white-paper-v2.0

01 Startrail's Vision

Startrail is a blockchain infrastructure supporting the development of the fine arts ecosystem by furthering its trust and credibility. It is designed and managed by Startbahn, but will soon be managed by the Startrail DAO, an organization to be established in order to further strengthen public trust.

This project began in 2006 when we first announced our central concept, which is to create a standard and universal infrastructure for art, utilizing technology.

Our initial idea was to create a platform where exposure and opportunities are readily available to new artists, and to ensure their contributions to the community are continually rewarded over the years. We envisioned a system where content creators and owners received a royalty-type revenue when their work is distributed or re-distributed, creating a mechanism that helps control the sale and resale prices to benefit all parties.

Currently, there are many trading channels available when distributing artwork, ranging from small individual sales to large entities making multiple simultaneous transactions. There are also many processes by other parties involved in the ecosystem, such as exhibition curators, critics, and appraisers, all of whom come with their own set of professional skills and services.

As the art business is global, the amount of exposure and circulation an artwork experiences ranges vastly, from being seen only within a small community, to being universally known and cherished throughout the ages. In order to trace transactional chronologies for these artworks, secure their values on the market, and allow for their owners to be able to retroactively collect revenues generated through royalties or usage (or remove common hurdles such as those mentioned), a system that connects all the stakeholders involved must be put in place. Yet, the realization of a set of rules that accommodates this level of diversity yields different needs and produces opposing opinions, including arguments against revenue generated and collected during secondary distribution, based on the notion that it lowers the liquidity of the secondary market. There are as many needs as there are roles and stakeholders within the art ecosystem, with those discussed so far being only a sliver of the pie; addressing them all presents one of the biggest challenges.

Ten years have passed since these challenges were first identified, and since then, blockchain technology has emerged, opening up possibilities for the future of this project. If blockchain is used, every stakeholder could share information within the industry, while maintaining privacy for customers and individual organizations. On top of this, by customizing distribution and valuation methods per user, works of art created by artists with different audiences can all be handled on the same platform for a long time. By using blockchain, both unknown and famous artists have the opportunity to be connected to transactions with local and major galleries and auction houses, or any other party that handles or may handle artworks. The amount of revenue each party receives could be set arbitrarily, and according to local laws, prominent artists could have their marketing and management teams tend to their accounts on their behalf. Built on blockchain, this platform can be designed to find the optimal distribution solution for each user while responding to the changing environment in real-time. Additionally, it can involve all art market stakeholders, such as curators and appraisers as well.

Startrail was designed to maximize the possibilities of using blockchain networks and initially began as a system to distribute revenue to artists on the network. As a result of expanding this system to serve more roles, Startrail became a sophisticated platform that linked related stakeholders throughout the transaction cycle of each artwork, including managing copyright and distribution. The initial product is built by Startbahn, but the operation of the platform itself will be decentralized via the Startrail DAO. The entire project aims to create a “sustainable and indispensable infrastructure for the entire art ecosystem that will remain, regardless of whether the Starbahn team continues to be involved.

The art market has become more present in society since the emergence of modern technology culture; within the last 250 years it has become a significant aspect of the global economy. We hope to contribute to this unique system, and add value to it through our technological creations.

At Startbahn we believe our proposed network is the best solution for the art market at the moment, and we recognize it is merely the first step in actualizing what is possible through the use of blockchain. As technology continues to progress, we envision our network continually updating and expanding with new players and business sectors within our industry.

We pledge to do our very best to get the most potential out of blockchain technology and to use our decentralized infrastructure to empower and cultivate all sectors of the art market.

Sincerely, Taihei SHII, Founder of Startrail and CEO of Startbahn, Inc.

02 Problem Statements

In 2021, the art market size reached an estimated $65.1 billion, rebounding from the COVID-19 driven downturn in 2020. Moreover, 2021 witnessed a remarkable growth of the NFT market, which increased over a hundredfold to $2.6 billion and is still rapidly gaining attention for its potential future use cases. However, regardless of the physical or digital nature of the artwork, there are still several pressing problems that prevent a sustainable art market. Counterfeiting is one of these major issues. Experts speculate that only half of the physical artworks circulating in the market are authentic. With regard to NFTs, the situation is even more troubling as the market is not mature enough to authorize token issuers and protect the copyright of various intellectual properties.

In order to maintain sustainable market growth, we believe it is necessary to implement a system to protect the rights of creators and empower all stakeholders with reliable records of their artworks.

