Founder of DappReview: Talking about NFT and Metaverse as I understand it

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Ethereum is a Metaverse without a cool front end.

Original title: “Talking about NFT and Metaverse as I understand”
Written by: Vincent, founder of DappReview

Almost three years ago, I wrote an article ” Talking about Blockchain Games You Don’t Understand ” to sort out some of the brains and ideas that can be thought of at that point in time. At that time, I talked about a lot of game + blockchain scenarios, including game props owned by users, scarcity, use of props across games, incentives for economic mechanisms, governance between project parties and players, incentives for Creators, etc., and today We see the same NFT characteristics that are being talked about everywhere. The article mentioned that if Minecraft is a blockchain game, it would be great if the work of the national architect team can be issued and traded in the form of NFT game assets. Recently, I saw the news that the national architect invested by Yuan Universe Capital is about to issue NFT assets. It feels like a world away, as if dreaming back to three years ago, what was envisioned at that time is gradually being realized.

As an old leek, from 2017 to 2021, he has undergone a round of bull-bear conversion, and he has undergone some iterations. This article is actually the 2.0 version of the article three years ago. On the one hand, I made some upgrades and additions to the superficial views 3 years ago, and on the other hand, I tried to make some judgments about the next cycle.

Note: This article is very subjective, personal opinions are for reference only, not as any investment advice

Let’s first throw out some personal opinions

  • NFT is not an application layer track, but a protocol layer component. The current stage is still from 0 to 1.
  • What NFT needs now is the carrier and the scene, rather than constantly printing new assets. Most projects did not think clearly why they should be made into assets in the form of NFT.
  • Ethereum is a Metaverse without a cool front end, and a metaverse without a blockchain as the underlying data and information layer is a centralized metaverse, and the imagination is very low.
  • Interoperability is the most invincible feature of NFT and Metaverse, none of them.
  • In the future, apps do not need separate login logic, and the virtual assets of an address/user are interoperable across apps.

NFT itself is a technical term, which generally refers to non-homogeneous tokens on the chain. As a token standard, it can be applied to various vertical applications, whether it is artwork, game props, or vouchers. From this perspective, NFT is not a vertical application layer track. For example, if you develop a blockchain game and use NFT as game props, then the game is the core and NFT is just a tool. For another example, although Uniswap V3’s LP token uses NFT format, Uniswap is still a DeFi application.

Essentially, NFT is a protocol layer or middleware located between the application layer and the blockchain infrastructure layer. A project party said that I had made an NFT project, but in fact, there was not much information content just like an Internet entrepreneur said “I made an Internet application”. Although the above argument sounds a bit critical, but I want to use this more extreme way to emphasize that the issue of NFT projects should pay more attention to the carrier itself, that is, what problems are solved in what scenarios, NFTs are just technology Means are not ends, otherwise it is putting the cart before the horse, and NFT is meaningless for the sake of NFT.

At this moment, we still use the term NFT extensively to refer to a series of on-chain assets and related projects created using protocols such as ERC721/ERC1155 (or other similar protocols on the chain). This shows We are still in the early days, and even the basic PMF has not yet been completed. A common programmer interview question: Which protocols are needed to access a website through a browser? For ordinary users, the answer to this question is completely unimportant. The user only cares about the content of the website he visits and the quality of the visit experience. After NFT is used on a large scale as the basic protocol of virtual assets, ordinary users do not need to know what NFT is, but only need to care about what assets I have, what they can do, and where they are used. As for the characteristics of assets in the form of NFTs, such as ownership, scarcity, interoperability, composability, etc., ordinary users will take it for granted at that time, and there is no need to go into the technology to achieve this.

NFT’s infrastructure is very early, and there are not many protocols that can be used. ERC721, ERC1155 and some of their magical modified versions can only meet very basic needs. There is no problem with using static pictures and videos, as long as it is necessary for an asset Perform some slightly more complicated gameplay combinations. Existing protocols cannot be used directly. For example, the interactive programmable NFT form. Async.art is just a simple magic change, and it does not abstract a set of more general new protocols. If people want to make some different interactive NFT assets, they still have to make their own wheels. At the basic protocol layer of NFT, I personally think that there are still many entrepreneurial and investment opportunities.

In the “Wu Shiyi Talk” podcast with Mable Goddess, I talked about:

NFT value = Intrinsic Value + Utility Value + Premium

Intrinsic value refers to the various costs of creating this NFT asset, including time cost / transaction cost / casting cost and so on. Use value refers to the specific scenarios in which NFT assets can be used to bring value to the owner. For example, a ticket can be used to participate in an event, and a game item can be used in the game. The premium includes many elements. The premium brought by IP, the premium brought by hype and low liquidity, etc., are relatively difficult to evaluate and judge accurately.

