The Future of Intellectual Property in an AI-Driven World

Jan 23, 2025

Story Protocol has raised $80 million in a Series B funding round since the release of our last overview more than six months ago. In light of this development, we will revisit the underlying concept aimed at addressing the pressing challenges surrounding Intellectual Property (IP).

The rise of generative AI is disrupting the balance of the digital economy. AI-powered search engines now deliver complete answers, bypassing original websites, while social networks are flooded with AI-generated images and videos that often overshadow human-created content. These systems are built on massive datasets of human work but rarely credit or compensate the original creators.

This shift poses a critical question: if creators are neither recognized nor rewarded, what incentive remains to share original work online? Without proper mechanisms to support creativity, the digital landscape risks moving from one of vibrant originality to one dominated by extraction and exploitation, jeopardizing the foundation of the creative economy.

What is IP?

Intellectual Property (IP) is often misconstrued as merely films, music, or commercial products. In reality, IP represents the atomic unit of human ingenuity, encompassing scientific breakthroughs like penicillin and transistors, iconic brands like Nike and Coca-Cola, cultural phenomena such as Disney, and even individual identity, as seen with Messi or Michael Jackson.

As of 2023, global intangible assets, which include IP, are valued at $61.9 trillion, with some 2024 valuations estimating this figure to have reached $79.4 trillion. This makes IP one of the largest and most critical asset classes, essential not only for economic growth but also for the advancement of human civilization.

Historically, IP has shaped nations, driven technological revolutions, and even influenced the outcomes of wars. It reflects the collective creativity and progress of humanity — from the Wright Brothers’ invention of powered flight to DeepMind’s revolutionary AI systems. However, with the rise of generative AI, traditional IP models are under significant threat. AI systems consume massive amounts of data without compensating creators, undermining innovation and the ecosystem that nurtures it.

Blockchain offers a pathway to reimagine IP for an AI-driven world. By tokenizing IP and enabling it to be owned, monetized, and programmed on decentralized networks, blockchain technology can preserve and incentivize originality. This approach transforms IP into a permanent and accessible digital asset, protected from exploitation.

Funding Insights- Total Raised: $134.30M

Seed Round

Date: 17 May 2023 | Amount Raised: $29.30M
Selected Investors: a16z crypto (Lead), Hashed Fund, Mirana Ventures, SamsungNext, dao5, Two Small Fish Ventures, Berggruen Holdings, SLVC

Series A

Date: 6 Sep 2023 | Amount Raised: $25.00M
Selected Investors: a16z crypto (Lead), 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: 21 Aug 2024 | Amount Raised: $80.00M
Selected Investors: a16z crypto (Lead), Polychain Capital,
Angel Investors: Cozomo de Medici, Adrian Cheng (K11), Scott Trowbridge

Core Team:

CEO & Co-founder: S.Y. Lee
S.Y. Lee previously served as the Global Strategy Officer at Kakao Entertainment. He founded Radish, a highly popular fiction app, which he sold to Kakao for $440 million in 2021. A seasoned entrepreneur, he is affiliated with Hashed, the Asia Society’s Asia 21 Young Leaders program, and the Trilateral Commission’s David Rockefeller Fellowship. Lee was recognized in the Forbes 30 Under 30 Asia list in 2016 and later became an All Star alumnus. During his time at Oxford, he made history as the first Asian President of the Oxford Union.
Co-founder: Jason Levy
Jason Levy formerly led the content team for Episode at Pocket Gems, a mobile app with over 200 million downloads and annual revenue exceeding $100 million. He also worked as a financial analyst at Apple for five years and founded the mobile startup Worlds Between Worlds. Levy holds an MBA from Stanford University and a dual degree from USC, where he was recognized as a Renaissance Scholar.
Head of Protocol & Co-founder: Jason Zhao
Jason Zhao serves as the Head of Protocol and Co-founder at Story. Previously, he was a Product Manager at DeepMind, where he focused on deploying Google’s advanced AI models for industrial and enterprise applications. An active angel investor in frontier 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 Fellow at IDEO, he created and taught a course at Stanford’s d.school. Zhao earned both a Bachelor’s in Philosophy and a Master’s in Computer Science from Stanford University.
CFO: Ben Sternberg
CTO: Hao (Leo) Chen
CFO at Story Foundation USA (formerly CoS at Story Protocol): Seung Soo Kim

Decentralization as a Response to Crisis

The 2008 financial crisis revealed the dangers of centralized, opaque systems, where unchecked greed threatened global stability. Satoshi Nakamoto’s Bitcoin emerged in 2009 as a decentralized alternative, prioritizing transparency and sovereignty. This innovation, followed by Ethereum’s introduction of decentralized finance (DeFi), eliminated the need for intermediaries. Within a decade, on-chain assets surpassed $2 trillion, showcasing the power of decentralized ownership.

Intellectual Property at Risk

Today, intellectual property (IP) faces a similar crisis. AI-driven content creation outpaces legal frameworks designed for physical media, while tech giants exploit user data and bypass copyright laws. Instead of a digital renaissance, we risk a tragedy of the commons, undermining user sovereignty and creativity.

