Story Protocol: AI Driven Future of Intellectual Property in the World

Author: insights4.vc Source: substack Translation: Shanooba, Golden Finance

Since we released the last overview more than six months ago, Story Protocol has raised $80 million in Series B financing. In light of this development, we will reexamine the fundamental concepts aimed at addressing the urgent challenges of intellectual property (IP).

The rise of generative artificial intelligence is disrupting the balance of the digital economy. AI search engines can now provide complete answers by bypassing the original websites, while social networks are filled with AI-generated images and videos that often overshadow human-created content. These systems are built on vast datasets of human labor, but rarely give recognition or compensation to the original creators.

This transformation raises a key question: if creators neither receive recognition nor reward, what motivation is there to share original works online? Without proper mechanisms to support creativity, the digital environment may transition from a vibrant original environment to one dominated by extraction and exploitation, endangering the foundation of the creative economy.

What is IP?

Intellectual property (IP) is often misunderstood as only referring to movies, music, or commercial products. In fact, IP represents the atomic unit of human creativity, including scientific breakthroughs such as penicillin and transistors, iconic brands like Nike and Coca-Cola, cultural phenomena like Disney, and even individual identities such as Messi or Michael Jackson.

By 2023, the value of global intangible assets, including intellectual property, is estimated to be $61.9 trillion, and some projections for 2024 put this figure at $79.4 trillion. This makes intellectual property one of the largest and most critical asset categories, not only crucial for economic growth but also for human civilization progress.

Throughout history, intellectual property has shaped nations, driven technological revolutions, and even influenced the outcome of wars. It reflects humanity's collective creativity and progress—from the Wright brothers' invention of powered flight to DeepMind's revolutionary artificial intelligence systems. However, with the rise of generative artificial intelligence, traditional models of intellectual property face significant threats. AI systems consume vast amounts of data without providing compensation to creators, disrupting the innovation and nurturing of innovative ecosystems.

Blockchain provides a way to reimagine intellectual property in the AI-driven world. By tokenizing intellectual property and enabling ownership, monetization, and programmability on decentralized networks, blockchain technology can protect and incentivize originality. This approach transforms intellectual property into permanent and accessible digital assets, preventing their abuse.

Financing Situation - Total Financing Amount: 134.3 million US dollars

Seed Round

Date: May 17, 2023 | Funding Amount: $29.3 million
Selected Investors: a16z crypto (lead investor), Hashed Fund, Mirana Ventures, SamsungNext, dao5, Two Small Fish Ventures, Berggruen Holdings, SLVC

Round A

Date: September 6, 2023 | Fundraising Amount: $25 million
Selected investors: a16z crypto (Lead investor), Hashed Fund, Mirana Ventures, SamsungNext, Alliance DAO, Foresight Ventures, dao5, Insignia Ventures Partners, Endeavor, Two Small Fish Ventures, 11:11 Media

Angel Investors: Balaji Srinivasan, David Bonderman TPG Capital, David Lee, Roham Gharegozlou, Charlie Songhurst

( Series B

Date: 21st August 2024 |Funding Amount: $80 million
Selected investors: a16z crypto (lead investor), Polychain Capital,
Angel Investors: Cozomo de Medici, Adrian Cheng VC K11), Scott Trowbridge

Core Team:

CEO and Co-founder: SY Lee

SY Lee previously served as the Global Strategy Officer of Kakao Entertainment. He founded the popular novel application Radish and sold it to Kakao for $440 million in 2021. As an experienced entrepreneur, he is affiliated with Hashed, the Asia Society's Asia 21 Young Leaders Program, and the Trilateral Commission's David Rockefeller Fellowship. In 2016, Lee was selected for Forbes 30 Under 30 Asia list and later became an alumni all-star. During his time at the University of Oxford, he made history as the first Asian Chair of the Oxford Union.

Co-founder: Jason Levy

Jason Levy led Pocket Gems' Episode content team, Pocket Gems is a mobile app with over 200 million downloads and annual revenue of over $100 million. He also worked as a financial analyst at Apple for five years and founded the mobile startup Worlds Between Worlds. Levy has an MBA from Stanford University and a dual degree from the University of Southern California, and was named a Renaissance scholar.

