Speaker 1: 0:01

Welcome to Test Talks Radio. I am your host, marissa True, and today I am joined by Paul Schmidt, the Chief Operating Officer of FXHash, one of the largest generative art marketplaces in Web3. So, paul, this is your second appearance on the show, the first being back in 2023. So I'd actually love to spend the conversation getting up to speed with where FXx hash stands today and the evolution of the generative art landscape and basically where it's all headed. But for the unfamiliar, how did it begin? What was its mission? And bring us through the timeline of where we are today?

Speaker 2: 0:36

okay, nice, uh. First of all, thank you for for being here again. Where did fx have start? F FXH started in November 2021.

Speaker 2: 0:47

Sporn was sort of built out of the necessity for artists to be able to create and ultimately also sell a genet of art at a low cost and with the possibility to not be able to have to go through Artbox, which was the only option essentially available back then in 2021. It was still a pool of work, so much higher gas fees I mean they're still high now in that sense but much higher gas fees. A lot of artists essentially couldn't even upload for one because there was like a large queue to be allowed to sell your work within Artbox. But then also a lot of collectors were sidelined because EVE was really expensive at that time and so simply for the financial logic to work, an output would have to cost a thousand dollars in that sense to justify gases of $250. Our founder Seifert he said fuck that and build a platform that. And build a platform essentially for himself, as he's a generative artist, but then also ultimately for all of the other generative artists out in the world. Since we were the first open platform and truly open platform without curation, we quickly amassed a lot of quite good following, but then also a lot of artists finally being able to unleash the algorithms that they have worked on for like maybe five to ten years. So, like these like first few months were extremely magical in that sense, and there was a lot of great art that still holds a test of time. In that sense, yeah, then then we sort of like just like started to build a bit more, more bootstrap for a year.

Speaker 2: 2:23

Then in 2023, raised around $5 million in seed from like OK X, fabric, right moments, usb, just like a lot of people within the space of like betting on our vision and betting on sort of like the idea that we had, yeah, and then we spend 2023 mostly building out our EVM portion as we sort of like yeah, so we just wanted to see what else is out there and sort of like increase the user base or see if we can gather more people within, if we can gather more people to also join on the Tesla side. But also because of increasing competitions and other people are trying to essentially copy our idea and put it on the EVM, on specific EVM chains. So we also thought, why should we just let them copy us? We can just do what we can do best and compete directly with them. Thankfully, that proved to be quite a good thing, because now those competitors are largely dead, so that's quite nice.

Speaker 2: 3:16

And then, I think that's sort of around the time that we last talked, we actually launched on EFA1, and then I think that was when we talked, and then shortly afterwards, what we sort of like called fxh 2.0, which maybe in hindsight was a bit too much, because I think right now we are actually now in like 2020 or like beginning of 2025. We're actually at that like point of time where it is like a big shift in like how fxh works, fxh looks. So maybe that is just like the, the, the normal tech cycle that we are, that we serve like over overestimated our ability and underestimated the actual amount of work it needs to serve like completely like rebuild uh, rebuild your tech stack from the get, go and remove all of the tech depth. But, um, yeah, that's roughly where we are now. So we have like a new, new website.

Speaker 2: 4:12

You look and feel that we have a new, like really exciting product or sort of like features that will launch soon, which I think we'll go over one being sort of like a token. Then we've also developed or developing nftqt, which is like an agent for nfts, which is something like completely out of left field, but we within the team were quite excited about it, so we just tried it and it has seen some success so far. So, yeah, that's roughly what we've been up to, but I'm sure we can go into these with like, uh, yeah, we can go more into this so, in a nutshell, a lot.

Speaker 1: 4:45

So it sounds like in 2022, it was all about putting fx hash on the map, building its profile, recognition amongst a community of artists and actually getting them to mint and interact on the platform. 2023 became a year of expansion, so that was about going multi-chain and basically taking on competitors directly, realizing that there's only so much you can diversify a marketplace model, so if they're going to pop up, you may as well tackle them head on. And I like what you said about. Perhaps you know, launching FXHash 2.0 wasn't quite what you thought it was going to be, because it was supposed to be sort of this like groundbreaking, almost pivotal moment. What you suggested is that that pivotal moment's actually just about to come, so maybe you were a bit hasty with describing it as version 2.0. So what were the main learnings there when it came to what you were attempting to achieve then and, as you said, the sheer amount of work it was actually going to take to achieve it?