“Intrinsic value” and “use value” are the fundamentals of NFT assets. “Premium” is mainly reflected in secondary market transactions. When the secondary market is hot, the premium is naturally high, just like 1-2 months ago In the NFT asset trading market, after the market returns to rationality, prices and turnover will naturally return in value. At present, most of the value of NFT assets comes from the “premium”. The “intrinsic value” and “use value” are relatively low, or even zero. In other words, there are no fundamentals. Once the market calms down, there will be The state of pricelessness has almost entered this state at this moment. The transaction volume and transaction volume will be greatly reduced.

Recently, many people have come to me. Whether inside or outside the circle, they talk about the NFTization of virtual assets. It is very chicken blood. There has been such a wave in 18 years. Most of the opinions are: “I made this XXX into NFT assets. Because it is decentralized, unmodifiable, owned by users, and rarity.” This view is neither right nor wrong. What needs to be understood is that NFT is not a panacea, and making centralized virtual assets in the form of NFT is naturally superior? In the final analysis, this question is to figure out what value does NFT and blockchain give virtual assets?

Splitting it with another dimension of value, the value of NFT assets = virtual assets + rights protection brought by smart contracts + economic incentive mechanism brought by blockchain + interoperability brought by blockchain

The properties of NFT asset user ownership, provable rarity, unmodifiable, etc., we are talking about, are all restricted by smart contracts. The difference from centralization is that smart contracts are like a legal document that publicly tells users. How these attributes are designed, how the rules are, and under what limits they can or cannot be adjusted, they will operate in accordance with the rules of the smart contract during the execution process. In centralized products, these rules can be opaque or public, but users don’t know how to implement them. Another point worth noting is that NFT assets are not necessarily unmodifiable. They are also rarity. The developers of smart contracts with these attributes can agree that they can be modified in the contract. Does cryptovoxel often issue new plots? GodsUnchained Isn’t it a lot of fun to print out a new batch of cards every once in a while? It can only be said that smart contracts provide a more developed and transparent mechanism to convey information to users, from a completely black box to a fuzzy glass box, the degree of ambiguity can be defined by the developer.

The economic incentive mechanism brought by the blockchain is divided into a native economic system and a derivative economic system. The original refers to the definition of a complete economic model in this application, and the incentives are obtained through certain user participation behaviors, which can be Play to earn, Stake to earn, etc., design the token distribution and incentive methods according to the specific scenarios of the application. The derivative economic system is the use of interoperability, so that NFT assets not only generate value in this application, but also obtain incentives in other applications.

The interoperability brought by the blockchain, or can also be called composability, is the most magical and imaginable value in my opinion. The so-called interoperability can be understood as the token assets/NFT assets/user’s address/smart contract, etc. on the blockchain, which can be natively referenced by any application on this chain. In the world of DeFi, this feature has been fully utilized, and in NFT-related projects, it is just the beginning. Now we can browse and trade different NFT assets in various NFT trading platforms/wallets, but these NFTs There is no effective combination of assets to create greater value. The fundamental problem is that NFT assets require carriers and scenarios. At present, most (over 90%) have only two application scenarios: display and transaction, or only have certain usage logic in one scenario of their own products. Because of the lack of carriers, the “use value” (fundamental) of NFT assets is very low.

There are a lot of projects exploring the financial properties and derivatives of NFT assets, such as NFT fragmentation transactions, NFT mortgage lending, etc. I think these directions have long-term value, but it may be a bit early in time, at the bottom Under the premise that the fundamental value of the asset itself is not strong, financial instruments may be just castles in the air.

What are carriers and scenarios? In layman’s terms, can the NFT assets I own can be used in various applications. For example, why can’t a CryptoPunks be used as an avatar in various game social dapps to prove that I am a “honorable” punks holder. Just shoot your forehead and think about some scenes. Can you do a NFT chaos? Let punks and crypto cats come to pk and bring all the NFT assets in the head to play together.

At the practical level, even though there are a lot of details that need to be processed, such as how different styles of NFT can appear in a game without a sense of violation, how to give different types of NFTs some additional numerical logic, and so on. But the point is to use interoperability to not only revitalize the use value of the existing core high-value NFT assets, but also to leverage the industry OG behind these NFT assets to become your seed users and successfully complete the cold start.

Just like in the DeFi world, why do the mining pools of new projects often have these DeFi tokens such as UNI/AAVE/SUSHI, and those who hold these tokens in the wallet for a long time are the core value users of DeFi. Through liquidity mining, seed users can be accurately drawn. At this stage, making an interesting NFT asset carrier and scenario is far more valuable than issuing a new set of assets, and it is also the best time to use existing assets to leverage core users.

Speaking of interoperability, let’s talk about the metaverse as I understand it. This concept has been too popular in recent months, but the definition of metaverse in the context of Web2.0 is different from that of Web3.0. Under the logic of Web2.0, a large company created development tools, the world framework and rules of the entire metaverse. Under these rules, the majority of developers use UGC to try to create scenarios and content, and use traffic logic to obtain the C-side. Users come in and operate. I will not interpret too much on this, there are many articles.

