Although there have been a series of events in DeFi recently, the popularity of this field has not decreased, and new gameplay and new projects are still emerging. After calming down, people began to explore the next direction in this field. Recently, a concept of NFT has been mentioned many times, and some people boldly predict that NFT will become the next hot spot of DeFi.
Why is it a niche in a niche like NFT?
What is NFT? Asset to value entry
The full name of NFT is Non-FungibleToken, which means non-fungible token in Chinese. It is a token with uniqueness and indivisibility. Each token is unique, indivisible and interchangeable. In contrast, the simplest homogeneous tokens are BTC or ETH.
NFT is actually a kind of Token, but unlike digital currency, each NFT has its own unique attributes that distinguish it from other NFTs. In other words, you can exchange one Bitcoin for another person’s Bitcoin. This is right Waiting. But you may not be able to exchange your own NFT for another person’s NFT, because these are two completely different things, which is equivalent to each NFT being marked with a unique brand, which determines each one. The value of NFT is different.
For the industry, NFT is not a new concept. As early as 2011, Bitcoin’s Colored Coin (color currency) had NFT presence. Until 2017, the emergence of the phenomenon-level Dapp-cryptocat CryptoKitties made NFT enter the industry’s field of vision. Due to its unique ID and genetic attributes, the crypto kit has The launch was extremely hot, and the most expensive cat sold for hundreds of thousands of dollars at the time.
The uniqueness of the NFT itself means that it can be bound to things that are also unique and scarce, such as the house you bought, a painting by Da Vinci, and the orange burst in a game. Product equipment, since each NFT is absolutely unique, holding this NFT is equivalent to holding the value of the anchor behind it.
Why is NFT expected?
We need to understand what problem NFT solves? We have a lot of digital assets, but we never really own them.
In the real world, there are two difficulties with assets. First, it is difficult to trade assets such as real estate. Second, it is difficult for intangible assets such as equity and IP to be reasonably priced and the conditions for reaching the transaction are also very difficult. Once tied to NFT, on the one hand, the types and space of assets that humans can have will increase exponentially. On the other hand, the threshold for liquidity of these assets will be further reduced and circulation will become simpler.
The opportunity for NFT in the industry lies in the support of the larger digital economy market brought about by the development of the Internet. An investment institution once mentioned that “all digital content is carried out on the chain. As intellectual property rights are inevitably transferred to the blockchain in the form of NFT, trillions of digital content units will be transferred to the secondary market. This will Unleash huge illiquid value and become the largest asset class in the blockchain.” This affirms that the accumulation of Internet digital content and NFT, especially in the fields of original works or collections, artworks, can fully release their non-homogeneous Potential value.
In addition to illiquidity, NFT has begun to learn from DeFi’s high liquidity characteristics. At present, Rocker NFT, an NFT lending platform , has emerged , which adopts a decentralized autonomous organization structure that allows users to mortgage NFTs to lend DAI. In the use case, the NFT artwork created by artist Josie Bellini, which was mortgaged on the Rocket NFT platform by the co-founder of the VR blockchain solution Qwellcode GmbH, and loaned out 1000 DAI for a period of 6 months and 15% interest. This is also the first decentralized mortgage lending based on works of art.
The story does not end there. Through the separation and circulation of loans and non-homogeneous series of types of artworks, the liquidity premium brought by NFT ART is the core of supporting its value as a “digital asset”. To put it simply, the real use case of the non-homogeneous artwork is used as the anchor to carry out the fission distribution of ERC20 tokens, and then the circulation premium is realized through DEX or CEX. This homogenized cryptocurrency + non-homogeneous real assets The supporting financial model gives NFT more room for appreciation.
The value attribute of NFT non-homogeneous unique ID allows each asset to naturally express its unique and complete value existence, which represents a future of digital value, coupled with the support of distributed networks and trust on the chain , The circulation of NFT can be more smooth, and will not generate excessive friction and generate huge trust costs.
Where is NFT?
According to the semi-annual report released by NonFungible.com, the leading data provider of the NFT industry, on July 7, 2020, the value of NFT USD transactions in the first half of 2020 soared to 230 million USD, a year-on-year increase of nearly 300%, and there were 78,881 active users, an increase over the same period 5.7%. Such a volume is less than the value of a public chain. NFT is still in a relatively niche and elementary stage.
In terms of the specific layout, NFT has extended from the initial game circle to the fields of art, collectibles, real asset tokenization and virtual assets. For example, Nike tested the blockchain, a limited-edition NFT pass issued based on the Ethereum ERC-721 protocol, and UEFA launched 20,000 NFT-style VIP tickets for the 2020 European Football Championship, which can be regarded as out-of-the-box works in terms of encryption applications. .
In addition, the underlying technologies, including BTC, EOS, NEO, IOST and other public chains have introduced the concept of NFT and created application products that represent their own platforms. Well-known NFT projects such as Mana (Decentraland) on-chain virtual ecology and on-chain Enjin, a game development platform, has already integrated agreement, transaction, and distribution. But even so, because most NFTs still exist based on the Ethereum platform, there is no real inter-chain effect to open up the NFT ecology, which hinders the development of NFTs to a certain extent.
NFT future hot industry prospects
Prediction market
Reality Cards, a decentralized prediction market platform that recently launched on the Ethereum mainnet, claims to be able to solve a problem that has always been unsolvable in the prediction market: the problem of “low liquidity”. The solution is to groundbreakingly integrate NFT and “forever for sale”. “Mechanism” is combined with the prediction market. Reality Cards is not a “gambling” model, but an innovation. It will use NFT to represent the prediction result and the currency holding date to settle the income. As more and more participants enter the forecast market, the NFT, which serves as an anchor demand, will have a very imaginative value space.
Insurance
Insurance is undoubtedly a hot area in the DeFi field, but at this stage, the purchase of cryptocurrency for DeFi insurance requires KYC review, and the overall market liquidity performance is not good. By using NFT to tokenize the policy, anyone can transfer and sell the NFT policy after purchasing the insurance. The NFT policy carried by the unique ID can also be repurchased at a later time, and even a “basket of policies” can be easily purchased. This form of “mutual insurance” will bring more derivative possibilities to DeFi insurance, and the future market is also worth looking forward to.
IP field
Art collections and original content have their own IP attributes, and it is extremely difficult to confirm the rights and distribute the content. To try assets on the NFT chain based on mature IP, one is to use the blockchain to guard the unique value ID. Reduce the possibility of evil; second, it is possible to further develop the multi-layered value of IP, through the non-homogeneous value of IP assets, from sharing future expectations to realizing a virtuous cycle of continuous asset supply, so as to have the opportunity to open up a larger market value space.
AR intelligence
An AR application called RakugakiAR has appeared on the market, which can move the cat or other things you draw on the table. This is an extremely interesting thing. Through NFT, we can also issue, store, and circulate NFT in all virtual worlds, augmented reality, and Internet integration with the only role that exists, which will further enhance the landing scene of the blockchain. .
You may find that after reading this, NFT is still very early, it is a niche among the niche, and there are many problems that cannot be explained and solved, but there is no doubt that NFT, as a digital asset and even a physical asset, has become the entrance of value resources. This change will far exceed our imagination of the world of digital assets.
