DeFi fever is gone, NFT takes over? Ethereum is still the biggest winner


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In August, Jordan Lyall, head of decentralized financial products at ConsenSys, tweeted to launch the fictitious DeFi project “The Degenerator” to mock the DeFi MEME projects that started in 5 minutes. After the tweet was posted, an anonymous person actually created the MEME token. The crazy market made MEME’s trading volume reached 1.2 million US dollars that day, and the highest price reached 40 US dollars. The biggest selling point of MEME is “DeFi+NFT”.

The story of DeFi doesn’t seem to be easy to tell right now. According to Odaily statistics, most DeFi tokens have fallen by about 50% in September. Old-brand DeFi tokens such as LINK and MKR have fallen by about 30%, while the new generation of DeFi tokens, such as SAL (salmon), KIMCHI (kimchi), and SUSHI (sushi), which are mainly liquid mining models, have generally fallen by more than 70%.

The media “Caiyun Blockchain” stated that DeFi has been about three months since the June fire. The shortest period of each stage in the bull market is 3 months and the longest is 6 months. Based on this inference, the end of the bubble may be around mid to late October.

So, will the NFT market be the next outlet?

Crypto cat fires, Ubisoft and BBC have tested the water

Dieter Shirley and his team hid in a workshop hut in Vancouver. After three months, they finally developed ERC-721 at the end of 2017. This is an Ethereum token standard that can realize the “scarcity verification” of digital art.

Based on this, the CryptoKitties project has received a enthusiastic response from the market, and the enthusiasm of many “cloud-raising cats” enthusiasts almost caused the Ethereum network to collapse. The success of the project also gave birth to the digital art industry. The total market value is expected to reach 315 million US dollars this year.

The innovation of the project lies in the combination of scarcity and cryptocurrency. There is no difference between Bitcoins, but Shirley’s ERC-721 tokens are different. They embed these tokens in each encrypted cat, similar to the genetic code of these cartoon kittens. Each encrypted cat has its own unique “category”, namely father, mother and personality. Users can raise their own kittens to breed new kittens. Rare crypto cats may be worth thousands of dollars. In 2018, a cat named “Dragon” even sold for a sky-high price of 170,000 dollars.

Franky Aguilar, an artist from Los Angeles, said: “They breathe life into boring things. Tokens originally belonged to an economic symbol, but they gave it characteristics and changed tokens. It must be cute and charming-people are full of enthusiasm for their CryptoKitties.” After that, the artist established a partnership with Dapper Labs, the company behind the CryptoKitties project.

A gold rush started, and others quickly released their own ECR-721 tokens (also known as NFTs, or non-homogeneous tokens).

With the opening of the market, game developers began to integrate NFT into digital objects, and digital artists also used this as a carrier to make a variety of fresh designs. A few years later, the French game giant Ubisoft even developed a complete game around NFT, which is an online trading NBA player card based on ERC-721. Excellent artists use this to make their works unique, and even the BBC has decided to devote themselves to it. This veteran media giant who is first involved in the blockchain has decided to test the waters with its ace “Doctor Who” series.

Seeing such a complete world gradually established, Shirley said: “I am very proud that we have worked hard to further help others create new things, and the intelligence of others will completely surpass any internal team. This makes me very pleased.”

But times have changed. Some people say that the NFT market is too large for Ethereum, the fees are extremely high, and the performance has never been improved. For this reason, people began to seek new solutions.

Shirley’s team has grown into Dapper Labs, and in the past two years has focused on building Flow, a blockchain network designed specifically for NFTs. Dapper Labs has achieved good development, and recently plans to create an NFT based on Dr. Seuss (an image in classic children’s science books) on the Flow blockchain.

If Ethereum cannot solve its own problems, then the NFT industry will definitely abandon it.

Fast maturing NFT market

As the co-founder and CEO of OpenSea from New York, Devin Finzer built one of the largest NFT markets. During the CryptoKitties epidemic, he established this company with co-founder and CTO Alex Atallah and entered the market in early 2018.