2.1 Proof of Authenticity and Provenance

Despite the fact that accurate records on authenticity and provenance are the basis of reliability in the art market, the circulation of counterfeits in art trading remains a serious problem. The main reason for this credibility problem lies in the transactions, as they are still dependent on paper certificate of authenticity (CoA). These paper CoAs have no uniform standards nor industry-wide management methods; they are also easy to tamper with or forge. If a CoA cannot be adequately verified as authentic, specialists who can determine the source and history of each artwork must take the time to evaluate each piece. In addition to this current reality, Startrail’s goals move in conjunction with the growth and changes in the art market.

Moreover, NFTs are also suffering from authenticity problems. Even though all transactions are recorded and open in public, the primary issuer is not always the genuine party. In fact, there are cases where well-known intellectual properties are used without permission. Since it is technically unfeasible to erase tokens issued and distributed in the market, authorization of token issuers is an indispensable part of healthy market expansion.

2.2 Compatibility with New Distribution Management Systems

Proof of authenticity and provenance can contribute beyond improving the reliability of the art market. For example, resale rights, a system where the artist who created the sold art receives a portion of the sale each time the work is resold in the secondary market, are a current topic of discussion. Those opposed to the resale rights system criticize the high cost of monitoring transaction records (including provenance information). The concept of Fractional Ownership, a system where a single piece of art can be owned and traded by divided interests, is also up for similar debate, with questions raised about the methods of securing the source and provenance of each piece. If a management system has built-in records of origin and provenance for each piece of art, currently hard to enforce rules and regulations would become practical.

A management system that revolves around securing the origin and provenance for each work in the market does not currently exist. Realizing this system would lead to the creation of unprecedented transparency and visibility in the art market, enhancing the culture we all live within. In preparation for such future, it will be necessary to develop an infrastructure that includes a design compatible with new distribution management systems.

2.3 System Updatability and Interoperability

The concept of creating a management platform for the art industry based on the importance of artwork authenticity and provenance is not a brand new idea. Online platforms for art management and trading have been actively developed since the early 2010s (Hiscox Report, 2015; Hiscox Report, 2016; Hiscox Report, 2017). Like Startrail, some of these other platforms also utilize blockchain technology to prevent forgery and falsification of the available information. While these trends are generally positive for the industry as a whole, Startrail has identified the following challenges in these current platforms:

Not all the proposed platforms are designed specifically for the structure of the art market. The art ecosystem is uniquely shaped by the very nature of what it does: value a transacted artwork based on market considerations and the history of the artwork and artist. It makes it challenging to streamline transactions because of this often subjective variable factor. This variable factor extends to the intentions and incentives of the different parties involved in the art ecosystem as well. If this platform is to become the industry standard, it is integral to create an infrastructure that appeals to and serves the interests of all parties.
The platforms currently available as solutions are not standardized in any manner. Having each platform be unique and non-compatible would mean that specific pieces of art or artists would only be available on one or a few platforms, resulting in the users registering in multiple platforms. As inconvenient as it would be to only have certain works available on certain platforms, the more significant issue is that the online art market could become concentrated in specific platforms.

Under these circumstances, upgradeability and interoperability is indispensable for Startrail. The former allows for appropriate changes to registration formats and rules attached to authenticity and provenance, in accordance with the incentive of each player in the art market and the rise of new technologies; the latter allows for record transfer across platforms that have similar functions.

As an infrastructure, Startrail will benefit various aspects of the art market, such as facilitating the entry of new collectors and financial institutions into the market and updating the existing record-keeping methods for public collections in institutions.

03 Features

Startrail is an infrastructure consisting of a group of smart contracts on the Polygon blockchain. Startrail offers EIP-721 standard tokens (NFT) called “Startrail Registry Record” (SRR), which operate as artwork certificates.

Startrail has 3 purposes:

To prove the authenticity of artwork information and provenance → 3.1
To empower and protect the rights of all stakeholders throughout an artwork’s distribution → 3.2 & 3.3
To provide an everlasting and comprehensive infrastructure for creative industries → 3.4

3.1 Startrail Registry Record (SRR) as Blockchain Certificates

In the art market, credentials for artwork are used to establish authenticity and trace the history of ownership, or provenance. Traditional art players issue paper CoA to prove artwork credibility. However, these credentials are easily lost, damaged, or counterfeited. Without a standardized, foolproof system, the trading of fake and plagiarized artworks continues to be a problem in the market.

