Everyone is in search of the next PFP (profile picture) or generative art NFT project that’ll 100x. CryptoPunks, Bored Apes, Cool Cats, ON1 Force, Fidenza, Autoglyphs… what’s next? Well, every day dozens of new projects aim to mimic this hype launch, and the vast majority go nowhere. Buying a 10,000 edition project today (like the ones above) is no different than buying a lottery ticket.
However, there are much more fascinating NFT use cases that show real longevity and staying power. Use cases that don’t make money simply from people’s FOMO (fear of missing out), but through actual utility.
Here are our theories on the Future of NFTs, specifically what the next year has in store for us.
NFTs Are In A Bubble
This tweet from Path, an NFT whale who sold off a lot of his high-value NFTs, pretty much sums up how we feel about NFTs right now:
Spend a considerable amount of time tracking new NFT projects and you’ll quickly realize the same thing. There are too many projects with big promises and no guarantees. It’s getting harder to differentiate what project actually has legs and from the junk that was imagined and put together in a week.
“But Christie’s and Sotheby’s are selling Apes, Punks, Curio.Cards, and generative NFTs. And what about Visa and other brands buying NFTs?”
These projects have nearly achieved a “grailed” status – which means they’re outliers. They’re likely to hold their value because of their historical importance and what they mean to NFTs at large.
Furthermore, Christie’s and Sotheby’s owe it to their collectors to continue propping up these projects for the next few years. And I’m sure they gave their collectors some assurance.
The problem is that there are a lot of other projects dropping every single day whose value propositions only include: minting rights to future projects, access to exclusive merchandise, and a “metaverse” they’re building but cannot define.
Seriously. These are the same value propositions I see daily. You tell me if that’s worth the $200 it costs for the NFT and the $300 you’re going to spend on gas fees.
NFTs are in this weird state where everything feels like a lottery (a feeling that reminds us of the 2017 ICO craze).
We don’t believe that NFTs are in a bubble in the sense that one domino will fall that wipes off all of the liquidity in this market, leaving everyone with worthless JPEGs. Why?
Because PFP projects are just one of the seven main categories of NFTs. And the other six actually offer up unique experiences.
Blockchain games or play-to-earn games, whatever you want to call them, are by far the stickiest use case of NFTs we’ve seen yet. And when that so-called NFT bubble pops, blockchain games are what will be there to keep the NFT market afloat.
Outside of getting really good at a video game and either becoming a pro or streaming to a paid audience, playing video games doesn’t pay the bills. That is until the advent of blockchain games.
Axie Infinity is by far the first notable example and still the premiere leader of this concept.
The basic premise behind Axie Infinity is owning and leveling up your Axies. Each Axie has different properties and abilities which allow players to battle their Axies against one another or in quests. Winning battles grants you potions and other items that help you level up your Axies, or breed them. Yes, you can breed Axies and create new Axies – which you can then sell on the Axie Marketplace.
There’s a lot more to this game including owning land (and I’d highly recommend you learn about this game, as it truly is the top 3 use cases for NFTs). But the basic premise of earning in the game is that you’re spending time to make your Axies more valuable to gameplay.
Overall, Axie Infinity gives players the ability to earn in-game currency, items, and land that translates to dollars in the real world. And with over 250,000 daily active users, this economy is quickly becoming one to reckon with. Chances are that you’ve seen some articles out there about people making hundreds or thousands of dollars a month playing Axie Infinity.
What I find the most appealing about getting into Axie is that the initial Axies you buy are not a sunk cost (unlike PFP NFTs which you may never get your value back from).
In order to play the game, you need at least three Axies. As long as there are new players coming into the game, there will always be a market for you to resell your Axies.
Right now, the floor price of an Axie is about 0.05 ETH. If you buy one, play the game for a week, and decide you don’t like it, then you can sell that Axie for the same price (maybe even more if you’ve leveled your Axie up). You lose the gas fees in the process, but it’s a stark contrast from other NFT investments.
While there are a lot of criticisms about Axie’s ability to continue making the earning mechanics better (and less like a pyramid scheme), Axie Infinity has a great trinity of entertainment, earning, and community. Not to mention, they’re working on a lot of new features to solve these doubts.