Speaker 2: 5:44

I mean, I think partially, it is like the way that it worked out was also partially because for nearly all of us within the team, it was our first startup where we really I mean, we've worked in startups before, but not where we were really at the helm and sort of like, yeah, I could decide what we want to do. So we try to do a lot and try to sort of like eat more than we could chew. I think that was really just like the learning process also, I'm now realizing more than ever. So, back in the last two years and in the last year and, for example, also seeing how, like rodeo and foundation have have done it. Like if you build really fast in the beginning, which we did you accrue a lot of tech depth over time.

Speaker 2: 6:23

So, like, the speech that we were able to do in the early FXH days essentially hindered us to develop faster than we wanted to in 2022 or 2023, because we essentially didn't have any more delineation and had to rebuild a lot of the internal tech stack and obviously the complexity of having an internal tech stack and obviously the complexity I mean that's doesn't. I mean obviously the complexity of having like an evm stack and the tesla stack also doesn't make it easier because in theory you would have to leave out of everything twice because there is not this sort of like crossover like the. You can't just rehash the code of tesla and put it on tvm and or the other way around. Ethylink can sort of like change that. But also it's like a question of when does it make sense to sort of like use Etherlink. So a lot of learnings in that sense. But now we removed most of the tech debt and we also know our development speed much better than we did before, so we're not running into these like long delays anymore, which is quite nice.

Speaker 1: 7:26

So it sounds like FXHash's ambitions were sort of hindered by the fact that blockchain technology hadn't actually advanced to the point where it was going to be an efficient thing for you to implement, as you mentioned.

Speaker 2: 7:37

I would say modularity really came onto any tech. Yeah, I think if you go to any consumer founder and ask him, how are his development cycles or her development cycles, they'll be like, yeah, too long, we're missing the deadline. It's just a reoccurring theme. You can always ship something out, but especially if you have something where 10,000 to 20,000 people interact and actually also something approaches one of the it and have it as their hobby, and then it's often the room for error is much smaller. If you're just like no, like watching a video, like maybe that's a bad energy because people are purposely spending money, but also like using your platform to to learn in a living and like your room for error, it's like much smaller. Especially then also like within crypto, where there's like a lot of self-custody and if the funds are gone in that sense also like this, like smart contract development, risk and these kinds of things just take more time.

Speaker 1: 8:36

In that sense, so then, how did you reprioritize what you needed to focus on? To basically keep FX hash scaling and building and prevent it from becoming stagnant, but also making sure that it was within your resources and capability at that point in time?

Speaker 2: 8:52

I think we tried out a few. I mean, it's like a two-fold question, right. On the one hand, it's like how much can you burn per month in that sense, like your expenses to like continue to develop your tech, and also like on like the revenue side of things, like what works in the market, what doesn't work in the market. But do we think that we should try out? Do we think like where, where do we have an opinion of, like what could work out? And and that was like a lot of like experimentation. I mean I said earlier that even though, like, our competitors have like launched and then also closed down again, they still extracted some liquidity in that sense, so they added their own mind to it. If you're the only platform which we were for at least a year where you could openly publish the NFR, if you're the only platform, then that makes it much easier for you to make a healthy living in that sense and be able to like pay wages or like be like cash and cash positive month over month. If there's multiple competitors, then that's harder. If that is in like a field where growth, where there is no inherent growth in that sense or not not, not as big of a growth, especially throughout, like the period that we had in like 22 23. Then it just becomes harder.

Speaker 2: 10:10

So we tried out a few different things. We tried to go to, uh, work with galleries. We try to like work with museums, like the musee d'orsay, for example, which, um, at least from a marketing standpoint, was like really nice and we can use and be quite proud of. But then also, in general, the market shifted a lot where it's becoming much harder for platforms to be sustainable or have a sustainable business model. And what did we do?

