DeFi Chat is a series of educational & informative interviews with world professionals in the Crypto / Blockchain / DeFi / Web3 communities. We aim to provide digestible content in multiple mediums such as video, audio (podcast), and written (blog) form!
Miguel & Quin from House of Rare has introduced interesting insights about how tequila can be used as an asset for NFT collectibles. In addition, they also shared their vision about the potential use cases of NFT in the future.
YOUTUBE VIDEO: https://youtu.be/GLvlrzAabtI
Note: This transcript was automatically generated by artificial intelligence (AI) and therefore typos and grammatical errors may be present.
00:00 – 04:23: Introduction
Lachlan: Hey everyone and welcome today I’m joined by House of Rare, Miguel and Quin. Thank you both to joining us, so House of Rare, we Stably’s actually known for a while. We did an event with them at Consensus in Austin. Yeah we go back a long ways, so it’s quite an interesting project. It’s sort of based on asset-backed NFTs so this will be an interesting topic to sort of explore. Personally I have limited knowledge of this area, so it’s been something that I found super interesting to learn more about, and yeah looking forward to jumping into it. Quin, do you still mind telling us a bit about your project and the history?
Quin: Yeah sure and thanks for having us on. Yeah our House of Rare is a Tequila NFT business we launched last year around November 2021. And the whole idea behind it is bridging the sort of digital collector and physical collector worlds. Our NFTs are digital assets but they also represent a real world collectible asset so what we did is we partnered with a Distillery to come out with a line of the QR for us. And as you can see in the background of Miguel there a lot of the artwork behind him is actually designed by artists that we’ve partnered with for this line. Essentially these are like tequila boxes where an artist will decorate the boxes, turn it into an art piece, and then we will scan that and digitize it and turn it into an NFT so then… then people can buy and trade and mint NFT and hold it as a digital asset, but they can also choose to redeem it for the actual physical asset, and get the bottle.
Lachlan: Super cool. Miguel, you’re from Mexico, correct?
Miguel: Yeah yeah, I’m here right now in Mexico City and obviously I’ve been at tequila fan for all my life, so we were lucky enough to… you know, found this project last year. And it’s been quite an adventure as Quin said the whole premise is to explore asset backed NFTs… you know, the whole real life applications of NFTs. I think there’s been two or three years of crazy speculative… you know, things going around NFTs. And we see a true value of… of you know, real life applications of this technology. So that was a premise with we… where we started and… and I think tequila is a great greatest excuse to… to bring that. And so yeah, I mean we found it last year in this… in December during Art Basel. We launched the collection. As Quin said, it’s… it’s… here are some samples of what we built here. I have a little bottle so this is what it looks like. This is actually… you know, hand… hand-drawn by a Mexican artist called Diana Menendez. And she did a great work on all the NFTs, so what you get is the NFTs, get it’s printed on that bottle and whenever you come to our one of our events or… or you meet us, you… you get to redeem the bottle and get the actual tequila. And I mean… obviously… and this is one topic I think we’re gonna touch a bit later, but we run out into a lot of issues now that the NFT, the current NFT marketplaces and… and you know, the whole ecosystem of such is it’s just made for images, right? There’s… there’s no real way to redeem or to give clarity to… to people about the… the real asset back in an NFT so that’s why we’re getting involved in this industry. And we want to develop the technology to be able to give certainty to the people that sell the collections as well as the people that buy the collections that there is a real asset back in it. I mean we’re here a year after and we’re very excited of what’s coming, and so that’s a brief intro.
04:23 – 13:59: Real life Tequila backed NFTs
Lachlan: Yeah cool, super interesting. Thanks for the overview to both of you. I guess one question that I had… had and that others might have is that… you know, in the NFT industry last year, we saw a lot of hype, a lot of thing, projects go up a ton, a lot of it… you know, some very cool communities, very cool projects with utility, but also just a lot of speculative arts, kind of different than what you guys are doing with asset backed NFTs. So you know, could you touch a little bit more on like NFT industry as a whole, and how you guys sort of fit into that with the asset backed NFT and how does this actually compare to me just going and buying a bottle of tequila, for example?
