It’s a sweatshirt that sparkles—1,200 Swarovski crystals embellish the front to create the distinctive box logo of streetwear fashionista, Supreme. Cost? $600, if you could find it.
Normally, people would line up around the block to snag this item during its brief, limited availability in a store (a process known in streetwear parlance as a “drop.”) Of course, buyers who can’t (or don’t want to) take the day off to stand in line can buy the hoodie later, via resellers. Cost? As much as $2,000.
But NYC-based startup 55 has a better idea: use crypto tokens to peg collectible streetwear to its drop price.
“Attaining these streetwear products can be restrictive because of geography, cost or availability,” Geoff Shearer, director of global marketing at 55.com, told Decrypt. “We provide a platform that eliminates a number of these barriers for entry.”
How does it do that?
The startup uses the Ethereum blockchain, and creates specific tokens for each item. Those tokens are sold before the drop, establishing how much interest there is in a particular item, and then 55 goes out and acquires that item on drop day. Once the items are acquired, 55 offers ownership of that item to those that purchased tokens.
During the Supreme Swarovski Box Logo Hooded Sweatshirt sale, for instance, 55 created tokens called SUP, which users purchased to show their interest in the hoodie. After gauging how much interest, 55 acquired the hoodies and sold them to buyers at the original retail price.
But here’s the most interesting part: People can buy fractional ownership in the item—as an investment. It’s streetwear collectors that drive up the prices that Supreme’s streetwear commands. Many people buy its stuff to hold it and resell it. SUP holders get to participate in the resale transaction.
During the Supreme sale, in May 2019, hundreds of people flocked to 55’s platform and used SUP tokens to invest in the hoodie; but only around 50 hoodies were ultimately purchased outright by token holders, Shearer said.
Once an item is redeemed by a user, the user’s tokens are taken out of circulation.
The token sale
To facilitate this flow of collectible streetwear across the globe, 55 developed its own token sale method—what it calls an “asset token onboarding,” or ATO.
Shearer defines an ATO as a token offering that allows people to signal their interest in a piece of streetwear without forcing them to actually buy the item outright.
“When we recognize a collectible item is in high demand, we work to procure an inventory of that item, tokenize it, host an Asset Token Onboarding for users to participate, and attain tokens tied to the underlying asset,” Shearer said. “And if users hold enough tokens to redeem those tokens for the underlying asset, we provide them the platform to do so.”
The idea was to democratize the buying of the hoodie. The idea isn’t entirely new. Several companies have tokenized art so investors—and enthusiasts—can buy into a piece.
The system also allows token holders to speculate, of course. If the asset appreciates, users that hold its tokens can redeem those for other goods in the company’s online store, which opens up diverse markets for individuals to invest in. Users can redeem their tokens for other goods, like other currencies or other streetwear, by trading one streetwear’s token for its pair, such as USDT Tether, and then that USDT can be used to purchase another streetwear item’s specific token, Shearer told Decrypt.
Changing the narrative of wealth
According to the 55 team, over time, with tokenization platforms, people will stop thinking of their wealth in terms of currency and instead will think about it in terms of assets and asset ownership.
So far, the company has tokenized three pairs of sneakers: The Air Jordan 1 High Travis Scott, Air Jordan 1 off-White Chicago, and Yeezy 350 V1 sneakers. Hundreds of pairs of shoes have been available on the platform.
While streetwear brands haven’t historically partnered with companies like 55 to distribute their goods, 55 is interested in teaming up with these merchants for exclusive launches at some point.
And not only does the team at 55 have aspirations for streetwear, but even the most renowned apparel.
“There’s no reason why you couldn’t tokenize some of the gowns or hats from the Met Gala,” Geoff said, adding, “At this point there’s very little limit to the full range of possibilities for tokenization of various asset classes.”