Welcome to the OpenVino purple paper!

This document explains everything about OpenVino and the OpenVinoDAO governance platform.

TL/DR summary

This “purple paper” covers the following topics:

• What is OpenVino?

• What problems does OpenVino solve, and who are our users?

• What is the OpenVino business model?

• How does the OpenVinoDAO governance model work?

• How will we scale OpenVino into a global service for 1M users and beyond?

• How we validate OpenVino?

• The devil is in the details: answers to all of your questions.

What is OpenVino

OpenVino is a Web3 platform that provides Tokenization, Transparency, and Traceability services for the wine industry. A highly atomized industry, 70,000+ wine producers operate worldwide, representing $400B in annual revenue. OpenVino solves existing real-world problems that affect wine producers, the wine supply-chain, and consumers.

OpenVino focuses on wine, but OpenVino Tokenzation, Transparency, and Traceability tools are exportable to spirits, olive oil, and other verticals.

OpenVino generates economic value from direct fee revenue, OpenVinoDAO token inflation, and composable data aggregation.

Tokenization

OpenVino enables wineries to mint fungible tokens backed by bottles of wine.

For each vintage (label), a winery can issue ERC-20 tokens on the blockchain, equivalent to the number of bottles produced.

A percentage of these tokens, issued and held by the winery, are initially sold through a Vintage Coin Offering (VCO) on OpenVino.exchange at a fixed price, determined by the winery.

At the end of the VCO, the winery funds a liquidity pool on the OpenVino.exchange decentralized exchange (DEX), permitting wine consumers, importers, distributors, retailers and speculators to both buy and sell tokens.

The price of the token on the exchange adjusts dynamically in real-time, according to supply and demand: the token price increases as more people buy tokens, and decreases as people sell their tokens.

When the wine is ready for consumption, token holders can redeem their tokens for bottles. During the redeem process, the buyer pays the shipping costs and their tokens are “burned”.

https://youtu.be/7ZYISUzJBMo

Transparency

Wineries can self-certify their wine production using OpenVino’s “BioDigital Certification”. Certifications can include multiple attestations:

• Organic

• Biodynamic

• Provenance

• Sustainability

• Ethical

BioDigital Certification enables wineries to self-certify, through a three-step process:

1. Define, in simple terms, the certification requirements.

2. Map these requirements to immutable, self-attestation data on-chain:

   1. Documents

   2. IoT sensors

   3. Images

   4. Accounting data

3. Provide a challenge mechanism

   1. Wineries deposit funds into a bounty for 30 days.

   2. Any challengers who believe that the certification is fraudulent, can deposit funds into the bounty and upload their evidence of fraud.

   3. The Kleros decentralized court determines if the certification is valid, and returns the full bounty to the winery, or to the challenger.

Traceability

OpenVino connects wineries with their customers.

Wine drinkers are invited to scan a serialized QR code on the back label of the bottle. Every QR code is different. The QR code takes the wine drinker to a webapp, where they are invited to provide:

• Basic contact information

• Take a selfie or picture

• Answer five questions about their drinking experience

In exchange for this information, wine drinkers are rewarded a free NFT of their drinking experience with the picture they took, and one OpenVinoDAO token.

This is called, “You Drink It, You Own It.”, because wine drinkers receive fractional ownership of OpenVinoDAO.

The winery receives the customer’s personal information and wine valuation.

https://youtu.be/wLHG7s_ebI4

Why wine?

Wine is the IDEAL product for decentralized tokenization, transparency, and traceability. While many Real World Assets (RWA’s) are being tokenized today with web3 tools, wine has unique characteristics that match perfectly as a cryptoasset.

These include, primarily:

• Built-in scarcity

• Quality evolution over time

• Elastic pricing

But also, include:

• Friction-full supply chain

• Multiple quality attestations

• Fungibility

• Cultural Significance

This section concisely outline each of these characteristics. These qualities combine into a product ripe for tokenization.

