face-swapping videos far exceeds judicial response);
In the traditional blockchain solution, NFT only solves the “ownership attribution”, but does not touch the “circulation of use rights” (for example, owning a CryptoPunk does not mean that you can use it to train AI models).
Story Protocol: The ‘Lego’ of the IP economy
In response to the problems faced by the IP economy mentioned above, you can understand the Story Protocol as becoming the “underlying ledger of the knowledge economy” - any creativity, from a paper to an AI-generated video, can obtain global liquidity here.
Positioning: The “TCP/IP protocol” of IP
In the Web2 era, the TCP/IP protocol enables data packets to flow freely on the Internet; In the Web3 era, the Story Protocol attempts to define a similar universal interaction standard for IP assets:
Core Features:
Standardized registration: Convert IP into on-chain assets (IP-Asset), including ownership, licensing terms, and other metadata;
Programmable Interface: Any application can call IP terms through APIs (such as ‘allow derivative creation, charge 5% royalties’).
Benchmarking case:
Story Protocol (IP Settlement);
Story (IP Derivative Relationship Map)
Three-tier designed ‘IP Lego’
Base Layer:
PoC Protocol: IP registration and compliance verification (such as automatic detection of whether derivative works infringe copyright)
On-chain fingerprint: Ensuring the traceability of AI training data through the model hash value (such as the OML technology mentioned in the whitepaper)
Middle Layer (IPFi):
Fragmentation: In simple terms, for example, splitting a movie IP into 100 million NFTs to lower the investment threshold;
Mortgage lending: Borrow stablecoins using unrealized patent IP as collateral;
Royalty securitization: bundle future royalty income as ERC-20 tokens for trading
Application Layer:
Possible use case for humans: Independent musicians can set ‘sampling rights’ automatic revenue sharing rules; using a part of their DEMO can generate income.
Possible use cases for AI: Self-driving companies purchase street view datasets for training purposes
From the copyright chain to the settlement layer of the AI Agent economy
Short-term goal: To replace traditional copyright bureaus and provide IP registration services with lower costs and higher transparency;
Long-term vision:
Become the “settlement layer” of the AI Agent economy
Build a ‘on-chain knowledge graph’ - the derivatives, benefits, and collaborative relationships of each IP can be globally checked.
Story Protocol technical highlights: Layered design and PoC protocol
When other blockchains are still struggling with “how to make NFT move”, Story Protocol has chosen a more radical technological path - customizing an exclusive blockchain for IP. Its core innovation can be summarized as: not creating a general chain, only making an “acceleration chip” for IP.
Since it is blockchain, it must go through these layers: execution, storage, and consensus.
We have extracted some important descriptions and key data from the whitepaper and presented its technical design in a popularized manner as much as possible.
Executive level:
IP Core: Native support for complex IP relationship verification (such as checking whether a song sample has obtained authorization from all ancestor nodes), the whitepaper reveals that it is faster than EVM.
AI Core (under planning): Optimize on-chain model fingerprint calculation to reduce Gas costs.
Storage Layer:
Dynamic tiered storage: hot data (such as IP licensing terms) is stored on the chain, cold data (such as 4K movie source files) is stored on Arweave;
Original “Storage Translation Layer”: automatically optimize data location, developers do not need to perceive storage details.
Consensus Layer:
Based on CometBFT’s instant finality, ensure 3-second confirmation of IP transactions (compared to Ethereum’s average 12 seconds)
Highlights: Proof of Creativity (PoC) Protocol
PoC is the “IP compiler” of Story, which converts legal terms into executable code:
IP account (ERC-6551++)：
Each IP is bound to a smart contract account, supporting modular function expansion (such as adding royalty distribution rules) [15];
Case: When a painter issues an NFT, the ‘Commercial use requires payment of 3% royalty’ clause is automatically embedded, without the need for manual encoding [16].
Automated Compliance:
Conflict Intercept: If a film soundtrack references unauthorized sampling fragments, NFT minting is automatically blocked;
Global Royalty: Automatically distribute revenue to all contributors (such as original authors, translators, remixers) based on IP derivative map.
$IP Token: Leveraging the Knowledge Economy
Comparing Story Protocol to the central bank of the knowledge economy, the IP token is its ‘base currency’ – serving as both network fuel, value carrier, and governance credential.
Network Fuel:
Pay transaction Gas fees (such as IP registration, licensing) ;
Staking to obtain validator qualification (PoS consensus).
Medium of Exchange:
Royalty distribution: IP income is settled in IP tokens (such as secondary creation profit sharing);
Agent Settlement: AI agents use IP tokens to purchase training data permissions.
Governance Token:
Voting to decide protocol upgrades (such as adding core types);
Adjust key parameters (such as royalty distribution ratio).
What might be the demand for tokens?
Gas consumption: increases with the volume of IP transactions;
Pledge requirement: At least 30% of the total supply needs to be pledged to maintain network security [8];
Speculative demand:
IPFi scenario: mortgage IP assets to borrow IP tokens;
Premium Governance: Scarce voting rights may push up coin prices.
The official IP token economic model and distribution method are not mentioned in the white paper, and more information may be needed.
Summary
Story Protocol seems to be betting on a bigger proposition: if knowledge is to become the new oil of the AI era, and Story is to become its pipeline.
Apart from the whitepaper, objectively analyzing whether Story Protocol has a moat?
From a technical point of view, the multi-core architecture mentioned in the whitepaper requires a deep optimization of IP processing flow. If imitators want to reproduce it, there may be certain difficulties (such as the IP core graph traversal algorithm mentioned earlier). At the same time, the dynamic optimization of the project’s own blockchain storage layer relies on the accumulation of long-term data patterns. If Story comes first, later participants will inevitably have a certain time gap.
In addition, a16z’s lead and high financing amount undoubtedly attracted everyone’s interest and attention. While the business and narrative are expected to be one aspect, the market performance of the token also affects the business development of Story Protocol, which needs to be observed.
Some uncertain places are:
Regulation: The progress of legal recognition of on-chain IP rights varies from country to country (e.g. MiCA of the European Union does not cover IP assets);
Cold start: In the early stages, it is necessary to attract multiple top-level IPs (such as Disney, Universal Music) to establish network effects; if there are low-quality IPs, it may trigger the ‘lemon market’ effect (you don’t know the quality of the IP, there is asymmetric information, and players would not be willing to pay a high price for the IP).
However, in terms of narration, the Story Protocol can meet the following two points:
For individuals: Any creator can publish IP like tweeting and capture the value of the entire lifecycle;
To AI: Become the ‘HTTP Protocol’ for IP transactions between agents.