Quin: Sure so yeah I think our project is a great way for people to get like introduced into NFTs because a lot of people see NFT space and like you said there’s tons of speculation and fluff around it. And it doesn’t really make sense it’s like… you know, why are these just jpegs going for hundreds of thousands of dollars and… and it seems a lot of people kind of dismiss it as crazy or whatever in my view. There’s sort of like a broad spectrum of NFTs… you know, on the one end, there’s purely like artistic… you know, being the feeling of being part of a community really, speculative side… you know, just like whatever value you choose to attribute to owning this NFT. And then on the other side, there’s complete utility and because really all an NFT says is I mean as a non-fungible token, it can’t be copied and it shows like a history of ownership, so something that I like to explain to people who aren’t to be familiar with NFTs. A really easy use case is to sell like NFTs for like tickets to an event. It means that you can see in the NFT immediately. You see the history of ownership. You know that it came from like the actual venue. Yyou can’t copy it, so it would take away a lot of like scammers, and stuff like that. And you know that like it belongs to you, so that’s like purely logistical like not much speculation there. It’s pretty straightforward so our project meets somewhere in the middle. And I think that really helps people like… you know, wrap their head around it, and find some value in the market, so there still is some artistic aspect to it, and the idea of owning that piece of art, and there’s some sort of like clout and recognition to that, but also it still is backed by a real asset that you can physically use, drink and hold and everything so. And the difference between just buying the bottle tequila is with House of Rare, we’re not just like a tequila brand. It’s also a community of people where we have these events and promotions and like showcases with the artists and stuff when you buy a House of Rare NFT, it also gets you access to a lot of to the events that we hold at different conferences and stuff like that, opportunities to redeem your bottle, redeem your NFT for a bottle at these events, and those kind of things. And so it brings like the whole community together in a way that like I think why people like to get into collectibles in the first place. It’s not just… not just for the item, it’s also to… you know, experience that with like like-minded people and people who also share those interests with you, so that’s sort of the benefit or like the addition of… you know, buying a particular bottle through an NFT that’s rare and it also helps bring… you know, people that like traditional or digital collectors into like the particular world and connect with The Distillery. We’ve done some events like brought kind of keyholders out to actual Distillery they got like in two of their fields and everything like that so that allows like… you know, the users to come see like where things come from. And it also helps connect The Distillery to a new market that they wouldn’t really have access to before. It allows The Distillery to grow as well so. Yeah that’s really what we’re trying to create there.
Miguel: And then I mean in addition to that, obviously the tequila bottles are the first collection we launched. And now that we’re looking at the whole tequila vertical industry, vertical the NFT applications will be even more obvious, right? So for example the next collection we’re launching is tequila casks, so the idea here is that one NFT gives you ownership of one tequila cask that will be aged on our private seller, which… you know, owning a tequila cask in… in normal life would be very difficult. You will have to… you know, get on a contract with the distiller make sure… you know, there’s a space to age it that it will be custody right? so NFT takes all that guesswork and all that leg work away from the… owning this asset and then gives you the facility to sell or buy the NFT in any of the stages where the tequila ages. So tequila… you know, it has four different faucets. Let’s call them, so first, no freshly freshly distilled is Blanco then it becomes Reposado, which is the one that most people knows, that the one that’s a bit yellow. And then it goes into Añejo and Extra Añejo. So the way and the really cool things about NFTs is that you can… you know, buy a Blanco tequila NFT, it will evolve into Reposado and then into Añejo. And you can sell it or buy it anytime you want. And you are part participating of these… you know, appreciation of the… of the liquid through time. So it’s… you know, you can be in Australia,you can be in Asia, you can be anywhere in the world and participate in this beautiful process.
Quin: Yeah and I think… I think one thing that’s really cool about that is people think okay I can buy the… the cask of the barrel and then choose to age it and then it becomes more valuable, it’s more rare… you know, better tequila. It’s like well why doesn’t the distiller just do it themselves. Well in a lot of cases most tequila is sold on aged simply because the distilleries like… need like the cash flow to keep producing. And they’re operating on small margins and so… you know, very little tequila is actually fully aged to… you know, to to like the rarest or best to do it, so connecting these collectors who might be interested in more age, more valuable tequila as an investment or as a product with the distillery, allows Distillery more options in their production… you know, finding the new methods for cash flow, so that they can keep producing while the users can decide like okay at what stage of the tequila do I actually want to… to age this to, or to invest in, or to enjoy.
Lachlan: Yeah and is it one distillery that you’re working with specifically or… or multiple?