Built-in scarcity

Whereas wineries can vary greatly in size, with larger wineries producing millions of bottles annually, across dozens of different labels, and the tiniest wineries producing only a few hundred bottles per vintage, wine production remains finite, and wine is a consumible.

This means that wine has built-in scarcity; only so many bottles are produced per year, for each vintage and label, and those bottles are consumed over time.

Wine gets better over time…until it doesn’t

Very few consumible products get better with aging. In between perishables and durables, we have products like olive oil, coffee, and spices, products that have a longer shelf-life than a vegetable, but nevertheless, lose quality over time. Coffee is never better than the day it was roasted, olive oil the moment after pressing.

But wine improves as it ages. Immediately after grape must fermentation ends, we can call our product wine, but wine needs a certain amount of time before it is enjoyable to drink, and even more time before perfection. At some point, this aging improvement reaches it’s zenith, and quality decreases.

Spirits, like whiskies, rums, and Cognac, stored in oak barrels, tend to improve with aging, but generally speaking, this improvement is linear in nature: the older the better.

Different wines evolve at different rates, and quality improvement and deterioration are subjective. Some wines reach their peak drinking moment after only six months, others require decades. And some people prefer wines “before their time” while others seek out those that are “rancid”.  To compound matters, the volatility from one bottle to another increases over time. Where one 20-year old bottle might be fantastic, another undrinkable.

Finally, because consumers associate fine wine aging with quality, the idea of storing bottles for the future is not foreign. Wine drinkers that collect bottles in their cellars understand that these represent future delicious experiences. These are physical tokens, waiting to be “cashed-in” on a special occasion.

Elastic Pricing

A bottle of wine represents neither a commodity, nor a unique object of art. Wine represents the intersection of art + science.

A bottle of wine represents so much more than the liquid contained within. History, provenance, scarcity, story-telling and branding all contribute considerably to a wine’s valuation. A bottle of wine represents a snapshot of a place and time, reflecting where the grapes were grown, when and how they were harvested and fermented, tradition, the weather, decisions made by the winemaker and the viticulturist in the field, the sweat and toil of the farmworkers, even the yeast in the air when fermentation began.

Wine combines all these factors into a product supporting very elastic pricing.

There are $2 bottles of wine on the market, $20,000 bottles, and everything in between.

A brewer who crafts an extraordinary, “100-point” beer, will still have a very difficult time fetching $100 for a bottle. This is not the case with wine.

Wine’s cultural and historical significance, combined with it’s inherent quality variability over time and built-in scarcity, translates into price elasticity that consumers appreciate. People “get it”. They know wines are valuable, and accept the fact that when they walk into a restaurant, they will be paying a considerably higher price for the same bottle of wine they could buy in the super market.

Even as an asset class, investors appreciate the value of wine.

“Rich Gen Zers and millenials are investing in jewelry, sneakers and fine wine instead of traditional assets, says Bank of America.”

The friction-full supply-chain

The majority of wine sales pass through three tiers: importers, distributors, and retailers (wine shops, and restaurants), before reaching consumers. Only a tiny fraction of wine sales today are DTC (direct-to-consumer).
The reason you don’t see wine available on Amazon is because wine contains alcohol, and alcohol sales are highly regulated. The USA maintains regulations on the books, legacy of 1920’s prohibition, that prohibit some interstate alcohol sales. The European Union is an open customs zone for the sale of goods across borders, with the exception of alcohol, tobacco, and fuel.

The appeal of wines to consumers has much to do with provenance: high-altitude malbecs from Argentina, sauvignon blancs from south island New Zealand, Bordeaux wines from … Bordeaux. Locally producing a Bordeaux in Chicago is not an option. And wine is heavy and fragile, liquid in a glass bottle, susceptible to temperature fluctuations.

Wine imports are highly taxed, as compared to other consumibles. A $5 bottle of malbec in Argentina becomes a $40 bottle in a shop in Sao Paulo, a $100 bottle in a New Delhi restaurant. Most of the price increase is because of excise taxes. Since wine is locally produced in 100+ countries, protectionism in the form of tariffs, add to the import taxation burden.