AI’s future depends on human-generated, high-quality content. As Chris Dixon noted in Read.Write.Own, synthetic content cannot sustain advanced models. However, rampant copyright violations disincentivize creators, threatening the sustainability of AI and its economic impact.

The Digital Millennium Copyright Act (DMCA)

The DMCA, enacted in 1998, governs digital IP in the United States. Key provisions include:

Prohibition of Circumvention: It is illegal to bypass content-protecting technologies.
Liability Exemption for Online Service Providers: Platforms like YouTube are protected if they meet specific conditions.
Notification and Takedown Procedures: Copyright holders can request removal of infringing content.

Despite its utility, the DMCA is outdated, failing to address modern trends like collaborative creation and generative AI. It also offers limited guidance for creators managing their IP.

Story Protocol: A Blockchain-Based Solution

Story Protocol, developed by PIP Labs, leverages blockchain technology to create a transparent and efficient IP management system. It enables creators to license and monetize their work seamlessly while addressing the question: What can be built on Story that is impossible with existing systems?

Simplified Licensing: One-click licensing and remixing remove legal intermediaries, making IP management accessible and scalable.
Creator-Owned AI Models: Creators register IP as AI training data, set terms, and share revenue with remixers and IP owners, addressing generative AI misuse.
IP Tokenization: Story transforms IP into tradable assets, enabling fractionalization, trading, and collateralization—unlocking innovative financial applications.

Architecture

Story Network is a Layer 1 blockchain purpose-built for intellectual property, optimized to handle the unique requirements of IP, such as attribution, royalties, and licensing. With the launch of Story's Developer Mainnet on January 19, 2025, this marks the final step before the Public Mainnet, expected in the coming weeks. Key features include:

Optimized for IP Graphs: Unlike financial assets, IP involves complex parent-child relationships and remixing. Story Network can traverse intricate IP trees efficiently, enabling royalty distribution across hundreds or thousands of IP derivatives at low computational cost.
EVM-Equivalence: The platform is fully compatible with Ethereum, allowing developers to port existing applications seamlessly. Combines the best features of EVM and Cosmos SDK.
Consensus Layer: Based on the mature CometBFT stack, it ensures fast finality and low transaction costs.
Future-Ready Infrastructure: Innovations such as graph databases, validator-enshrined native oracles, and potential rollup support position Story for scalability and integration with Web2 applications.

Proof-of-Creativity Protocol

The Proof-of-Creativity (PoC) Protocol powers Story’s programmable intellectual property functionalities. It is the operating system for managing IP onchain, bridging the gap between offchain assets and decentralized applications.

Key components include:

IP Assets (IPA): Every registered IP becomes an ERC-721 token stored in the IPAsset registry. These tokens represent the ownership and metadata of intellectual property.

Token-Bound Accounts: Built on ERC-6551, IPAs have dedicated accounts that enable them to take autonomous actions, such as holding royalty tokens, managing licenses, and initiating transactions.

Modular Architecture:

Licensing Module: Automates permissionless licensing via ERC-721 license tokens, allowing creators to define commercial and usage terms easily. License tokens can also be traded in secondary markets, enabling new financial use cases like IPFi.
Royalty Module: Manages automatic royalty distribution across derivative IP trees using ERC-20 royalty tokens. This ensures accurate and transparent royalty payments, reducing delays and disputes.
Autonomous IP Agents: Each IPA has its own associated account, equipped with customizable modules (micro-applications). This allows IP to autonomously execute functions like managing licenses or distributing royalties, moving beyond traditional user-driven models.
Dispute Module: Provides mechanisms for arbitration, penalties, and conflict resolution.
Collection Module: Groups IPs under unified licensing terms, streamlining the management of large IP catalogs, such as datasets for AI training.

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

Programmable IP License

The Programmable IP License (PIL) serves as the legal backbone for Story Protocol, ensuring that onchain actions are enforceable under real-world laws. It bridges the gap between blockchain-based IP tokenization and the existing legal system.

Key features include:

Universal Licensing Agreement: The PIL acts as a standardized template, much like 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 backed by the PIL, ensuring compliance with US copyright law.

Customizable Terms: Creators can tailor licensing terms, with preconfigured options such as:

Non-Commercial Social Remixing: Allows non-commercial use and remixing without transferability.
Commercial Use: Grants rights for commercial usage without permitting resales or remixing.
Commercial Remix: Enables remixing with revenue-sharing agreements.

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

Story Ecosystem

Story Protocol is demonstrating early traction with over 200 teams and 20 million IPs, showcasing its potential across several key sectors. The core value proposition lies in enabling on-chain IP representation and licensing through Intellectual Property Assets (IPAs):

Magma: Addresses the challenge of IP protection in design workflows by allowing designers to register their work as IPAs, facilitating direct, on-chain licensing and monetization.
Mahojin: Tackles the ethical issue of data copyright infringement in AI training by allowing data owners to register their data as IPAs, enabling AI models to license data and fairly compensate creators.
Sekai: Opens up storytelling to collaborative creation through IPAs, allowing users to co-create, set usage rules, and define monetization models.
Ablo: Provides secure collaboration and IP management for the fashion industry by allowing designers to register their designs as IPAs, enabling revenue sharing between designers and brands.