He said in the interview, “We initially just wanted to provide another way to trade CryptoKitties. But the initial effect was not good because the CryptoKitties project already has its own trading market. But as more and more other NFT products With its successive launches, the value of OpenSea has become apparent: people holding these commodities can access their own MetaMask and start trading operations easily and conveniently.”

Finzer pointed out that in the following months, a large number of low-quality copycat versions of CryptoKitties appeared on the market, hoping to “catch the popularity of CryptoKitties and profit from this wave of speculation.”

But the good news is that the NFT market matures quickly.

As of February 2018, legal projects in this market have taken the mainstream-that is, projects with more development prospects and reliable quality. Today, there are 600 to 700 legal projects running on OpenSea.

Finzer’s company currently has approximately 20,000 traders, with a monthly transaction volume of approximately US$1 million. He estimated that the monthly market size will grow to 4 to 5 million US dollars in the future. “Even now, we are still in its infancy, and there are still very few users using NFT.” Finzer said.

NFT has attracted many serious artists, including photographers, graffiti artists and 3D digital art producers.

Nifty Gateway is an exclusive digital art and collectible platform that provides NFTs. It was founded by Cameron and Tyler Winkevoss, the founders of the cryptocurrency exchange Gemini, a few months ago.

Works on Nifty Gateway can sell for thousands or even tens of thousands of dollars. Duncan Cock Foster, co-founder of Nifty Gateway, said: “What excites me the most is that artists who have a large number of Instagram followers but have been unable to find sales channels for their works finally have their own market platform.”

Jon Noorlander is a digital artist with 400,000 fans on TikTok. With his outstanding professional skills, his digital art works soon landed on Nifty Gateway. Cock Foster said: “This is the first time he has made money by selling works. It is really exciting to be able to witness all this.” But he did not disclose the benefits he received from these sales.

DeFi grabs Ethereum resources, NFT is implicated

For Cocker Foster, Ethereum can be regarded as the “best option without consideration”: it has the most collectors, the most tool options, and a powerful infrastructure. Although NFT can also be implemented on other blockchain networks, the performance of Ethereum is very stable. In the past few years, Ethereum has been the main platform for encrypted collection applications.

It can be seen that the entire NFT community takes the infrastructure of Ethereum as its foundation. For example, by connecting your MetaMask to the encrypted collection game “Decentraland”, you can transfer the tokens to OpenSea and use them directly in many games. This is something that other blockchains currently cannot do.

But Finzer said that blockchain also has substantial limitations and deficiencies.

With the recent rise of DeFi (that is, decentralized finance), transaction fees have risen all the way, making it difficult for games that rely on microtransactions to obtain encrypted collectibles to continue to operate.

He explained: “Now, to buy things on OpenSea, almost every transaction costs about $1 in handling fees. If everyone wants to buy goods worth about 50 cents, then this tax is more expensive than goods. The experience is too bad.”

Because of this, Shirley led Dapper Labs for several years to build a blockchain specifically designed for NFT. The block chain called Flow is still under construction. Shirley hopes to migrate the CryptoKitties to this new chain after the project is completed, and promises to help the entire NFT industry get rid of the problem of excessive transaction fees.

But at least at the beginning of its launch, the Flow blockchain may not support Ethereum-which means that all types of NFTs, games and even markets based on Ethereum will be excluded. Shirley explained, “It is really difficult to interoperate between decentralized systems, and I haven’t been able to really solve this problem until now.”

So, will the Ethereum community fall apart because of this?

Cock Foster stated that he has no reason to transfer Nifty Gateway to other blockchains. Although Ethereum’s transaction fees are high, it will not affect buyers who are willing to spend $10,000 to buy a JPEG format painting.

Shirley also mentioned that users who have already invested in cryptocurrency collections are unlikely to completely abandon Ethereum. “In the next 100 years, I believe that Ethereum will continue to run-even if there is only one node left, running in places like the Smithsonian Museum.”

In Shirley’s view, “As long as Ethereum has vitality, then the NFT on it will have vitality.” However, although everyone has a very close relationship with Ethereum, if we can provide faster and lower-cost services , People have no reason to refuse.