The wine pricing problem

Wine producers face a unique challenge, in part because they are beholden to this three-tier supply-chain. Despite built-in scarcity, elasticity, and quality variability, wine producers lack mechanisms for dynamically adjusting their prices.

Once a wine producer provides a suggested retail price, it is very difficult for them to increase price, to accommodate scarcity and demand, nor can they readily slash prices on slow moving wines, or wines that are reaching the end of their drinkability.

Boutique wine shops complain that supermarket chains undercut prices below the cost distributors provide. Wine stock that has failed to sell quickly becomes unsellable, and wineries cannot dump product without using the grey-market, thus competing with their existing channel. And the few wineries that do sell DTC, cannot be seen as competing with their retailers. For this reason, buying wine directly from the winery is rarely a good deal for the consumer.

Attestations

Consumer consciousness increasingly focuses on traceability and provenance, understanding where the things that we buy come from and how were they made. This focus is especially acute when it comes to wine.

Wine drinkers prize uniqueness, those qualities that differentiate one wine from another. So this presents a challenge and an opportunity for wine makers: how can they best differentiate their labels from a sea of offerings.

These are some of the attestations, or claims, that wineries use to distinguish their brands. Many of these attestations require complex and costly certification processes.

• Provenance:
  Declaring where a wine comes from involves complex certification processes defined by regional wine authorities. Denominación de Origen (DOC) in Spain, or Appellation d'Origine Contrôlée (AOC) - France, are examples.
  
  The label for the denominación de origen “Ribera del Duero” in Spain, describes not only the geography where the grapes were grown and the wine made, but also the grape variety (predominately “tempranillo”) and the wine making process.
  
  Provenance can include specifics, like “single-vineyard”, and characteristics of the vineyard soil, altitude, and irrigation methods.

• Varietals:
  Many wine regions have their flagship wine varietals, malbec in Argentina, pinotage in South Africa, carmenere in Chile.

• Wine-making styles:
  Was the wine fermented or aged in oak barrels? Was it American or French oak?

• Authorship:
  Was the wine made by a famous winemaker?

• Organic / Biodynamic:
  Were the grapes grown, and the wine made, according to “organic” standards.

• Sustainability:
  Is the winery “Carbon-Neutral”? What about the water footprint, and other sustainability metrics?

• Vegan-friendly:
  Was the wine clarified without using animal products, like egg whites or bone marrow?

• Fair Trade:
  Does the winery follow acceptable ethical and social standards?

A Highly Regulated Product

As a foodstuff and an alcoholic beverage, wine is scrutinized by public health authorities. Additionally, wine often serves as a token of regional and national cultural identity.

For example, in Argentina, wine is considered a “National Beverage”. Malbec is more than a grape varietal, it is a protected national brand. Therefore, by law, every wine produced in Argentina, must include a legend on the label “Bebida National” (National Beverage), and every wine purporting to be a Malbec, must contain at least 85% of fermented must from malbec grapes. Both the malbec vineyard and the resulting wine production must be registered and monitored by the national wine board INV “Instituto Nacional Vitivinícola” for authenticity.

Similar regulations exist in wine producing countries around the world, protecting regions in Europe, like Champagne, Rioja, and Toscana.

Wine fraud is a real problem. Fake labels on bottles, and wines misresenting their regions comrepresenting their regions contribute to substantial economic losses.

Fungibility

Wine is a fungible product: one bottle should taste the same as any other bottle of the same label and vintage. As such, wines can be tokenized with fungible tokens (i.e. ERC-20).

Having said that, wine is a “living liquid”, evolving over time, even after bottling.  And while two bottles of the same vintage should taste them same, slight differences and defects can occur in outlier bottles. These small inconsistencies can be a result of wine bottle storage or cork deficiencies, but also from serendipity. Whatever the case, this volatility provides sufficient quality randomness to inject variability in quality assessment and valuation.