SRR is a digital form of a certificate that is highly secure, durable, and easy to manage, all backed by blockchain technology. Every activity (e.g. sales, exhibition, and appraisal) is recorded to make the certificate more credible.

Information stored in SRR is categorized into the following three areas:

Basic artwork information
Title, artist name, year of creation, medium, edition, and any additional information needed to identify an artwork is recorded upon issuing on the blockchain. This information is supposed to be fixed unless the original artist intends to change it. As for digital artworks, the original data is planned to be stored in a decentralized data storage to prevent data loss by accidents on servers. (See Chapter 5.6 for details)
Provenance data
Upon issuing or transferring a certificate, the owner’s EOA address is recorded as blockchain transaction data along with the timestamp and other optional information such as the handler's name, transaction type (primary/secondary sale, donation, etc.), and transaction location.
Detailed information to enrich artwork authenticity
Startrail provides stakeholders with a feature to update and record detailed information on the blockchain. In addition to on-chain transaction data, any off-chain activities such as awards, exhibitions, and restorations, can be recorded as well. Moreover, Startrail allows users to attach different types of media—such as appraisal reports, artist signature images, and spectrum scanning data—to enrich and protect the artwork value.

When requested by the current owner of an artwork, the SRR is transferred to a new owner’s address. Owners are exempt from paying related fees required to run a blockchain transaction (known as “Gas fees”) thanks to a smart contract of meta transactions (See Chapter 5.1 for details) in Startrail.

3.2 Account Eligibility & Reliability

On Startrail, there are two Account types:

An EOA (Externally Owned Account) is a general term in Ethereum, which enables users to trigger actions on the blockchain. Specifically, on Startrail, an EOA is an account type for artwork owners. An EOA has access to SRRs it owns and can trigger transfers.
A Licensed User is an authorized type of account with strong authority over certificates and rulesets. Only reliable entities who pass a KYC screening by the Startrail DAO will be authorized as Licensed Users and allowed to issue SRR or configure rulesets. A Licensed User is assumed to be used by corporate entities or artist management offices, thus a single Licensed User account can authorize multiple EOAs so that administrators can mitigate the risk of a shared private key.

Startrail places great emphasis on the the reliability of artwork information. KYC screening processes, which will be overseen by the Startrail DAO (currently by Startbahn), will support anti-money laundering efforts in the art market, as well as help to prevent the circulation of inauthentic (fake, plagiarized) works.

3.3 Royalty and Other Rulesets

Startrail allows users to set rulesets (e.g. royalty, distribution control, copyright guidelines) on each artwork. Rulesets are executed on smart contracts and inherited over transactions, which shortens the complicated contract resigning process of artwork trades.

3.4 Decentralized Operations

The ultimate goal of Startrail is to be an everlasting infrastructure that validates authentic artwork information. To achieve this goal, all data written on Stratrail are planned to be stored in decentralized storage (data transfer to decentralized storage is currently ongoing). Startrail, therefore, will maintain its role as an indispensable infrastructure for the creative industry even if the administrative body were no longer in operation.

In addition, we’re planning to have Startrail be operated by a “Startrail DAO”, consisting of multiple authorized organizations from the creative industry.” (See Chapter 9 for details)

04 Technology

4.1 Smart Contract Architecture

4.1.1 StartrailRegistry Contract

This is the main ERC721 NFT contract where the SRRs are registered.

See the "4.2 SRR Details" section for full details of the features and capabilities.

4.1.2 Administrator Contract

A GnosisSafe contract instance is deployed to handle administrative actions on the Startrail contracts.

These include:

Contract upgrades
Licensed User creation and maintenance
Meta transaction request type maintenance
Contract level configuration property maintenance

We intend to replace this with a governance-based voting system once the Startrail DAO is formed.

4.1.3 LicensedUserManager Contract

A Licensed User wallet is a single address controlled by one or more owners. The owners register with the Administrator as known and KYC'd entities.

Each wallet is allocated an Ethereum address which is computed with create2. Create2 inputs **are the LicensedUserManager address, bytecode hash of a proxy that can be optionally installed at the address, and a salt.

This contract manages all Licensed User wallets with a level of security equal to a proxy with bytecode. This is because the LicensedUserManager checks signatures are correct and n of m signature thresholds must be reached before a transaction is sent. The same checks that would be in place at a proxy with bytecode.

This setup provides very cheap wallet creation (~110k gas) and transaction relaying.

If for some reason a contract independent from the LicensedUserManager is required (i.e., an address with its own bytecode), then a theoretical ejectWallet function can be called to install bytecode (a transaction proxy, LU management functions, etc.) and store state (owner lists, LU names, etc.) at the wallet address. A commented-out example of this function is provided and could be added by an upgrade in the future.