Miguel: So at the beginning, yeah we’re working with a single distillery. It’s a 50 generation tequila producer, very reputable family that’s just… you know, embedded into the tequila town in Mexico. And yeah the idea is down the line… you know, to find exotic Tequilas, to find things you cannot… you know, normally buy and just start putting them on our seller, continue the… the aging process and going back to community right. It’s also a community exercise. We want people to… you know, age it as long as they want. Then we can either bottle them for them or… or ship the whole barrel, or we can sell it back to the producer. The idea is that… you know, and it’s an open seller right? They can come, they can visit. We’ll have events actually for this collection in specific. We’re gonna… all the House of Rare team we’re gonna be in Guadalajara which is the closest city to tequila and we will be hosting all the NFT holders that want to come and see the process from field to… to barrel. They’re welcome to come see and they get to see the liquid being poured into their barrel. And then you know put in the private seller. So we also… we’re also… all about that experience and showing our collectors… you know, the whole process, teaching them how it’s… it’s made.
Lachlan: Yeah that’s super cool, because that stood out to me is that well, first of all you’re connecting investors or just fans tequila together, and getting them that full experience throughout various community events, but additionally like… you know, the use case of me being able to invest in a cask of tequila from across the world using blockchain is massive. Because you know, investments in alcohol is… you know, quite a big market. It’s one of those ones that does suffer from a lack of liquidity and the logistical issues of having to purchase from across the world so… you know, security costs it can get stolen, it might be hard to prove ownership just a ton of different issues. It kind of reminds me of Stably, when we tokenize golds so that people around the world can now purchase gold using blockchain to reduce costs. Obviously certain differences, for example that’s fungible compared to non-fungible, but that really stood out to me and like a really big use case of House of rare and… you know, why this actually makes sense.
13:59 – 21:37: Various potential use cases of NFT in the future
Miguel: Yeah, yeah that’s I mean we… some people call it NFT 2.0 right. It’s… it’s the the real life applications of the technology and like Quin said, it can be applied to ticketing intellectual property real estate, collectibles, catalogs. You know, we had a chat with the guy from the nature department from Florida and they want to do like a cataloging of… of new animals and plants that are discovered through NFTs right. So that’s a… that’s a way that you guarantee that the discoverer gets a proper… no, they… they get recognized, that they discovered that issues and that it gets cataloged in the right way. So I mean the sky’s the limit on the new applications for this tech.
Lachlan: Is this an issue having… you know, governments, etc. recognize this NFT ownership however is… like is this one of the challenges of the industry?
Miguel: Well I mean in that specific example I don’t think it’s a challenge because they’re just embracing the blockchain technology as something that’s… you know, you that lives on an open ledger, so it’s an easy way for people to show hey I discovered this new kind of fish on this date and that’s when I mint the NFT and here are the characteristics and it just leaves up the open ledger where people can check. And if someone else runs into that fish… you know, they can check the ledger and if it already exists, then they carry on, so it’s there’s not a lot of government involvement in… in this one, and it’s just it’s bringing you know catalog into a decentralized chain.
Lachlan: Yeah I suppose I’m thinking about like in the future when… you know, people are proving property rights using NFTs or passports or health records etc, because I think that those as quite big use cases that sort of that when we get there, we’ll get to the point where… you know, it’s a lot more common for an average household do hold an NFT even if they don’t recognize it as such. You think that will be an issue having governments etc recognize goes in the future?
Quin: Well I mean there are a few the projects that are dealing with real estate or things of that nature and really I mean the NFT is really just a contract like… you know, they’re in those cases like the contract is sort of built into the NFT. And so as long as it is… you know, entered into by both parties, then that’s really the… that’s really the most important thing and… and the government recognizing that contract as long as it was like agreed upon by both parties entering in the transaction should follow with that. I mean I’m sure there’s… I’m sure there will be more regulation that comes into it especially with things like real estate. There’s definitely a lot of more factors that need to be considered and ironed out. But with the soul of it just being that it represents a contract between two parties, I think that’s there’s plenty of sort of prior established… you know, regulation and practice based around that… that should be able to be built upon.
Lachlan: Yeah that makes sense that… you know, when you’re doing these transactions with NFTs, you’re just entering an agreement… you know, with agreement consideration etc. I just hadn’t really thought of it that way so maybe that’s a question of others as well but interesting. It’s just a different way of thinking I guess… you know, about ownership etc, so it can be a little hard to wrap one’s head around. One other question I had was that so say I buy a bottle of one of those Tequilas behind Miguel, I’d buy the NFT of it, how do I actually take hold of that bottle of tequila and what happens to my NFT if I drink the bottle of tequila for example? Is this something how are you guys sort of addressing this and has that presented any challenges?