Speaker 2: 10:37

I mean, essentially, we tried to cut our costs as low as possible to where it makes sense, but not as low as we were just like stagnant, so still like employing like five to six developers at times, to like continue building, because ultimately the only way out out of these things is to build, in my opinion. So, yeah, um, and then it just took quite some time and ultimately led us to where we are right now, with us being like a multi-chain platform, seeing good growth in the evm ecosystem, which is really exciting and also sort of like the token coming and our solution to maybe the inherent problem that that persists within a general development, or even like nfts or like related nfts, not really taking into account pfps, because they seem to have found like a solution, but they also is that talking? So it really just seems to go into the direction of there needs to be some sort of token attached to further liquidity and make it easier for people to directly engage and trade with that there.

Speaker 1: 11:40

So then, before we actually get to the token element, I want to talk about the other side of the equation, which is the generative art space. We've covered a lot of ground and how fx hash has evolved over the last three years, but how has the generative art space evolved in that same time? Because you kind of got this catch-up scenario where you also need to be keeping an eye on what the shift, the shifting trends, the demands, the potential opportunities that are existing on that end of the relationship. So what trends are you seeing on that side?

Speaker 2: 12:09

I mean, in that sense I would say that we are seeing, especially from like these, like high profile AAA or however you want to call these artists, stuff like that continuously large drops. We are seeing a lot lower edition size in that sense. So like lower edition size, higher individual iteration, min cost, so to speak. Every now and then there's like a few new auction models popping up, but most recently I mean it's mostly like the English ranked auction, which makes the most sense, because you don't have to get people in the same online room essentially to like to bid on a dutch auction. But you can like spread it out over a week. Everybody gets their bids in and then, if you want to, you can like be there at like the last last bidding hour and then you have something like this like you're bidding a factory like but now I really want, and now I really want this piece, and then people are bidding each other up um, this is, in theory, good because it gives more money on the primary. Ultimately, that means that if you have this price equilibrium, you really max out, you find the ideal price, but that means that there's no room to grow in secondary. What sort of made Artbox in the beginning, but also especially FXH in the beginning, so powerful because, looking back, we have to say artists mispriced their work or we just didn't know how the primary market was supposed to work and then price just probably happened on secondary and you had this really amazing and nice loop to it, or nice economic feedback loop that really powered a lot of what we saw, and this is essentially what you mostly see. Or like nice economic feedback loop that really powered a lot of what we saw, and this essentially what you mostly see. And like performing crypto protocols. It's like this like economic feedback loop. You even see it in like pumpfun, even though like for there, like it doesn't really work out for a large majority, but it does work out for for some, or it at least gives you the allure, or like the possibility of it working out for you on your like next purchase, and that's really one magical thing.

Speaker 2: 14:10

The other thing is obviously that has been a trend I think we probably also already talked about it the last time a continued, continued trend into physicals and having something like having generative art be more than just an algorithm in that sense, but also also trying out also different physical forms. So not only okay, I have a browser. I sort of like printed or like whatever, but really sort of like experiment with generative as a whole. Um, upbox has been doing some of it like, even like generative sense in that sense. You see, there I think there was tonic around, I don't know if they're still doing something, but yeah, like a few things. And obviously we are also experimenting with like genetic fashion. There are tattoos, these kind of things, which I still think will become relevant.

Speaker 2: 14:56

But I think for that to be, I think the use case will not be like from like an NFT marketplace platform in that sense, but really just like embedded into like some other like normal consumer platform in that sense, but really just like embedded into like some other like normal consumer platform in that sense.

Speaker 2: 15:10

And then you can sort of like tell people on the idea and they will like it. You can probably be like hey, this is this nft, this is crypto, that's to narrative, that's like a lot of things at once. But yeah, I would say that these kind of things and then ultimately sort of like in in the recent times, like, there's been Rodeo, which has been quite an interesting proposition, similar to EarlyHand maybe, but also a bit more extractive, so to speak. But it's quite nice to stop a funnel, and especially nice if you look at how their user onboarding works, because essentially you just need the email. I really quite like that. I think that that is a way that you can actually get new people in, because ultimately that is still, in my opinion, like one of the biggest issues that the narrative art has seen that there's like too little the collective business increasing, but it's still too little in the grand scheme of things.

Speaker 1: 16:06

In that sense, In that sense being still quite niche and still sort of a category that you want to build up and build out.

