The differentiation of NFT projects has already begun, as can be seen from the performance of the NFT trading platform.
Original title: “NFT: The future is divided in the rise (2: Part 1)”
Written by: Free A Fei
The famous NFT collector Whaleshark concluded in an interview with the media in March this year: As new projects enter the NFT field and become mainstream, 99.99% of the current projects will fail.
NFT: Differentiation in the rise in the future (1) Mentioned that the NFT market has risen strongly and is still a long-term track. Some projects will become dazzling stars, and most of them will eventually fall. This article continues the previous article and continues to discuss the differentiation of NFT problem.
This article focuses on two chapters: 1. The phenomenon of differentiation of NFT projects; 2. Analysis of the reasons for the popularity of some NFT projects. In the next article, we will continue to talk about the last two chapters: 3. Reasons for the differentiation of NFT projects; 4. Summary of current NFT projects successfully capturing value factors. Fall on the words, to feast on the readers.
The phenomenon of NFT project differentiation
The different trading volume of the NFT trading platform shows the differentiation of NFT projects
The differentiation of NFT projects has already begun, as can be seen from the performance of the NFT trading platform.
NFT has many trading platforms. The most popular trading platforms include: OpenSea, Rarible, SuperRare, Foundation, AtomicMarket, KnownOrigin, Enjin Market, BakerySwap, Portion, VIV3, Async Art, etc. Each trading platform has its own characteristics.
Among them, the largest platform is OpenSea, followed by Rarible. Digital asset research company Messari compared OpenSea and Rarible’s transactions in its Web3 and NFT reports in the second quarter of this year. The performance of these two markets has been very different in the past few months, and the gap in their development reflects the recent The differentiation of NFT projects in a few months.
Chart source: MESSARI—Web3 and NFT report for the second quarter of 2021
After entering August, there is still a big gap between Opensea and Rarible. According to statistics from DappRadar, as of September 3, the 30-day trading volume of the OpenSea platform was US$3.72 billion, and more than 329,000 wallets had interacted. The transaction amount on the Rarible platform during the same period was 21 million U.S. dollars, and about 10,000 wallets had interacted.
The main reason for the gap between the two is that OpenSea has been continuously optimizing the user experience since the end of 2020, including free for creators to cast NFT, etc., as well as integration of public chain Flow, integration of Ethereum sidechain Polygon, and the second-tier expansion solution Immutable X. Of course, the more important reason is that, as Messari analysis believes, projects such as NFT avatars, Art blocks, sports collectibles, and meta universes traded on the OpenSea platform are developing rapidly, while the Rarible platform lacks these NFT projects.
NFT project transaction ranking
The popularity of the NFT market is mainly driven by some popular projects. The top-ranked projects include Axie Infinity, CryptoPunks, Art Blocks, Bored Ape Yacht Club, Intertial Moment, Mutant Ape Yacht Clud, Lot (for Adventurers), 0N1 Force, Meebits, Pudgy Penguins, etc.
According to DappRadar data, as of September 3, 2021, in the NFT project, Axie Infinity ranked first in the transaction amount within 30 days, exceeding 818 million U.S. dollars; followed by CryptoPunks with about 645 million U.S. dollars; Art Blocks about 528 million U.S. dollars; Bored Ape Yacht Club is about 295 million US dollars.
Source: dappradar, as of September 3, 2021
NFT development of different tracks
According to the analysis of Bochun Chien and Jingcheng Li of FBG Capital, from the perspective of development speed, the growth rate of different types of NFTs is different. Collection NFTs account for more than 2/3 of the market share, and the game NFT market has also grown substantially, surpassing the encryption art sector.
From the perspective of market distribution, the main factors are the growing popularity of the CryptoPunks market and the high growth of Meebits. Representative items in the collection NFT include CryptoPunks, Meebits, Sorare, Avastars, CryptoKitties, Bored Ape Yacht Club, NBA top shot, Bored Ape Kennel Club, Zed Run, Vee Friend, etc.