Quin: So yeah, I mean one what we’ve done is… you know, people can… can come to our events, and then say like, hey I want to redeem my NFT, and then they can get the actual bottle. You can have the bottle and then the NFT is just an art piece with that… you know, there’s different ways for NFTs to be like mutated or changed, and so it’s like you recognized that this NFT has been redeemed right? So you know, you can still hold it and it would still like you mean like you’re part of the community, and everything and it still is like a digital piece of art. But you know given that it’s marked as redeemed, it wouldn’t be as valuable as an unredeemed version of NFT.
Miguel: Yeah yeah that’s… that’s part of what we’re developing right. Current NFT protocols and marketplaces, they don’t have a redeem or not redeeming feature on them, so the way we’re looking at it is that we want to get into that game, also we want to develop our own marketplace where people that upload collections will have different… you know, features where… where they can give the option to the collectors to redeem. Now the first one is… you know, I get the bottle of tequila so the NFT gets burnt and it disappears. The second one can be that the NFT gets marked or it becomes an entity which is a non-transferable token, so the art that means that the art stays in your wallet forever. It cannot be sold or transferred but you get to keep the art. Or the third one and it’s something we’re exploring with other brands of beer and… and cigars and stuff is… is making it like a club, so as long as you own the NFT, you got… you get maybe monthly or semester or yearly drops of… of real assets right, so you’re thinking about… you know, limited edition beers every month. You will get a shipment of beer as long as you hold the NFT. And so those three features we really want to implement it to our marketplace along other like just asset back to NFT things that you can seem you cannot see on… on actual marketplaces right now.
Lachlan: So but if you were going… I mean if an NFT issuer was going to keep giving airdrops for example additional beer every year, that’s unique would that how would that fit into the business model if people aren’t transferring the ownership, because for example a common way to monetize NFTs is to take five percent off of every transaction, correct? Is that an issue if someone’s just holding it and if you’re continuing to give airdrops or I guess, how does the monetization fit in here?
Miguel: So in that sense I mean we haven’t gone deep into monetization. Obviously our marketplace we will have the regular secondary market fees that you see around the industry which is like you said five percent, but for the clubs the way I think it is that not depending on the longevity the collection of loader wants to give to the collection, it will… you know, mark the price, so maybe it’s… it only lasts for two years you get monthly drops. So then you know, it has a depreciation in value through time NFT but that’s no problem, because if you want to jump in only for a year or if the collection gets really popular, then there’s like appreciation so it’s that details… I mean the industry is… it’s still under infancy so we’re… we’re exploring different venues and we’re open to… to hearing what partners want to do and… you know, adapting to that and bringing in the features for the… for the collectors.
Lachlan: Awesome yeah and I guess one last question is to wrap up. I mean if someone wants to learn more about House of Rare or… you know, ask about NFTs etc, like what would you suggest for people who are interested but want to… you know, sort of dive deeper?
Miguel: So first I mean visit our page houseofrare.io. It’s been refreshed right now. It’s all about the tequila collection, but we’re about to announce that tequila barrels and all the other collections we have in hand. Also I mean just Google NFT 2.0 right. There’s you can find a bunch of other companies doing not nothing like us, but… but you know, ticketing real estate, a bunch of stuff so there will be a lot of material down there already. And yeah I mean we’re building communities with these guys, also you know, I think real estate and tickets and us, we have very similar back-end technology, so we’re… we’re exploring partnerships. We’re seeing how we can work together just to bring the technology up to speed with what… what we’re doing.
Lachlan: Yeah awesome, well yeah that was super interesting. I hope that everyone found this as interesting as I did, sort of learning about how asset-backed NFTs… you know, are coming into existence, actual benefits being realized, and you know, this isn’t just like an emotional area of the market doing art and jpegs, like there is real utility and stuff coming out of this. This is just one example of… you know, purchasing… you know, kind of a combination of art, but also investing in tequila and connecting with other investors, and… you know, fans of the industry in the sector. So is there anything else you’d like to add before we drop off?
Miguel: I’m good. Thanks a lot man. We’re very excited. We can’t wait to have another event with you guys and keep talking to both of our communities about what we’re developing.
Quin: Yeah and thanks for taking your time.
Lachlan: If anyone is interested yeah check out houseofrare.io and when is your Meetup in Guadalajara?
Miguel: So we’re gonna be there the whole month of November. We will be announcing it on social media on the main webpage soon. But I mean whoever wants to come to Guadalajara throughout the month of November, we will be there, we will host you and we’ll show you so it’s an open invitation for anyone that wants to come. There’s… I mean flights from anywhere in the US directly to Guadalajara so see you there guys.
Lachlan: Awesome! Thank you both for joining us today and really appreciate it. Take care!
Miguel: Thank you, bye bye!