Speaker 2: 16:15

Yes, I know, I mean the interest. The weird I think it's called the trickster position is that the institutionals are actually going into a generative and are making shows, having it in the museums, there's more galleries experimenting with it, more artists experimenting with it, but it doesn't really seem to trickle down like like an economic level for the artists and the platforms, at least like in the last one to two years. So where the real art world is getting to know it and and then experimenting with it. Yeah, the, the, no, no, that's not the actual. The, the core artist group that maybe have been doing this work for some time doesn't really seem to gather the benefit, or like most of the benefits that could also be, because there's now obviously also like a lot of hype on that, not so high, but also like justified type, unlike ai artists and that took some steam out of generative, I would say. But even so, like now it's like that intersection has more things coming. I mean even what was doing generative art now.

Speaker 1: 17:16

So let's see what what comes out of that so it's kind of like it almost comes down to the fact that people underestimate and misunderstand just how broad and diverse digital art as a category is.

Speaker 1: 17:31

Producing their own code to create a physical output or like a visual output, versus creating a prompt that was going to generate something visual to consume as well. So when it came to, I guess, mainstream awareness of these different art forms, of these different art genres, it only took someone who was genuinely dedicated to learning the nuance between all of these different forms to get it, while I think the vast majority unfortunately don't get that far. And so it's about how do we, how do we bring attention and awareness so that people invest that time and energy into learning about an art form? That genuinely is very fascinating, and I also think that the the exploration into physical has been very, very interesting, as you said, generative fashion, tattoos being a very interesting one to me, and also just physical installations as well, but basically bringing digital art into physical spaces so people can interact and consume with them in new ways. Is that something that you see FXHash kind of continuing to support in the future in terms of how you exhibit artists?

Speaker 2: 18:50

Mm-hmm.

Speaker 1: 18:51

And how do you think that's going to, I guess, build that understanding for people in terms of how wonderful generative art really is?

Speaker 2: 19:00

Yeah, I mean, I think obviously there's like exhibitions and fairs. For example, like Paris Photo is one that is quite nice and it is like pushing into like digital art as a whole, as a whole. I think that's really really nice because obviously you have one of the one of the largest, like the most relevant photo fair, uh, like trying to exhibit general thought, digital art, ai art in that sense, and there at least it like the crossover at times is easier because within photography a lot of people are at least already working like a pc or like a computer or like they are way more, way more digital than sort of like your, your traditional artist painting, like painting something in that sense. But still it's like a lot in this sense and obviously there's only so much that you can explain or showcase in like a I don't know five byx5, 10x10 booth at an art fair. It's possible, but it's much harder to cross the whole concept. I feel like a good overview of this is also what Ethics is trying to do.

Speaker 2: 20:08

It was like the Entangled exhibition that we did in Ghent, where we really just put the technology forward, a lot of different things, but essentially also like like a big industrial mechanical robot that essentially the artwork was created around with so entangled is essentially about like the relation between sort of like a quantum movement and then up your install like non-figurative, the artist essentially try to play homage to how FXLash also is like a dual chain and how these two quantums can move, but then also how Tezos and the EVM or these objects interact and link together. And it was quite interesting to see the reception because we were asked by Winterstruck, which was this historical building in Ghent that reopened and now is trying to be the place in Ghent for and not trying, but it is actually the place for tech and startups, has received a huge funding from the Belgian government as well and we were asked to sort of like be the opening cultural act. So a lot of people had no clue what Genre of Art was. Still Like 500 people at the opening or like the grand opening, like looked at it and were like quite fascinated by it. It was like small children from like a kindergarten trip going there and like looking at the art. So that was quite nice.

Speaker 2: 21:32

And then also through that we got a lot of more openings, like talking with some festivals and these kind of things that saw it and sort of like understood, the like understood how nice technology can be, because I feel like a lot of people are coming, especially now with like this like continued ai boom, coming around to the idea that technology will not get less but we'll get more and we'll sort of like spread through all of what we're doing on our daily, daily lives.