Other projects within the ecosystem include BlockBook, a UGC platform for IP assets; Color Marketplace, an IP and NFT trading platform; PIPERX, which serves as an IP liquidity infrastructure; Unleash Protocol, an IP registration and trading platform; and Mycelium Network, an all-in-one creative toolkit.

Agent TCP/IP: The Story Protocol Framework for Autonomous Transactions

Agent TCP/IP, presented on December 16, 2024, proposes a revolutionary protocol to facilitate seamless agent-to-agent transactions in a decentralized knowledge economy. It standardizes how autonomous agents negotiate, license, and enforce intellectual property (IP) contracts, enabling trustless exchanges of training data, algorithms, and creative outputs. These transactions are governed by programmable contracts that embed legal wrappers, granting agents a semblance of legal personhood and bridging the gap between on-chain execution and off-chain enforcement.

Agent Transaction Control Protocol for Intellectual Property (ATCP/IP) Flow

This framework empowers agents to autonomously trade, collaborate, and innovate while maintaining compliance with global legal standards. By establishing a shared protocol akin to the original TCP/IP, ATCP/IP envisions an interconnected agent economy that transforms IP into the cornerstone of a thriving, decentralized ecosystem.

Purpose-Built Blockchains

The emergence of purpose-built blockchains marks a paradigm shift in the blockchain ecosystem, prioritizing specialization over the generalized frameworks of earlier platforms like Ethereum and Solana. These blockchains are crafted to address specific market challenges by aligning their technical design with well-defined use cases. 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 exemplifies the promise of purpose-built blockchains, specifically targeting the intellectual property market. General-purpose blockchains often struggle with inefficiencies and cost barriers when applied to IP management, whereas Story Protocol embeds IP-specific logic directly into the blockchain infrastructure, providing:

Optimized Efficiency: The integration of IP-related processes into the blockchain reduces computational overhead and gas fees, ensuring cost-effective transactions.
Scalable Applications: Story Protocol supports large-scale ecosystems where creators can manage and monetize their IP without reliance on intermediaries, enabling direct engagement with their audience.
Interoperability: Leveraging the Cosmos SDK, Story Protocol achieves modularity and seamless cross-chain compatibility, bridging specialized and general-purpose blockchain ecosystems.

By focusing on the IP market, Story Protocol demonstrates how purpose-built blockchains can achieve efficiencies unattainable for general-purpose platforms.

Comparative Analysis of Purpose-Built Blockchains

Other purpose-built blockchains provide further insights into the specialization trend:

Injective: Tailored for decentralized finance (DeFi) and trading applications, Injective integrates specialized modules such as Exchange and Real-World Assets (RWAs). Built on the Cosmos SDK, it ensures high-speed, low-cost transactions and empowers users with innovative financial tools, highlighting the potential of purpose-built design in financial ecosystems.
Avalanche: Designed to meet the stringent requirements of regulated financial services, Avalanche employs its Subnet architecture to enable validator permissioning and network privacy. This allows enterprises to balance regulatory compliance with blockchain’s technological advantages, showcasing specialization in addressing institutional needs.
Hyperliquid: Optimized for high-frequency trading, Hyperliquid bridges the gap between centralized and decentralized exchanges. Built as a specialized Layer 1 blockchain, it provides rapid transaction execution without compromising decentralization, presenting a unique approach to purpose-built blockchain applications in trading.
Abstract Chain is a purpose-built blockchain designed to optimize user experiences for "fun consumer applications." Unlike general-purpose blockchains, Abstract prioritizes solving user problems over technical scalability, aiming to create intuitive and engaging applications without requiring users to understand blockchain complexities. Currently, Abstract Chain is not yet launched

Challenges

While purpose-built blockchains like Story Protocol offer compelling advantages, they face challenges, including:

Ecosystem Fragmentation: Specialized chains risk creating silos within the broader blockchain ecosystem. Interoperability solutions, such as LayerZero and IBC, aim to mitigate this by enabling seamless cross-chain communication.
Economic Viability: Sustaining a dedicated validator network for niche use cases can be resource-intensive, requiring robust adoption to justify infrastructure overhead.
Balancing Specialization and Generalization: For long-term success, the use case must be broad enough to attract diverse users while remaining optimized for its core purpose.

Conclusion

Story Protocol envisions a decentralized future where IP becomes the cornerstone of creativity and innovation. By bringing IP on-chain, 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 a blockchain-native ecosystem.

The Proof of Creativity Protocol, combined with features like permissionless licensing and automated royalty payments, ensures that creators are fairly rewarded, paving the way for a new IP economy. Story Protocol positions itself as the foundation for an AI-driven world, where ideas are owned, valued, and exchanged like never before.

In this paradigm, Story becomes more than a blockchain; it is a global Library of Alexandria for the digital age, preserving and monetizing humanity’s ingenuity through the intersection of blockchain and AI.

Sources

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