Lately, we’ve seen two main new approaches to adding “fungibility” to artists and their work:
Fungible & Semi-Fungible-Editions
Individual pieces of work minted as open editions, or direct ERC-20 launches (“coin your content”).
Creator Coins
A fungible token tied loosely to a creator’s brand, typically expecting post-launch utility that’s only somewhat connected to the artist’s NFTs.
Proposing a Third Approach
Instead of focusing on single pieces or a loosely defined brand token, let’s tie the issuance of a fungible token to a concrete body of work—a set of individual NFT mints happening over time.
This could be:
A generative art collection
“My next 10 years of digital art”
“This year’s blog posts”
Or any scope the creator chooses
The NFTs can be released gradually, all while sharing a single fungible token that grows in liquidity with each mint.
Collector & Artist Experience
The experience can actually feel quite simple:
Artists: Auction work in ETH as usual, enjoy direct mint proceeds and a regular fee claim.
Collectors: Bid in ETH as they’re accustomed to. They can eventually choose to swap the NFT for its base token amount or aim for a higher sale on secondary.
Secondary Buyers: Use fungible tokens to make offers, with guaranteed liquidity as a safety net.
Traders: Participate in the ERC-20 token market—speculate on the body of work’s popularity or specific NFTs.
How It Works
1. Auction Each NFT in ETH
Artists receive most of the ETH proceeds directly (maintaining provenance via their own contract).
Each NFT has a fixed “buyout” price in a percentage of the collection’s fungible token. That amount remains locked until it’s swapped for the NFT.
2. Secondary Market in Fungible Tokens
Guaranteed Buyout: Any owner can swap the NFT for a set amount of the fungible token held by the contract. If exercised, the NFT goes back to the contract in exchange for those tokens.
Reacquisition: A new collector can buy it back for that same token amount, which then re-locks in the contract. If the NFT doesn't sell, there can be a timed lowering of the swap price.
Traditional Listings: Owners can also list the NFT on secondary markets as usual.
3. Ongoing Liquidity & Fees
Every mint pairs a portion of ETH proceeds with newly issued ERC-20 tokens to add to liquidity.
Artists can claim a share of the LP fees, rewarding them for continued interest in this body of work.
An NFT Mint Using "Visual Illustration" Diagrams Below
Proceeds split with $lum holders, /lum and /lum-protocol channels, and /collaborate channel.
This NFT could be included in the first use of this model, as one slot?
More Details
▼Visual Illustration
A collection contract is set up with a certain number of pre-defined slots for NFT auctions (using 3 slots here, for illustration, but could be hundreds or thousands of slots). A certain amount of the erc-20 is liquid from the start in a one-sided liquidity pool (like Clanker), and the rest of the erc-20 supply is locked in the contract
When an auction is complete, that NFT now has an owner.
That owner can choose to list or receive offers on their NFT, as usual. But they can also sell it back to the contract in exchange for a portion of the erc-20.
That % of the erc-20 becomes unlocked, and the NFT is now locked in the contract.
But then anyone can come along and unlock the NFT (purchasing it) using the same redemption amount of the erc-20
▼Minimum Specifications for New Contracts
Collection Contract (ERC-20 Controller)
Initial ERC-20 Liquidity Allocation
Amount of total ERC-20 supply allocated to a liquidity pool at launch.
Slot Distribution System
Defines how the remaining ERC-20 supply is divided into “slots” (sub-allocations).
A slot receives a specific amount of the ERC-20 supply (or an amount depending on certain variables, like final auction price).
Can support one slot or thousands, each with customizable erc-20 allocations.
While primarily designed for NFTs, slot contracts can also fund other mechanisms (e.g., rewards, staking pools, community incentives).
Each slot contract governs the release of its allocated ERC-20 portion.
Slot NFT Auction Contract
Liquidity Pairing Parameters
Percentage or fixed amount of incoming ETH that will be paired with newly issued ERC-20 and added to an LP.
Artist & Contract Ownership
Artist provides their wallet address to receive direct ETH earnings.
Artist deploys and owns their own NFT contract under the collection.
NFT Metadata & Auction Setup
Artist uploads artwork, title, and description.
Defines auction parameters (timed auction, reserve price, bid increments, etc.).
Why This Matters
Guaranteed Liquidity
Collectors always know the minimum token amount they’d receive if they redeem the NFT—creating a floor value tied to the entire collection’s popularity.True Ownership & Provenance
Each piece is minted under the artist’s contract, but still benefits from a shared ERC-20 ecosystem.Scalable & Flexible
Anyone can buy into the collection’s token for any amount, while specific non-fungible works attract individual collectors.Group Collections
Multiple artists can collaborate under one ERC-20, each controlling their own mint sub-contract, and each receiving perpetual fee shares.
Why a Part of the LUM Protocol?
This model is especially well-suited for AI-human art collaborations or crowdsourced collections. Two potential future use cases:
AI Model Art
A token tied to the first # of outputs from an AI art model, managed by an artist collective. Each artist has a certain number of “slots” to mint from the model, earning directly from their pieces plus continuous fees from the overall collection.
Community-Minted Channel
A bot in a community channel grants permission to mint artwork posted by members, once it gets enough upvotes. Those pieces automatically become part of the shared collection, earning the artist immediate proceeds and future fee shares.
The next step is formalizing these contract standards so AI-driven bots can automatically integrate them.
Conclusion
This “third way” merges fine-grained NFT ownership with the scalability and liquidity of a fungible token. It gives artists upfront ETH plus perpetual rewards, provides collectors with clear liquidity, and offers traders a robust secondary token market. While the mechanics may seem complex under the hood, thoughtful interfaces can streamline the user experience and help shape a more flexible, liquid, and artist-friendly NFT future.