The proportion of games has also increased significantly, surpassing the art sector to rank second. The NFT game track began to explode in the second quarter, and the number of users and the growth rate of transaction volume were higher than other NFT tracks, stepping out of its own independent market. The highest single-day trading volume even exceeds US$4 billion. In addition to Axie Infinity, the NFT game track has grown by 1500% from early February to August, with approximately 440,000 daily active users, and a 5000% increase in transaction volume. Representative projects include Axie Infinity, Alien World, CryptoBlades, My Defi Pet, Mobox, Aavegotchi, TT Guess, etc.
Most of the projects in the Metaverse series are in the early stages, and many projects on this track are also repeated on the game track, such as Axie Infinity. The more prominent projects on this track include Decentraland, The Sandbox, in addition, there are projects such as CryptoVoxels and Somnium Space.
Analysis of the reasons for the popularity of some NFT projects
NFTs can be digital art collections, avatar collections, collection cards, game props or value-added tools. The category and connotation of NFT have been extremely rich.
Whether it’s games, avatars, collections, or meta-universe NFTs, several tracks have outstanding projects, each with its own logic of success. We have summarized these projects separately.
Axie Infinity: “Play-to-Earn” + economic system + game guild + meta universe + high performance
Axie Infinity is currently the number one NFT game and one of the most trafficked applications on Ethereum. The project fire is the result of the interaction of Play-to-Earn, economic system, game guild, community, and metaverse.
Play-to-Earn is a new mode that rewards players for the time and energy spent playing games and developing the game ecosystem. The core of Axie’s economic system is combat and reproduction, and it forms a closed loop composed of players, Axies (NFTs), and AXS/SLP (Native Tokens). And Axie’s economic system is the foundation of Play-to-Earn.
During the battle in the game, players can use their own elf team to fight with other elf teams and win SLP (Small Love Potion) as a reward. When breeding, each Axie Elf can breed new offspring. Reproduction will cost SLP and AXS tokens. The new offspring can be sold on the market for income. According to industry analyst JX calculations, considering the combat system alone, at the SLP price level around July 22 (the price was about $0.32 at the time), an average player can earn more than $2,000 per month.
Chart source: JX Twitter @jx_block
Yield Guild Games is the key reason behind the explosion of Axie Infinity
Yield Guild Games is a game guild established in the Philippines. The influence of yi’s affection caused the unemployment rate in the Philippines to soar. Yield Guild Games saw the opportunity of Play-to-Earn in Axie Infinity.
On the one hand, the guild helps Axie Infinity recruit and train players. On the other hand, Yield Guild Games rents in-game characters from players who cannot afford the early start-up costs, and then draws off the player’s revenue.
This action resulted in a “three wins” result. Yield Guild Games can help games quickly drain and reduce the cost of entry for players. The guild itself also benefits from this positive mode and quickly becomes the largest game guild in Axie Infinity.
Axie Infinity is also a meta-universe game. The immersive experience and virtual land trading operations also attracted more players.
In the Axie Infinity game, the land is a scarce resource called the Lunacia continent. The land on the Lunacia continent can be used for the residence of the wizard Axies. It can be used to collect AXS tokens and other resources and equipment items. It can also be used to manage stores/markets, rent, and place beacons for summoning Chimera monsters. It can be used as a dungeon. Access portal (ie, Chimera battle portal), and even allow third parties to develop their own games on it, and earn revenue through these operations.
Axie Infinity developed its exclusive Ethereum sidechain Ronin, and high performance and low cost have also become important reasons for attracting users. And Ronin Wallet integrates a payment gateway, which greatly reduces the threshold for deposits. After these deployments were completed, the number of users exploded.
CryptoPunks: Scarcity + Punk Culture + Narrative + New Commercial Value + Community Role + Innovative Gameplay + Financial Tools
CryptoPunks are the first digital artworks on Ethereum with a built-in method to verify ownership. In June 2017, software company Larva Labs launched CryptoPunks. Scarcity + punk culture + narrative + community + representatives of new commercial values ​​+ innovative gameplay are factors that make CryptoPunks continue to be popular.