Speaker 2: 21:59

So, also like the art, um. So yeah, we will continue to do exhibitions, but I think much more like not as many maybe, as we did before, but then if we're doing them in like a bigger scheme or like and like, just like a little bigger, to to see what kind of effects, or like um, yeah, or to see what this can be, but then also really trying to go back to our roots and do more of online exhibitions or online interactive experience, because ultimately, not everybody can be at a specific point on a specific day, but mostly everybody can be on a specific internet website at a specific point of time so you kind of also have a double barrel challenge, where not only are you trying to raise awareness and educate around generative art as a genre, but you also have the, the inevitable blockchain component of the platform itself, which I guess is only really relevant less so to the observers of the art and more so to the artists and the collectors themselves.

Speaker 1: 22:58

But how do you ensure that there's this continued education as to, I guess, the merits of Web3 and why FXHash does all of this on-chain?

Speaker 2: 23:08

I mean, I think by now we can explain what we're doing quite well and can explain it also to new people, like why it matters doing quite well, and can explain it also to new people like why it matters, I feel like also, at least right now, when you're talking to someone, they at least maybe have heard of crypto a bit more. In that sense, they will continue to hear about crypto even more, depending on what, like Donald Trump could do or like the US government will do. So I have a feeling that obviously there was, and there still is, some bad actors in the space, but it's at least right now, far easier to talk to people about it because they understand, or at least maybe also, especially if they're like within finance, they have understood okay, blackrock is saying it's having a Bitcoin ETF and that actually changes a lot of things because you have this like stamp of approval that, okay, it's not just like crazy computer kids doing doing something weird, but just like this largest asset manager in the world that says I am willing to like earn money through this, I'm willing to offer this to my clients and then so, like, with that, a lot of people are starting to come around to the idea, um, that crypto or like on-chain can help, and then you just give them use cases. I always, for example, give them like currency swapping. Essentially that gets a lot of people, because a lot of people have swapped or like tried to swap cash currency before and saw like how huge the fees are.

Speaker 2: 24:30

And if you then show them like okay, how easy it is within crypto and how low the fees get, and they're like, okay, hey, maybe this does really make sense and then you can give them more, more sort of like of these explanations. But obviously there's far easier to do in like a one-to-one setting. And if you're then again in this like exhibition setting, essentially you have to have like a really well-written these paragraphs like introduction to it and that con. That that makes it a little bit harder in that sense. So there we mostly just speak about the art, and I mean a lot of people also maybe at times don't understand all of the the art text at an exhibition, but at least then we're not confusing them with like cryptospeak, but just without speak.

Speaker 1: 25:16

Yeah, I think in terms of the fact that people are a lot more crypto savvy than the currency that you know sustains the network versus the way the platforms themselves function. But, as you said, you know, when it really comes down to it, if it's there and it's visual and it's ready for someone to just perceive and enjoy, all of the intricacies and all of the technical details don't seem to matter as much, unless, of course, they are looking to mint or to buy or to collect, which also brings us to fx hash's newly revamped website. So there's there's a lot on there that's shifted from the original website and can you just talk us through you know why the redesign and what people can find on there that previously maybe wasn't available.

Speaker 2: 26:20

I mean essentially like the first design, even though a lot of people really liked it was done by Seifert and Baptiste himself, which, like I, quite like it, but it was like really sort of like why, how do you explain it best? I think it was like really simple and clean, but there were a lot of design decisions that were made where we maybe didn't think about the long-term consequences of this becoming a platform that hosts more than 2 million artworks or hosts more than 50,000 projects. Some of these changes that we now implemented we had to do. We're putting more emphasis on the actual art, not as much emphasis on text. I mean, in the old website it was essentially the artwork. When you clicked on a project and you first looked at the artwork, maybe 10% to 20% of your screen and now, at least on the laptop, it has 60% to 20 percent of like your screen and now, at least on the laptop, it has like 60 to 70 percent of the screen if it's like on it correctly.

Speaker 2: 27:26

On that note, it's a much bigger shift towards art. There's a lot of things of us like a lot of ways where we try to simplify the way that you go on about the website, essentially removing clicks needed to win. Removing clicks needed to like sell, like essentially, just like trying to win. Removing clicks needed to sell, essentially just trying to make the user experience easier, make discovery a bit easier and just put it into a clean slate where we can be. We were not proud before to show it, but we're also like hey, this is a nice retouch, it looks nice. It doesn't look like from three to four years ago, but it's just something fresh and also something that we can use for like the next chapter of, like our journey and like all of the visual cues make more sense together okay.