Wallets can be single owner or have multiple owners; a single owner wallet is upgraded to multiple owners if a second owner is added. This separation makes the creation of single owner wallets as cheap as possible.

4.1.4 MetaTxForwarder Contract

This contract verifies and forwards meta transactions to other Startrail contracts.

Startrail meta transaction types are defined in the MetaTxRequestManager. Transactions are forwarded if they are one of these types.

A meta transaction signature is verified by the MetaTxForwarder before being forwarded to the destination with the sender address appended to the call data by the forwarder following the EIP2771 standard.

Forwards can be from a Licensed User address or an ordinary EOA address. For a Licensed User forward, 1 or more signatures must be provided by addresses in the owner list up to the defined signature threshold on the Licensed User wallet.

4.1.5 Bulk Contract

The bulk contract facilitates the mechanism described in the "4.2.6 Bulk Actions" section.

The Merkle root of a tree of actions to be performed in bulk is stored with the contract, as are hashes of leaves that have been processed.

Leaf actions are submitted through the Bulk contract which verifies they are part of the Merkle tree before forwarding them to an appropriate Startrail destination contract.

4.2 SRR Details

Startrail issues SRR, a token for the tracking of artworks.

The SRR is an EIP721 compatible NFT with a number of enhancements and additional features including:

Rich versioned metadata
Provenance tracking
Custom history events
Licensed users and permissions
Market locking
Bulk issuance and transfer
Meta transaction enabled

4.2.1 Metadata

Startrail has built an advanced metadata system that employs versioned JSON schemas for recording event information and core SRR data. This metadata is easily queried providing a rich history trail.

Types

SRRs link a few types of metadata:

Core - this is the main ERC721 metadata file seen on most NFTs
Provenance/Transfer metadata - information related to the transfer of ownership event
Custom history - some event in time - eg. an artwork was exhibited at a gallery

A JSON schema is defined for each of these metadata types.

Storage

Though currently stored in Startrail servers, we will soon be storing to IPFS and later with a permanent storage protocol like the Lighthouse extension for Filecoin.

These protocols collect a fee upfront that is enough to incentivize storage providers to keep the data pinned and available forever.

Schemas

Metadata JSON schemas are versioned enabling the metadata contents to evolve over time.

Multilingual

Multiple languages are supported in a number of text fields in the metadata. The schemas support any language through ISO 3166-1 alpha-2 code as JSON properties.

4.2.2 Provenance

Artwork provenance is tracked by producing smart contract events at the time of transfer.

Each event includes a link to a metadata file describing the transfer event.

For example, the following metadata shows a Primary Sale transfer and adds some remarks in both English and Japanese languages:

{
  "remarks": {
    "en": "Sold at Kama-to-Tsuchi online store.",
    "ja": "窯と土オンラインストアにて売買成立"
  },
  "transferType": "Primary sale"
}

These provenance records and the associated metadata can be found by querying the Startrail subgraph or the Startrail API.

4.2.3 Custom History Events

Custom history events can be written to the SRRs history log by producing smart contract events that include a metadata hash with full details of the event.

Examples of these types of events include auctions and exhibitions, however any custom history type can be added and logged.

4.2.4 Licensed Users and Permissions

As described in the section Account Eligibility above, some actions can be only be performed by Licensed Users. For example, issuing a new SRR. The StartrailRegistry contract verifies rules on SRRs.

4.2.5 Market Lock

The token issuer can lock an SRR from external market transfers. This will restrict transfers initiated from outside Startrail by disabling the standard ERC721 transfer functions. Transfers can still be made via Startrail when transactions are initiated from a Startrail based UI.

4.2.6 Bulk Actions

Issuance and transfer of SRRs can be done in bulk by submitting batches of actions to the Startrail API.

Each batch requires only one signature of a meta transaction message to execute.

To achieve this we build a Merkle tree from a batch of actions and submit the Merkle root to the chain. Once the root is on-chain, the Startrail API manages the sending of sub-batches of actions to the blockchain. Startrail smart contracts verify records in the sub-batches are part of the Merkle tree and if they are the action will be executed.

This process saves both time for the user and gas for the transaction relayer.

Note this mechanism is different from the ERC1155 batch minting feature as SRRs have unique sets of on-chain data sent with the issuance transaction.