Director and Co-Founder: Jason Zhao

Jason Zhao serves as the Protocol Lead and Co-founder of Story. Previously, he was a Product Manager at DeepMind, focusing on deploying Google's advanced AI models to industrial and enterprise applications. As an active angel investor in cutting-edge technology startups, Zhao also served as the Founding Editor-in-Chief of Stanford Rewired, a magazine exploring the intersection of storytelling and technology. As a Design Researcher at IDEO, he created and taught a course at Stanford University's d.school. Zhao holds a Bachelor's degree in Philosophy and a Master's degree in Computer Science from Stanford University.

Chief Financial Officer: Ben Sternberg
Chief Technology Officer: Chen Hao (Leo)
Chief Financial Officer of Story Foundation USA ###, former Chief Financial Officer of Story Protocol (: Seung Soo Kim

) Decentralization as a measure to deal with crises

The 2008 financial crisis exposed the dangers of centralized and opaque systems, and unrestrained greed threatened global stability. In 2009, Satoshi Nakamoto's Bitcoin emerged as a decentralized alternative, prioritizing transparency and sovereignty. This innovation, along with the decentralized finance (DeFi) introduced by Ethereum, eliminated the need for intermediary institutions. Within a decade, on-chain assets exceeded 2 trillion dollars, demonstrating the power of decentralized ownership.

( Intellectual property is at risk

Today, intellectual property rights )IP### are also facing similar crises. AI-driven content creation is outpacing the legal frameworks designed for traditional media, while tech giants exploit user data and bypass copyright laws. Instead of a digital renaissance, we are risking a tragedy of the commons, undermining user sovereignty and creativity.

The future of artificial intelligence depends on the high-quality content generated by humans. As Chris Dixon pointed out in *Read.Write.Own, synthetic content cannot support advanced models. However, rampant copyright infringement undermines the motivation of creators and threatens the sustainability and economic impact of artificial intelligence.

( Digital Millennium Copyright Act )DMCA###

The Digital Millennium Copyright Act (DMCA), enacted in 1998, governs digital intellectual property in the United States. The main provisions include:

Prohibition of circumvention: Bypassing content protection technology is illegal.
Exemption of Liability for Online Service Providers: Platforms such as YouTube will be protected under specific conditions.
Notification and Removal Procedure: Copyright owners may request the removal of infringing content.

Despite the practicality of DMCA, it has become outdated and unable to address modern trends such as collaborative creation and generative AI. It also provides limited guidance for creators to manage their intellectual property rights.

( Story Protocol: A blockchain-based solution

Story Protocol was developed by PIP Labs and uses blockchain technology to create a transparent and efficient intellectual property management system. It enables creators to seamlessly authorize and monetize their works, while addressing the following question: What functionalities can be achieved on Story that existing systems cannot achieve?

Simplified License: One-click licensing and remixing eliminate legal intermediaries, making IP management easily accessible and scalable.
AI models owned by creators: Creators register IP as AI training data, set terms, and share revenue with mixers and IP owners to address the issue of AI abuse in generation.
Tokenization of IP: Story transforms IP into tradable assets, achieving segmentation, trading, and collateralization, unlocking innovative financial applications.

Architectural Overview

Story Network is a Layer 1 blockchain built specifically for intellectual property (IP) and focuses on meeting the unique needs of IP, such as ownership management, royalty distribution, and authorization. With the launch of the Story Developer Mainnet )Developer Mainnet( on January 19, 2025, it marks the final step before launching the public mainnet )Public Mainnet### in a few weeks. Key features include:

Optimized for IP graph: Unlike financial assets, IP involves complex parent-child relationships and hybridization. Story Network can efficiently traverse the intricate IP tree, thus achieving royalty distribution among hundreds or thousands of IP derivatives at a lower computational cost.
EVM-Equivalence: The platform is fully compatible with Ethereum, allowing developers to seamlessly port existing applications. Combines the best features of EVM and Cosmos SDK.
Consensus Layer: Based on the mature CometBFT stack, ensuring fast finality and low transaction costs.
Infrastructure for the Future: Innovations such as graph databases, native oracles carried by validators, potential aggregation support positions like Story, etc., can achieve scalability and integration with Web2 applications.