Tokenizing wines with NFT’s, instead of fungible tokens, can be interesting when dealing with “library wines”, collectible rare bottles of a particular wine and pedigree.
By combining fungible tokens, issued across and entire vintage, and You Drink It, You Own It, serialization NFT’s OpenVino provides wineries and consumers with the best of both worlds, fungible and non.

Cultural Significance

Wine drinkers represent a passionate audience, who search uniqueness. Golf, cars, and wine are internationally seen as a status symbols, but of the three, wine is the most accesible. Wine drinkers prize the uniqueness, those qualities that differentiate one wine from another.

Consumer focus on traceability and provenance, understanding where the things we buy come from and how were they made, is even more targeted when it comes to wine.

What problems OpenVino solves, and who are our users.

OpenVino provides value to everyone in the wine ecosystem. This section enumerates OpenVino’s benefits for:

• customers (wine drinkers)

• supply-chain partners (importers, distributors, wine shops and restaurants, influences, brand ambassadors, wine regulators)

• wine producers

• wine partners (winery service providers)

• the cryptosphere: token speculators, RWA funds, web3 protocols

For the winery

1. Early access to liquidity (“Liquidity from Liquid”)

2. Chicken-and-egg problem

3. Access to price volatility

4. Import / Excise tax reduction

5. Eliminate certification costs (BioDigitalCert)

6. Connect with real customers - validate quality

7. Token backed loans

For the supply-chain

1. Risk reduction

2. Forwarder - Access to new customer base

3. Imprinting customers as new crypto users

4. Ability to pay brand ambassadors / influencers / markets in wine tokens

5. Regulatory friction reduction

6. Fraud reduction

For the consumer

1. Price authenticity

2. Belonging to the community

3. First NFT and DAO tokens, risk-free entry into crypto

4. Attestation authenticity

5. Gifting, prizes

6. Liquidity farming and P2P lending

For wine partners

1. Onboarding services

2. Integration services

3. Certification services

4. Wine analytics and AI. This is OpenVino can help the world make better wines.
   (such as, but certainly not limited to: Verivin, db.wine)

5. Access to OpenVinoDAO community

The cryptosphere

1. Tokenization of a RWA asset class

   1. Less problematic than other RWA’s - it is based on a utility token.

2. Participation in RWA stable coins

3. Tokenized carbon credits

The OpenVino Business Model

Wineries can use OpenVino Tokenization, Traceability and Transparency for free!

The only requirement for wineries is that they become members of OpenVinoDAO. For the first ~300 wineries, OpenVinoDAO subsidizes the cost of joining (nominally equivalent to $2500 USD).

So does OpenVino make money and generate value for investors and other OpenVinoDAO members?

The three primary vectors of value generation for OpenVino are:

• Direct Revenue

• OpenVinoDAO inflationary token

• Composable wine data

Direct Revenue

OpenVino generates revenue from two primary sources: token swaps, and YDIYOI data fees.

All revenue generated is received in an OpenVinoDAO Revenue Wallet. Periodically the contents of the revenue wallet are disbursed to OpenVinoDAO token holder wallets. The automatic disbursement schedule is adjustable, daily / weekly / monthly.

Token Swaps

Whenever someone purchases or sells a wine token issued on OpenVino.Exchange, a transaction fee (swap fee) equal to 1% of the value of the token is levied.

This swap fee is divided into two payments:

• 50% of the swap fee is paid to the token liquidity provider(s). Initially the winery issuing the token is the liquidity pool provider, but anyone holding wine tokens can participate in the liquidity pool, including OpenVinoDAO.

• 50% of the swap fee is paid to the OpenVinoDAO revenue wallet.

Essentialy, the more token swaps occur, and the higher the price of the tokens, the more revenue that is generated for OpenVinoDAO.

Here is an example of swap fee volume projections:

“You Drink It, You Own It” (YDIYOI) NFT data fee

OpenVInoDAO token liquidity farming

BioDigital Certification Yield

Inflationary OpenVinoDAO token

Wineries can utilize OpenVinos Tokenization, Traceability, and Transparency services for free, but the must be members of OpenVinoDAO.

