Sale of the Goose NFT for $6 million hints at demand for digital art

But with the fund’s demise, “The Goose” was loose again: Last Thursday, bankruptcy liquidators put the work up for auction at Sotheby’s art house in New York City. And by the time the bidding was over, 6529 — who goes by a pseudonym to protect his privacy, but whom Sotheby’s confirmed as the buyer — had agreed to pay $6.2 million for the non-fungible token, or NFT.

That’s more than twice what Sotheby’s had forecast, and the second highest sale ever for a piece of generative art, according to the auction house.

It wasn’t the first crypto-themed night at Sotheby’s, which in recent years has leaned into serving a new audience of young, high-rolling crypto millionaires. Despite a broader downturn in the cryptocurrency industry, the price fetched by “The Goose” shows the market for digital art remains resilient.

“Sixty percent of the buyers that night were under 40 years old,” said Michael Bouhanna, head of Digital Art and NFTs at Sotheby’s. “This is a group that is new to the art world but certainly a part of Sotheby’s future.”

The company has sold $150 million worth of NFTs to date, spokesman Derek Parsons said. That includes two auctions so far for NFTs seized from Three Arrows, including a May 19 event that fetched $2.4 million, and the June 15 auction that generated $11 million in NFT sales, including “The Goose,” which Sotheby’s originally predicted would sell for $2 million to $3 million.

The golden goose of generative art

“The Goose” developed a cult following from the moment it was created in October 2021. It’s seen as the seminal edition of “Ringers,” a collection of 1,000 NFTs created by digital artist Dmitri Cherniak, each unique and generated by code instead of by hand. Cherniak described the collection as inspired by the ways a string might move around a peg.

For 6529, “The Goose” and other NFTs are more than just pieces of art. “NFTs are a critical part of the architecture for freedom in an increasingly centralized and corporate-run digital world,” he told The Post.

On the NFT marketplace OpenSea, the cheapest piece in the Ringers collection sells for $80,000. Their value is tied to their aesthetics, said Nikolai Yakovenko, the founder of DeepNFTValue, a machine learning start-up that estimates the value of high-priced NFTs.

“One reason ‘The Goose’ is so valuable is because it shows off the beauty of randomness,” Yakovenko said. “Cherniak didn’t set out to build a goose or all these animals, it was the randomness of what the code generated. It really does speak to people.”

When the piece was first purchased by Three Arrows in 2021, Cherniak says he exchanged a few messages with the fund’s founders, Kyle Davies and Su Zhu, letting them know that they were now stewards for “The Goose.” He described their response as polite but brief.

“’The Goose’ was the piece that the community bonded over, because it looked like a goose,” Cherniak said. “It helped people learn about art through a sort of memetic appreciation. Whenever something big happened in the generative art space, people would share pictures of ‘The Goose.’”

Since then, “The Goose” has held its value, though the crypto world as a whole has not. When Three Arrows failed, it took much of crypto’s mainstream momentum down with it.

While Davies and Zhu left Singapore, where Three Arrows was based, and spent the next year reportedly traveling Asia and playing 12 hours of video games a day, the contagion spread. Voyager, a digital asset brokerage, filed for bankruptcy after Three Arrows couldn’t pay off its $665 million loan. Cryptocurrency exchange Blockchain.com recorded $270 million in losses. When the death spiral was over, capped by the blazing collapse of crypto exchange FTX last fall, $2 trillion was erased from the industry’s total market value.

Three Arrows’s NFT collection fell into the hands of liquidators, who held onto it for nearly a year before arranging the multipart auction with Sotheby’s.

The generative art community turned its eyes to the bankruptcy proceedings in hopes of tracking “The Goose’s” fate. Three Arrows’ NFT collection made up only a fraction of the multibillion-dollar liquidation process, but liquidator Teneo waited and chose to work with Sotheby’s to “maximize the value of these assets on behalf of all creditors,” said Russell Crumpler, a managing director at Teneo.

In a message to The Post, 6529 described the moment “The Goose” first escaped him. Pacing down a gravel road somewhere in Europe on an August night in 2021, he pleaded with the work’s then-owner, a fellow collector who goes by the handle PixelPete, to give him more time to find more cryptocurrency. But his bid of $6 million fell $150,000 short of the offer from Three Arrows, which at its peak managed assets valued at $10 billion.

At the most recent auction on June 15, bidding quickly blew past Sotheby’s estimated $3 million price point. After 10 minutes of back-and-forth between bidders, the price surpassed $6 million, ultimately going to 6529’s investment fund for $6.2 million including fees.

Tyler Hobbs, whose “Fidenza” art was sold alongside Cherniak’s that night, sees institutions like Sotheby’s and Christie’s as a great way to grow the generative art community.

“They command attention and lend a type of cachet to whatever they’re selling,” Hobbs said. “For anything that doesn’t have a well-established market or is expanding its collector base, those can be useful signals.”

Both Hobbs and Cherniak said that Davies and Zhu owning their artwork added to its lore, and with it, its value.

“There’s all sorts of great works of art that have passed through questionable hands,” Hobbs said. “As long as people are able to see and enjoy the work, that’s what matters most to me.”

The auction house’s road to embrace crypto has not always been smooth. In November 2021, it hosted an auction for a copy of the U.S. Constitution that a group of crypto enthusiasts called ConstitutionDAO pooled over $47 million worth of crypto to buy. But they were outbid by Citadel chief executive Ken Griffin, and chaos ensued when group members couldn’t decipher if they had won or lost.

In February 2022, a lot of 104 CryptoPunk NFTs, expected to sell for around $30 million, was withdrawn minutes before the bidding began, leaving the crowd stunned. “Nvm, decided to hodl,” the collection’s owner said in a tweet, using a crypto term that means “hold on for dear life.”

Since then, NFT trading has cratered. NFT marketplaces like OpenSea — which at one point saw billions of dollars in trade volume a month — now trade in the low tens of millions of dollars.

Still, the industry has felt a boost from the Three Arrows Capital auctions, as some NFTs have fetched more than their perceived market value. Prices for NFTs on Art Blocks, a generative art storefront for the industry, have seen a bump since “The Goose” auction, Yakovenko said.

6529 says he plans to display “The Goose” in his NFT museum, and hold onto the asset as an investment for at least 10 years.

“The honest answer is that there is a chance it might be sold in a decade,” 6529 said in a statement.