Creativity Proof Protocol

The Proof of Creativity (PoC) protocol provides support for Story's programmable intellectual property features. It is an operating system for managing on-chain IP, bridging the gap between off-chain assets and decentralized applications.

Key components include:

IP Asset (IPA): Each registered IP will become an ERC-721 token stored in the IPAsset registry. These tokens represent ownership and metadata of intellectual property.

Token Binding Account: The IPA built on ERC-6551 has a dedicated account that enables it to take autonomous actions, such as holding royalty fee tokens, managing licenses, and initiating transactions.

Modular Architecture:

License Module: Achieve permissionless licensing automation through ERC-721 licensed tokens, allowing creators to easily define commercial and usage terms. License tokens can also be traded on the secondary market, enabling new financial use cases such as IPFi.
Royalty Module: Use ERC-20 royalty tokens to manage automatic royalty distribution of derivative IP trees. This ensures accurate and transparent royalty payments, reducing delays and disputes.
Independent Intellectual Property Agent: Each intellectual property agency has its own associated account and is equipped with customizable modules (micro-applications). This enables the intellectual property agency to independently perform functions such as managing licenses or distributing royalties, going beyond the traditional user-driven model.
Dispute Module: Provides arbitration, punishment, and conflict resolution mechanisms.
Collection Module: Group IP according to unified licensing terms to simplify the management of large IP catalogs (e.g., datasets used for AI training).

This modular design ensures flexibility and scalability, allowing developers to create custom modules for specific use cases.

( Programmable IP License

The Programmable Intellectual Property License )PIL( is the legal foundation of the Story Protocol, ensuring that on-chain actions are enforceable under real-world law. It bridges the gap between blockchain-based tokenization of intellectual property and existing legal systems.

The main features include:

General License Agreement: PIL, as a standardized template, is very similar to Y-Combinator's SAFE, allowing creators to define terms for licensing, remixing, and commercialization.

Legal enforceability: Actions on Story Network, such as licensing and royalty payments, are supported by PIL to ensure compliance with US copyright law.

Customizable terms: Creators can customize the license terms using pre-configured options, such as:

Non-commercial social mixing: Allows non-commercial use and mixing, but not transferable.
Commercial Use: Grant commercial usage rights, but no resale or mixing allowed.
**Business Remix: **Achieve remixing through profit sharing agreements.

By interweaving code and law, PIL provides flexibility and accountability, ensuring trust in decentralized IP systems.

) Story Protocol ecosystem

Story Protocol has over 200 teams and 20 million IPs, demonstrating early appeal and showing potential in multiple key areas. Its core value proposition lies in achieving on-chain IP representation and licensing through intellectual property assets VC.

**Magma：**By allowing designers to register their work as IPA, it promotes direct on-chain licensing and monetization, solving the IP protection challenges in the design workflow.
**Mahojin：**By allowing data owners to register their data as IPA, AI models can license data and fairly compensate creators, solving the moral problem of data copyright infringement in AI training.
Sekai: Collaborative creation is allowed through IPA open narrative, which allows users to co-create, set usage rules, and define monetization models.
Ablo: By allowing designers to register their designs as IPAs, it provides a secure collaboration and IP management for the fashion industry, enabling revenue sharing between designers and brands.

Other projects within this ecosystem include IP asset UGC platform BlockBook, IP and NFT trading platform Color Marketplace, IP liquidity infrastructure PIPERX, IP registration and trading platform Unleash Protocol, and integrated creative toolkit Mycelium Network.

( Agent TCP/IP: The Story Protocol framework for autonomous transactions

Agent TCP/IP was released on December 16, 2024, proposing a revolutionary protocol to facilitate seamless transactions between agents in the decentralized knowledge economy. It standardizes the autonomous negotiation, licensing, and execution of intellectual property )IP### contracts, enabling trustless exchange of training data, algorithms, and creative outputs. These transactions are managed by programmable contracts embedded with legal wrappers, endowing agents with legal personhood and bridging the gap between on-chain and off-chain execution.