I hope to imagine the metaverse in the context of web3.0, at least-

  • The infrastructure layer is open without permission. Developers can not only develop scenarios, but also develop middleware and protocols for other developers.
  • The user’s data and information do not belong to any centralized entity, and developers (anyone) can freely analyze/use these data
  • Multiple metaverses with different styles can form a larger metaverse, and user identities/data/assets can be natively synchronized across metaverses

There is no doubt that only the blockchain as the bottom layer can realize the above-mentioned vision. It seems that the above description of metaverse features is too abstract, I will fill in the day of metaverse in the world of Web3.0——

I signed in to Dland with my private key signature, first opened my DeFi panel, a few liquid mining projects received food, loaded Uniswap components, sold the coins of a few projects, and left my optimistic project tokens In order to earn some extra income, I formed an LP to provide liquidity in Uni V3. As a proof of liquidity provision, I received the NFT from Uni V3. Not to mention that this NFT is pretty good-looking, I opened the card game “Yizhi” and decisively changed the card back to the V3 NFT style. After playing two games, winning streak, finally won the achievement medal for the 1000th victory, and also drawn two legendary cards. I put this medal on the first row of my profile achievement page and counted it. Now I am also a user with 15 platinum game achievements and 10 platinum DeFi achievements. A few days ago, the internal beta version of the card game of V Club was released, and all users of “Yizhi Card” with the 1,000-win Achievement Medal can directly participate in the test. Sure enough, I can directly participate in the test today, who has gained achievements. First, I set up a deck. In addition to the card system in the game, there is actually a foreign aid card pool. Up to two foreign aid cards can be used in a set of cards. All the legendary cards in “Everwisdom” can be used as foreign aid in the game. My instinct told me that the price of the cards of “Yizhi” is going to increase. I immediately opened the Opensea exchange and found that the average price of legendary cards has increased by 30% in the past few days. ——

The above running account contains several key points:

  • Only log in once, all other applications no longer need to log in separately, and the user’s identity/data/assets are all recorded on the blockchain address
  • Assets generated by one application can be reused by other applications (the result of asset reuse can be a win-win situation)
  • Through data analysis and user portraits on the chain, we can find targeted seed users

For readers who have not used centralized applications in the past, the above may feel like a idiot. Yes, in the world of Web2.0, this is dreaming. Users and data are the moat. How can it be open?

In Web3.0, the logic of value capture, business models, production relations, and organizational governance will all be reconstructed. In the past year, the three key points mentioned above have become home-cooked noodles in the DeFi world.

For DeFi old leeks, the first thing to wake up every day is to open Chrome, log in to Metamask, open several tabs, collect vegetables from different DeFi projects (claim the tokens dug up overnight), and then go to Uniswap /Sushiswap Sell tokens, find new projects, participate in the governance of certain projects, etc. During the whole process, you only need to log in once, and all the web pages of each decentralized application that you open will be automatically logged in. The changes in your assets in one application will be seamlessly synchronized in another application.

4 years ago, I always felt that the way of private keys and mnemonic words was too anti-human. Now I think that each application needs to use an independent account system to be anti-human, and everyone’s requirements for passwords are different. The numbers + letters will do, and the more demanding ones must also be capitalization + numbers + symbols. Had it not been for 1password that had stored hundreds of account and password records, it is estimated that I would receive emails to retrieve my password hundreds or thousands of times a year. Once you get used to the experience of one account walking sideways among N applications, you can never go back.

All operations performed by a user on the chain will be recorded on the blockchain in the form of transactions. Anyone can easily view all historical operations under an address. This is a database that aggregates user behaviors of all decentralized applications. It’s as if an Internet company desensitized all its user behavior logs to the public. Not only that, in addition to being able to view data/analyze data, you can also directly interact with these addresses (users) on the blockchain. Nowadays, a new project releases tokens and airdrops to users are almost standard. The objects of airdrops are often screened based on the user’s historical behavior as a condition to find the seed users that best meet their needs. The data analysis and achievement system on the chain will be an important component of the metaverse, which can delineate the identity of an address, user profile and behavior pattern.

Each smart contract is a piece of code logic, just like a “Lego building block”. Developers can build their own “house” by creating new “building blocks” and combining existing “building blocks” at will. Application scenarios. Every “building block” and every “house” is an integral part of the metaverse. The blockchain at the bottom layer carries the storage of data and information, as well as the transfer of value. So in a sense, the current Ethereum and its on-chain applications have formed a metaverse without a cool front end. (It seems that all evm-compatible public chains form a higher metaverse)

The final form that conforms to the ordinary user experience may be:

  • There are several application carriers, some will look like the screen of a 3A game, like the world in the top player; some will go in pixel style; you can find a world that meets your desired style.
  • You can travel in any world, using the same account address system, all assets and data are shared
  • Not just games, any types of financial/social/e-commerce applications can be seamlessly integrated into the world

From today’s point of view, everything is inevitable to move forward to the metaverse of the Web3.0 version. It may be 3 years or 5 years before it will enter large-scale applications, and there will be a Web2 in the middle. An intermediate state between .0 and 3.0.