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Assets that can generate income are often more valued. What kind of chemical reaction will NFT have when it encounters DeFi?
Original Title: “IOSG Weekly Brief | NFT’s Road to Financialization #77”
Written by: IOSG Ventures
NFT is a token form of virtual goods, including digital art, virtual real estate, game assets, etc. NFT can also be used in real-life commodity distribution mechanisms, such as inventory management, trade finance, ticketing and other fields.
How to make your NFT play more value?
In the senior crypto world group, the assets that can generate income are often more easily valued , so what kind of chemical reaction will NFT encounter DeFi?
Image source: Fractional
Collectibles have always had the problem of poor liquidity. But with the tokenization of collectibles, rare assets have a greater possibility of generating liquidity. The current NFT asset segmentation platform (NFT fragmentation) can convert ERC721 or ERC1155 into tradable homogenized ERC20 tokens. This innovation brings unprecedented liquidity to NFT and other collectibles.
The segmentation of high-value NFT assets began with the Metapurse Fund, which was the buyer of Beeple’s Everydays 5000 ($69.3 million NFT). The Metapurse Fund divided the works, created B20 tokens, and sold them in two phases.
Coinmarketcap: B20 token
The advantage of dividing NFTs into homogenized tokens is that as the market revises the price of tokens, it provides a good evaluation mechanism for most NFTs. Platforms like Fractional, NFT 20 and Unicly can help collectors segment their NFTs and create communities around these NFTs.
The main considerations for collectors include the liquidation ability after the NFT is divided, control the number of coins to be mined for homogenized tokens, prevent large-scale buyouts of “whales”, and the ability to create a community around NFT. The buyer’s main consideration is to be able to obtain certified NFT risk exposure and participate in the governance process.
Other interesting projects built or extended in this direction include Fraction.Art by DODO NFT and DAOfi. The figure below shows the liquidity situation of multiple split tokens and ETH pools on the Unicly platform in less than 1 week.
Total locked up volume (TVL) of quality projects on Unicly and NFT20 platforms
NFT asset ownership sharing
It is good to have a rare punk, but it is even more ideal if you can build a punk community and share the ownership of the NFT (or collectibles). Unicly is a fork of Uniswap V2 and has successfully established communities for some well-known NFT projects, such as Hashmasks, Cryptopunks, Autoglyphs and Doki Doki.
The financialization of NFT gave birth to a new type of community, namely NFT DAOS. The first generation of NFT DAO provides services for managing NFTs and artists. Jenny DAO is the next generation NFT DAO. They curated the NFT collection process and focused on the financialization of these assets. The uniqueness of Jenny DAO is that uJenny tokens represent the NFT assets it holds and DAO social tokens.
uJenny is an ERC20 token issued by Jenny DAO on the Unicly platform, which represents part of the ownership of all NFTs purchased by DAO. This will truly be the first asset-backed social token. Currently uJenny can be used to mine UNIC tokens on the platform.
Jenny Token (uJenny)
NFT game + finance
Now, NFTs have also become income generating assets, especially in the game field. The concept of blockchain games has become a hot spot in the industry after the explosion of Cryptokitties in 2017-2018, but a large number of projects on this track have a long-term monthly life of tens to hundreds of people. The reasons are: poor playability and poor performance (Subject to the performance of the blockchain), some requirements are pseudo-requirements (for example, the project represented by Dmarket wants to build a game props trading market to open up traditional games), but the number of monthly active NFT games represented by Axie Infinity has been qualitative We predict that the development form of blockchain games in the future will have its own characteristics instead of simply copying traditional games to the blockchain. Successful projects will have stronger financial attributes, and players will gain benign, Positive economic incentives to form an ecological closed loop.
The performance of Axie Infinity LP (below) shows that overall, the LPs in the Uniswap SLP-ETH pool have already generated profits, with a gain of approximately 16%.
F1 Delta Time
Delta Time’s NFT pledge allows users to increase their income by obtaining $REVV tokens. At a token price of $0.5034, Apex NFT pledgers will receive $REVV tokens worth $60,000 per NFT. The most common NFT pledger will receive at least $125 in $REVV tokens.
The division of NFT into ERC20 is a natural process for the NFT community to realize its asset financialization and healthy price discovery. NFTX is the first ETF project that created NFT. As new NFT index funds such as MASK and PUNK appear on the platform, NFTX will gain more and more popularity.
At the same time, collectors will quickly realize that NFT index funds in the form of ERC721 are inefficient. Depositing NFTs in these funds as collateral does not guarantee that depositors will receive their original deposits (that is, the deposited NFTs) at the time of withdrawal request.
NFT20 launched the NFT20 lightning loan based on Aave. The borrower will borrow the 20 most valuable Hashmasks from the pool, get the accumulated NCT (Name Changing Token), sell it and get ETH (NFT20 DAO will charge a 10% fee) and return the borrowed NFT .
The next step of the NFT fragmentation platform is to provide lending services for NFT promoters and ERC20 fragmentation token holders.
In the exciting field of NFT lending, we predict that the next project that can come out is a product that can design an effective pricing mechanism and liquidation mechanism to solve the risk of NFT collateral impairment (due to most of the high NFT Assets appear in the fields of artworks and special collections, and asset price bubbles are relatively large) In addition to being a path for us to know physical assets on the chain, NFT’s special design can naturally accurately express a large number of complex protogenesis assets. From the current on-chain insurance policies and virtual game assets on the chain, in the future, there may be behavioral logic on the chain, the NFT capitalization of credit information, and even the application of off-chain NFT assets on the chain. After experiencing the first half of the carnival in the NFT market, infrastructure builders/art creators and collectors will continue to explore the true value behind it.
In short, we have witnessed the popularity of NFT in the first quarter of 2021. Not only did we see participants in the encryption field, more and more people even participated in the non-crypto field. From Beeple’s work Everydays 5000 to Twitter founder Jack Dorsey’s first tweet, NFT, all involve high-value transactions. It now appears that individual collectors, NFT funds and DAOs have exquisite NFT collections, and it is time for them to exert greater value: for example, let them interact (Alethea), divide their ownership and build around these NFTs Community (Unicly), using them for lending or continuing to collect (Jenny DAO), these are exciting directions.
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