4.2.7 Meta Transaction Enabled

ERC721 contract functions and Startrail extension contract functions support meta transactions, which allow Startrail to relay transactions for users without them needing to acquire any crypto tokens.

4.3 Upgradability and Backwards Compatibility

Startrail contracts employ the transparency proxy pattern enabling upgrades of contract logic.

This enables Startrail to add features and adapt to ecosystem changes over time.

These upgrades can be performed by the Startrail Administrator contract only. However later when the Startrail DAO is formed these will be authorized by a quorum of DAO members.

It’s important to note that SRRs created on older versions of the contracts will continue to work with newer versions of the contracts, thus maintaining backward compatibility.

4.4 Subgraph

Startrail's on-chain data is indexed by TheGraph providing an easy way to query the smart contract data and events. Data is available via the Startrail API also, however indexing with TheGraph provides some redundancy and high availability. If Startrail's hosted infrastructure were to become unavailable, the on-chain would still be available via graph APIs.

Startrail has defined a "subgraph" to make this possible. A subgraph tells TheGraph how to index the Startrail smart contract data and events and makes Startrail part of the TheGraph ecosystem or “Graph of Graphs”.

4.5 Meta Transactions

Startrail supports meta transactions to enable users to send gasless transactions. This simplifies the onboarding process and makes the system easier to use.

Meta transactions are defined using the Ethereum typed structured data hashing and signing standard EIP712.

A major reason for using EIP712 is that the data being signed by users is human readable; users know exactly what they are signing and can check if the data is correct. Additionally, all major Ethereum wallets support this signing standard so these transactions have wide support.

Blockchains charge fees to make changes. This is referred to as paying gas, which first requires obtaining some tokens. This can be a barrier to entry.

Security

Startrail meta transactions are verified on-chain. The smart contracts check that the signer of the message is authorized, that it's a well-formed Startrail domain meta transaction, and that the current chain matches the chain ID in the signed message.

Replay protection is enforced via a 2D nonce system. Transactions can't be resent because once a nonce has been used the next transaction must be signed with a new nonce value. The 2D nonce system is convenient to allow multiple streams of transactions to execute in parallel. Each stream keeps track of a separate nonce sequence.

4.6 Decentralization

SRR token data is stored on the decentralized Polygon blockchain. This data is replicated and validated by many nodes. This network has proven itself to be secure and effective over recent years.

SRR metadata will be stored on the IPFS decentralized storage network. While the solution has yet to be built, we plan to try the Lighthouse protocol for metadata permanence via Filecoin. When the Startrail DAO is formed, an IPFS collab cluster can be used to provide additional redundancy for the metadata.

Startrail’s first iteration is controlled by Startbahn who has the power to upgrade smart contracts and set various configuration parameters. However, once the Startrail DAO is formed, this authority will be ceded to a DAO with voting rights distributed to DAO members.

4.7 Scalability

Startrail contracts were migrated to the Polygon network from the Ethereum Mainnet in 2021. This was done to support the growing demand for the Startrail service and to improve usability.

Prior to the migration, transactions were taking more than 24 hours to mine and often cost more than $100 each.

Polygon was the leading solution for scaling Ethereum at the time of migration and continues to be at the time of writing. The Polygon Proof-of-Stake network has enough capacity to support Startrail’s current demands and Polygon zk-based solutions are now been trialed and developed. It’s likely Startrail will move to one of these zk-based networks in the near future.

4.8 Privacy

Although the art industry needs to ensure the transparency of the provenance of artworks, not every detail should necessarily be shared publicly. The degree and parameters of preferable privacy are also dependent on the artwork and the owner, and they are often situationally different. Many owners would prefer to keep certain transactional details (such as what artworks they currently possess and how much they paid for them) to themselves and unavailable on the public chain.

Blockchain was designed to distribute and manage data in a transparent way, and for this reason, all nodes are designed to save and view the same data, resulting in anybody being able to see the data on the blockchain network. However, many new blockchain network protocols that strongly emphasize data privacy are emerging (such as the Secret Network and the Oasis Protocol), and Startrail is considering using such protocols in the future.

05 Interoperability

Startrail PEG

Please find the details here:

https://medium.com/startbahn/startrail-peg-968f364ad7f8

06 Services Connected to Startrail

TBD

07 Governance

TBD

08 About Startbahn, Inc.

Startbahn is a leading Japanese art tech company aiming to enrich society by providing the technology needed by artists and all those involved in the art around the world. Startbahn operates Startrail, a sustainable and scalable blockchain infrastructure that assures the reliability, authenticity, and traceability of works.