Scarcity: CryptoPunks is a collection of artistic images composed of irregular pixels in a 24×24, 8bit style. Only 10,000 were issued, each with its own randomly generated unique appearance and characteristics.
The appearance of CryptoPunks is a representative of punk culture
For Matt Hall and John Watkinson, the founders of Larva Labs, in the early days of the blockchain movement, there was a noisy, anti-establishment spirit. They reflected this atmosphere in Punk’s exterior design, that is, “they You need to be a group of unsocial and nonconformist people.” Cyberpunk dystopian courage represented by the movie “Blade Runner” and William Gibson’s novel “Neuromancer” has also had an impact.
Industry expert Ben Roy believes that CryptoPunks is a narrative reflexive asset (reflexive asset)
Reflexive assets refer to the fact that once an expectation of rising prices is formed, investors’ purchase behavior can push asset prices up, which in turn strengthens the expectation of rising prices.
CryptoPunks has a very good narrative, the project is issued fair, anyone can receive it for free on the day; the founder behind the project is very good, is a rookie of NFT, etc., which gave its price rise a good expectation.
CryptoPunks is a representative of new business value
In the new business value, community influence is particularly important. CryptoPunks avatars are used by important people as profile pictures in social media, which can enhance their influence in the community and the industry.
On August 23, the American credit card company VISA announced that it had officially entered the NFT field and purchased an NFT with the CryptoPunks number 7610 at a price of approximately US$150,000. VISA believes that CryptoPunks has created a wave of NFT technology and NFT business, so VISA wants to have a Punk.
CryptoPunks is a symbol of community influence. Owning a Punk is not only a symbol of the status of a veteran in the crypto market, but also a pass for high-end investors. CryptoPunks has gradually become a representative of the cultural level of Ethereum, becoming a closer community with a high degree of internal recognition. The high price is not a limitation for the development of collection NFT projects, but a threshold for joining this elite community.
The blessing of value-added gameplay
Larva Labs, the development team of Cryptopunks, launched the 3D virtual world game Meebits. Cryptopunks holders will be able to get Meebits for free, making up for their own gap in the game field.
Financial tools have helped increase the liquidity and availability of CryptoPunks, making it easy for small and medium investors or collectors to purchase.
CryptoPunks are expensive and have high barriers to participation, but agreements like NFTX and Niftex can facilitate small investors to participate. NFTX and Niftex have different protocol mechanisms, allowing participants to own a small portion of CryptoPunks through a group of index funds supported by real Cryptopunks (NFTX) or a single Cryptopunks (Niftex) to obtain partial ownership. With the joint support of these agreements, the ownership of CryptoPunks is dispersed. NFTX and Niftex tokens have strong liquidity in the secondary market, which is more conducive to small and medium investors to participate in CryptoPunks investment.
Art Blocks: Generative Art + Artist Influence + Community Role
Art Blocks is a platform for on-demand programming and storage of works on Ethereum. The content of works includes static images, 3D models, and interactive experiences. Art Blocks was launched by Erick Snowfro in November 2020 and is widely welcomed in the market. After entering August, multiple NFT transactions have more than 1 million USD worth of ETH. According to DappRadar data, as of September 3, the 30-day transaction amount of Art Blocks has exceeded US$527 million.
As of September 3, Art Blocks ranked third in the 30-day transaction amount of NFT projects, and there were also sky-high NFT transactions in the project. On August 27th, Ringers#879 in Art Blocks was sold at a sky-high price of 1,800 Ethereum (valued at about 5.66 million US dollars at the time).
Art Blocks: Ringers#879
The reason for the fire of Art Blocks can be roughly summarized as: generating art + artist influence + community.
Generative art has the charm of original encryption and art
Generative art itself is not a new phenomenon, it started in the 1960s. In 1984, the Museum of Modern Art recognized generative art for the first time. In 2018, 18-year-old artist and Stanford University student Robbie Barat used GAN to cast the first generative art work “AI Generated Nude Portrait #1” on Ethereum.