Attracting and onboarding customers

Reaching the network effect

Leveraging winery marketing budgets

The OpenVino onboarding process.

Tokenization

Transparency

Traceability

OpenVino partners

How OpenVino attracts users

The OpenVinoDAO Governance model

6. An introduction to DAOs

   1. Decentralization: DAOs are built on blockchain technology, which enables a distributed network of participants to collectively make decisions and govern the organization. This eliminates the need for a centralized authority or hierarchy.

   2. Autonomy: DAOs are designed to operate autonomously, meaning that decision-making and execution of actions are governed by predefined rules and smart contracts. This allows for trustless and transparent operations.

   3. Transparency: Since DAOs are built on blockchain, all transactions, decisions, and activities are recorded on a public ledger, ensuring transparency and auditability. Anyone can access and verify the DAO's operations.

   4. Governance by Consensus: DAOs employ mechanisms for decentralized decision-making, typically through voting systems or consensus algorithms. Token holders often have voting rights, allowing them to influence the direction and decision-making processes of the organization.

   5. Economic Incentives: DAOs often have their own native tokens, which serve multiple purposes such as governance, voting, and rewarding participants. Token holders may receive incentives for contributing to the DAO, fostering community involvement and engagement.

   6. Smart Contracts: DAOs rely on smart contracts, self-executing code stored on the blockchain, to automate and enforce rules and agreements. Smart contracts enable trustless interactions and ensure that actions are carried out as programmed.

7. How much OpenVinoDAO is raising

8. How the money will be spent
   Answering the questions of “how OpenVino will scale to reach the Network effect”

9. The fund-raising process

   1. Calendar

      1. August 31 to December 31st.

   2. private commitment white-list

      1. First come, first serve

      2. Value add from the investor

      3. Shared vision

   3. minimal success barrier

   4. who is invited

      1. investors that understand wine and/or the opportunities of web3 universe.

      2. friends and family

      3. investors who are comfortable with the model, committed to reaching the network effect breakout - exhausting the 25% promo wallet.

      4. passive Investors, and those who are willing to contribute

         1. liaising with wineries

         2. helping overcome the scalability challenges

   5. The founders commitment

      1. No token sales until network effect has been achieved. This is our success criteria.

         1. onboarding wineries

         2. adding partners

         3. YDIYOI consumers

      2. Achieving “autonomos” and “decentralized” in DAO as quickly as possible after the network effect is achieved (time limit? formula)

      3. Compensating those who have helped OpenVino along the way.

         1. Winedrop! not Airdrop

10. OpenVinoDAO!

    1. Token issuance

    2. Incentives for all

    3. Dividends and Shares

    4. Comparison with traditional governance and growth structures

    5. Global presence with reduced friction

11. The Devil is in the details

    1. OpenVinoDAO mission statement

    2. Governance model

    3. Tokenomics

    4. Technology Stack

    5. Roadmap and Timeline

    6. The community Moat

12. Legal, Compliance and Accounting

    1. The Crecimiento RWA manifesto

Scaling OpenVino into a global service, 1M users and beyond

The time is now!

How did we get here, and where are we going.

This section provides a brief history of the development of OpenVino, and explains now is the time to scale.

OpenVino was officially launched on May 6, 2018, with the tokenization of MTB18, the world’s first wine-backed crypto-asset. In 2024, our seventh vintage token, MTB24, was released, along with “You Drink It, You Own It” NFT drinker experience minting.

A brief history of OpenVino

Why now is the time to scale

2024: The year to scale…and why before was too-early.