The framework enables agents to trade, collaborate, and innovate autonomously while adhering to global legal standards. By establishing a shared protocol similar to the original TCP/IP, ATCP/IP envisions an interconnected agent economy that transforms IP into the foundation of a thriving decentralized ecosystem.

( Private Blockchain

The emergence of dedicated blockchains marks a paradigm shift in the blockchain ecosystem, prioritizing specialization rather than the general frameworks of early platforms such as Ethereum and Solana. These blockchains combine their technical designs with well-defined use cases to address specific market challenges. The result is a more intuitive path to product-market fit and an opportunity to overcome the limitations of scalability-driven general-purpose blockchains.

Story Protocol embodies the prospect of dedicated blockchain, specifically targeting the intellectual property market. Generic blockchains often face inefficiency and cost barriers when applied to IP management, while Story Protocol directly embeds IP-specific logic into blockchain infrastructure, providing:

Optimize Efficiency: Integrating IP-related processes into the blockchain reduces computation costs and gas fees, ensuring cost-effectiveness of transactions.
Scalable Applications: Story Protocol supports a large-scale ecosystem where creators can manage and monetize their IP without relying on intermediaries, enabling direct interaction with the audience.
Interoperability: Utilizing Cosmos SDK, Story Protocol achieves modularity and seamless cross-chain compatibility, connecting specialized and general blockchain ecosystems.

By focusing on the IP market, Story Protocol demonstrates how dedicated blockchains can achieve efficiency that general platforms cannot.

) Comparative Analysis of Dedicated Blockchain

Other dedicated blockchains provide further insights into the professionalization trend:

Injective: Injective is designed specifically for decentralized finance (DeFi) and trading applications, integrating professional modules such as exchanges and real-world assets (RWA). It is built on the Cosmos SDK to ensure fast and low-cost transactions, and provides users with innovative financial tools, highlighting the potential of dedicated design in the financial ecosystem.
Avalanche: Avalanche aims to meet the strict requirements of regulated financial services. It uses its Subnet architecture to achieve validator permission and network privacy. This allows enterprises to balance regulatory compliance with the technological advantages of blockchain, demonstrating professionalism that meets institutional requirements.
Hyperliquid: Optimized for high-frequency trading, Hyperliquid bridges the gap between centralized and decentralized exchanges. As a dedicated Layer 1 blockchain, it offers fast transaction execution without compromising decentralization, providing a unique approach for specialized blockchain applications in trading.
Abstract Chain is a blockchain specifically designed to optimize the user experience of "interesting consumer applications". Unlike general blockchains, Abstract prioritizes solving user problems rather than technical scalability, aiming to create intuitive and engaging applications without users needing to understand the complexity of blockchain. Currently, Abstract Chain has not been launched.

Challenge

Although specialized blockchains like Story Protocol have notable advantages, they also face challenges, including:

Fragmentation of the Ecosystem : Specialized chains may form isolated islands within a broader blockchain ecosystem. Interoperability solutions (such as LayerZero and IBC) aim to alleviate this situation by enabling seamless cross-chain communication.
Economic Feasibility: Maintaining a dedicated validator network for niche use cases may require significant resources and strong adoption to prove the rationality of infrastructure expenses.
Balancing Specialization and Generalization: To achieve long-term success, use cases must be broad enough to attract different users while optimizing for their core purposes.

( Conclusion

Story Protocol envisions a decentralized future where IP becomes the cornerstone of creativity and innovation. By introducing IP on the blockchain, Story creates a permanent, accessible, and monetizable infrastructure for managing ideas. This not only protects creators but also incentivizes innovation by connecting IP holders with AI developers in the native blockchain ecosystem.

The Creativity Proof Protocol, combined with functions such as permissionless authorization and automatic royalty payments, ensures that creators receive fair compensation and paves the way for a new knowledge-based economy. Story Protocol positions itself as the foundation of an AI-driven world, where the ownership, evaluation, and exchange of creativity are unprecedented.

In this mode, Story is not just a blockchain; it is the global Library of Alexandria of the digital age, preserving and monetizing human creativity through the intersection of blockchain and artificial intelligence.