On the Art Blocks platform, the artist creates an algorithm or script and deploys it on Ethereum. Before locking the code, try to combine elements to develop the unique style of the project. During the creation process, the final image is generated from the script through the hash string or “seed” provided by the Token. Each final image is created on-site, invisible to buyers, but has consistent elements and repeated themes, connecting them into a coherent project.
This is the combination of traditional artistic aesthetics and blockchain data, which has produced some undeniable encrypted native things.
William M. Peaster, a well-known expert in the NFT field, believes that Dapps like Art Blocks are ushering in a “golden age” of generative art on Ethereum.
Artist influence
The Art Blocks platform consists of three internal platforms:
1. Curated: The main platform, where the Art Blocks team conducts a thorough review of each candidate
2. Artist Playground: A secondary platform for artists who have previously launched a portfolio on Curated and want to launch subsequent works
3. Factory: A more open platform, with less stringent review and access requirements.
Art Blocks is led by some of the most talented people in the NFT field, such as Snowfro and Jeff Davis. The platform also introduced the most iconic generative artists, including Dmitri Cherniak and Tyler Hobbs.
Hot community building. As of August 27, Art Blocks Twitter has accumulated nearly 50,000 followers, and the social software Discord has more than 24,000 members. A passionate community is rapidly developing around this project.
Bored Ape Yacht Club: Ingenious narrative + community (social) + celebrity effect + identity attribution + copyright attribution
Bored Ape Yacht Club, abbreviated as BAYC, is a collection of 10,000 apes NFTs, including hats, eyes, looks, clothing, backgrounds and other 170 attributes with different rarities. 10,000 unique apes were randomly combined by programming, and each ape has a different expression and dress. Bored Ape Yacht Club ranked fourth in 30-day NFT project transactions. NFT Labs summarized and believed that ingenious narrative + community (social) + celebrity effect + identity attribution + copyright attribution, etc., constitute the special value of BAYC.
Ingenious narrative: The price of each ape for the first sale of BAYC is 0.08 ETH, and the entry cost is low, so that all users stand on the same starting line. The fair and just distribution method has attracted many investors.
Community atmosphere + social capital: Since its release in April, the BAYC community has rapidly grown into a huge community in a short period of time. For players holding BAYC, this is not only a collectible, but also a club.
Celebrity effect: Many celebrities, including NBA player LaMelo ball, NBA chairman Daryl Morey, DJ duo Bassjackers, DJ 3lau, Chen Bolin, Wu Jianhao, Shawn Yue, and many other celebrities have used BAYC’s works as their social media avatars, which inspired the general public to NFT And BAYC’s interest.
Identity attribution: BYAC’s NFT is more like a social identity card. When a user uses NFT as a social avatar, it helps the holder to obtain additional social capital and resonates with members who are also BAYC.
Community benefits: Owning a Bored Ape NFT will enjoy the unique benefits of club members. For example, users with Bored Ape NFT can access the collaborative graffiti board “bathroom” function of BAYC’s official website, which is a place where you can draw or create at will. Every club member can adopt a Club Dog NFT from Bored Ape Kennel Club. The adoption is free, and only the Gas fee is required. BAYC also purchased a piece of land in The Sandbox game, on which the project team will build a place for club members only.
Copyright ownership: Generally speaking, the copyright of NFT does not belong to the buyer. The ownership and commercial use rights of BAYC will be granted to the buyer when a transaction occurs. BAYC grants Bored Ape NFT holders the full commercial use right to use, copy and display the purchased collections, as well as use it to produce creative derivative works.
In addition, the project has a good interactive system. The project party also has a set of plans for the future, which increases the social influence of BAYC or the owner’s source of income. For example, treasure hunt activities, adding DeFi elements to NFT, community Grant projects, and so on.
Concluding remarks
The rapid rise of the NFT market may not only grow into a giant with a trillion-dollar market size, but also demonstrate a very individual culture, identity and community.
The NFT market has not only very popular projects, but also a large number of overlooked corners. Through the summary, we can discover the six sources of NFT value capture. Projects with some or all of these characteristics, coupled with excellent team and capital value capture capabilities, can grow into very good NFT projects.