4. Scaling OpenVino

   1. Reaching the “network effect” - exponential expansion

      1. get wineries and partners to tell our story

      2. Low friction entry barrier

      3. Economically beneficial to be part of a community

      4. Automate usage

      5. Who will be our partners?

         1. Wineries

         2. Winery supply chain

         3. Wine consumers

         4. Winery service providers

            1. onboarding partners

               1. Sergio

               2. Michael Kramer

               3. Eugenia

            2. crypto ERP providers

            3. DB.wine

            4. Vivino?

            5. BioDigitalCert consultants

            6. D.O.'s

         5. Partner projects

            1. 4m3.bio - ecosystem

            2. Verivin

         6. Enabling 100,000+ people to tell the OpenVino story - what is the incentive

            1. sell more wine

            2. increase the value of wine, and OpenVinoDAO tokens

   2. What do we need to scale?
      For OpenVino to become the global flag bearer for tokenization, traceability, and transparency in the wine universe, five areas need to be addresses, five attack vectors opened:

      1. Make buying, selling, and redeeming wine tokens super easy, and fun. (The UX problem)

         1. Easy to use for people that don’t have metamask.

         2. The fiat on-ramp/off-ramp

         3. ferment - the winery dashboard

      2. Tell the world about OpenVino

         1. Attracting wineries and partners

         2. Getting wineries to tell the OpenVino story for us (proxy-marketing)

      3. Fill the moat - build the community that insures growth through the network effect
         Building OpenVinoDAO

      4. Always-on (Resilience)

         1. Security
            What needs to be done to insure that the OpenVino components are secure?

            1. The Rekt Test

               1. Do you have all actors, roles, and privileges documented?

               2. Do you keep documentation of all the external services, contracts, and oracles you rely on?

               3. Do you have a written and tested incident response plan?

               4. Do you document the best ways to attack your system?

               5. Do you perform identity verification and background checks on all employees?

               6. Do you have a team member with security defined in their role?

               7. Do you require hardware security keys for production systems?

               8. Does your key management system require multiple humans and physical steps?

               9. Do you define key invariants for your system and test them on every commit?

               10. Do you use the best automated tools to discover security issues in your code?

               11. Do you undergo external audits and maintain a vulnerability disclosure or bug bounty program?

               12. Have you considered and mitigated avenues for abusing users of your system?

         2. Availability

         3. Recoverability

      5. Autonomous (the importance of self-running)

         1. A Self-Driving OpenVino

         2. Automate Provisioning

         3. Partner network and a robust community

   3. Who are we up against? The competitive landscape

      1. NFT’s and wineclubs
         1.⁠ ⁠Penfolds, This renowned Australian winery has used blockchain to authenticate their wines. Penfolds has collaborated with BlockBar, an NFT marketplace for luxury wines and spirits, to release limited edition wines with blockchain-backed provenance.( we know all ready about)

      2. Traceability

         Several wineries have adopted blockchain technology to enhance transparency, traceability, and authenticity of their wines. Some notable examples include:

         1. Château Pape Clément, One of the oldest Grand Cru Classé wineries in Bordeaux, France, Château Pape Clément has integrated blockchain technology to provide detailed traceability of their wine bottles. Each bottle comes with a unique, tamper-proof NFC tag that links to a blockchain record.

         2. ⁠DeMorgenzon : A South African winery, DeMorgenzon, has used blockchain technology to enhance transparency and traceability in their wine production process.

         3. Ariousios :A Greek winery that uses blockchain technology to ensure the authenticity and traceability of their wines, providing customers with detailed information about the wine's origin and production.

         4. Medici Ermete, This Italian winery, known for its Lambrusco, has implemented blockchain to trace their wine production and ensure the authenticity of their products.

         5. Australian Vintage Limited (AVL), AVL has partnered with VeChain, a blockchain platform, to integrate blockchain technology into their supply chain for better traceability and transparency.

      3. Library wine marketplaces

How we validate Openvino?

Starting with this experience:

Six years of work and honing on a working winery (who understands the pain points of selling wine!)

Uniquely positioned - 20 years in the wine business, as an outsider. 40 years in the IT business - PC revolution, the growth of the internet from web1-web3 - and the blockchain.

Yet, how can know that OpenVino has been vetted by others?

Let start with the number of times OpenVino has been presented in public (blockchain world / wine world)