Speaker 1: 28:11

So it's about simplifying the user journey and also about making sure that the website's equipped to handle the continued growth of the platform exactly because a Because a lot of like the visual.

Speaker 2: 28:21

I mean, yes, it's a visual change, but to some I think it won't look as big. But the bigger changes, like how we like completely rebuilt the tech stack, remove the tech depth allowed for, like SDKs, like build an SDK that allows for others to like work, create their own website based on FX hash, or like to create their own drop sites, all these kind of things that are not as directly seen in that sense, but it was all part of the same tech rehaul, which is also why it took so long, because ultimately, we just decided that we want to rather ship it all at once than have smaller releases.

Speaker 1: 28:56

In that sense, and also there's a lot of resources that help artists and collectors. So there's project templates, there's overviews of the marketplaces. So if there was a new generative artist or a new collector who was coming to this brand new website, what are the main things they need to know to really kind of kick off their journey in exploring FXHash?

Speaker 2: 29:20

know to really kind of kick off their, their journey in exploring fxh, read through the docs on twitter, see what people are doing, and I think that's it. I mean, in that sense, I think we obviously we we try to have like an easy onboarding. I actually think we do like our docs are much better or like in a much better state than they ever have been, so that's really nice, yeah, and I think I think from there they can essentially get started, like we have like tutorials on how to code or like to try it somehow to like also get better, or just go to the docs and and then so like see what happens, like obviously our discord, which also has like a huge power of information in there, just by the fact that we've been writing in that for like three to four years, and also most, mostly every question that can that can get asked probably was asked in there. Um, so I think I probably sort of get things that I would guide new artists and we've hinted at it a few times throughout the course of our conversation.

Speaker 1: 30:19

So we can't ignore the launch of the FXHash token that is coming up. So how does that support the broader mission of supporting artists? How is it going to create a new economy for artists and collectors that doesn't exist already? And what's all the thinking that's going into the token?

Speaker 2: 30:36

So, yeah, I think we've been.

Speaker 2: 30:37

I mean within FXHash, I think, in a month, two or three, that FX existed, we already thought about the ideas of a token, but quickly went away from those as we realized that in the way that we want to do it we can't really do it.

Speaker 2: 30:52

It would be like a legal risk, always wanted to have like revenue sharing as a possibility and essentially what we've seen over the past two years within crypto is that tokens work much better for community building than anything else. So we really thought, okay, how can we design a system that brings in more people and ultimately also brings in more revenue throughout us? So, yeah, I think it will just be a really exciting time for us especially the direct connection between art and tokens, if we can get interesting artistic projects funded through that mechanism. The next step behind that is if we believe as a society, that we will continue to like create more tokens and financialize a lot of things. And why shouldn't we also use that for like artists? So you can also directly fund something or try to fund like specific projects similar to how it is works in, like patreon or whatever or kick, but that's like really like larger scale, much bigger in that sense.

Speaker 1: 32:02

What is the long-term game plan or mission for FXHash, given its journey so far, and what is the priority for 2025?

Speaker 2: 32:14

The long-term mission vision, whatever, I think is largely stated, which is make it possible for artists to earn a living and to make money through the art. Mostly, it is obviously generative art, digital art, but that continues to be sort of like our North Star metric If you think about how many artists can make a living off generative art on FX-Cast in general, and then what is sort of like the focus on on 2025. I think it will be really about this sort of like what's a token and like the, the new economic model that we are proposing, and then then that's like uh, not a side thing, but something that is like equally as impossible. Important for us is like nftxpt and like like the age that we're building, um, and also trying to like gather like a new community and educate them about generative art. It's also just like try to build this like number one, which has no bias and that's. I think that's that's quite cool and um, there's like a lot of fun things that you can do with it, which we are also really excited about awesome.

Speaker 1: 33:20

Well, we'll keep an eye on it, as always, but it sounds like you have a very full plate for the remainder of the year and it's only january. Thank you so much for taking the time, and I'm sure we'll catch up again in maybe another year and a half and see where you're at yes, that would be lovely.

Speaker 2: 33:39

Thanks, paul, always.