Nonetheless, over the next year, NFT gaming will continue to be the most fascinating and growing NFT sector, with many other highly anticipated games coming out including:
Memberships, Clubs, & Funding
Aside from the Bored Ape that Q flipped for nearly a 100x return this year, the projects we both have seen the most appreciation on are Access Tokens. Specifically The MetaKey and Metaverse HQ, which we both have unrealized gains around 10x.
We minted these NFTs to gain access to a Discord channel. That’s pretty much it. But honestly the value has grown from there.
I browse the Metaverse HQ Discord almost daily and learn a lot from people way more experienced than I am. I’ve seen countless testimonials from people earning money from this advice. And it’s a great sounding board.
The MetaKey, on the other hand, has a much more ambitious roadmap for its members. They’ve begun executing collaborations and educational content.
- They’re buying land in places like The Sandbox so that there’s a virtual place to hang out and throw events.
- They’ve done private collaborations for wearable NFTs that can be used in Decentraland (RTFKT, for example).
- They’re continuously adding resources to the MetaKademy – a place where they’re sharing their insights on crypto, NFTs, and the metaverse.
And The MetaKey is just getting started.
What’s fascinating about these two Access Tokens is that they’ve effectively created valuable NFT networks. They’re strong user-bases of power-NFT-collectors. This means they can drop projects and instantly have thousands of holders.
As a result, these networks they own are now valuable entry points for newbies in NFTs. Anyone from Coca-Cola to Chris the Artist (not a real person) will want to collaborate with Metaverse HQ or The MetaKey to bolster their entry into the NFT market.
There’s so much potential for NFT membership clubs like this and I love them because if they don’t prove their value for collectors instantly, then collectors will flood the market trying to get out and it’ll be clear the community isn’t solid. It’s a lot harder to execute a successful Access-Token project like MetaKey than it is to create a derivative CryptoPunk project.
A similar area of potential is using NFTs for funding things such as newsletters, movies, comic books, etc.
There are the majorly popular ones like ON1 Force (funded a comic book through NFT characters) and Stoner Cats (funded an animation series through NFT characters).
While ON1 did a great job rallying the NFT community through their roadmap and great artwork, Stoner Cats tapped into star power to sell NFTs by featuring the likes of Mila Kunis, Jane Fonda, and the founder of Ethereum, Vitalik, in their animated series.
These projects have shown Hollywood the blueprint for crowdfunding projects via NFTs. And we’re likely to see a lot more like them in the coming months. However, they’ll need to tap into features like rev-share to really entice future collectors.
Similarly, Dirt is the world’s first newsletter funded by an NFT sale. It’s a daily entertainment newsletter that had a solid following but wanted to unlock some funding to continue operating the project.
And so they strategically drop NFTs every 2-3 months to fund a “season” of newsletters. Their first season sold out and raised 12 ETH, which they use to pay writers and designers.
What I love about this model, is that if they don’t perform in the months between drops, people won’t buy the next season of NFTs. It’s a perfect feedback loop for content creators.
We envision a lot of writers leaving their positions to start their own “journalism companies” funded by their readers. Furthermore, a very interesting use case we haven’t seen unlocked yet is the idea of a Decentralized Autonomus Newsroom (DAN).
Similar to a DAO (Decentralized Autonomus Organization) which is essentially a company run entirely by its funders, DAN’s would allow their funders to dictate what stories they want to be covered or content they want to be created. Mirror is getting close to this, allowing their community to vote via $WRITE tokens on which newsletter they’ll fund next (Dirt was their first funded project).
Overall, we’re bullish on NFT projects that promote a community that creates value or helps fund projects that people are genuinely interested in.
Blockchain Domain Names
I was born a little too late to snag cowdrey.com or even ryancowdrey.com. I wasn’t quick on the ball to claim the corresponding social media handles. But I’ve got the next best thing with some real future use cases. I’m the proud owner of cowdrey.eth and I couldn’t be more pleased. In fact, it’s my favorite NFT I own.
Blockchain domains are essentially suites of smart contracts that can direct to various blockchain-related activities. They can work as a naming registry for crypto wallet addresses, for example, or they can point to content hosted on the blockchain, like a website, among many other current and future use cases.
“.eth” is the domain created and distributed by ENS – Ethereum Name Service. The most common use of an ENS domain is to use it as a replacement for those complex, 42-character crypto wallet addresses we all have.
For example, if you were compelled to send me some bitcoin, then I could go open my crypto wallet, find my address, and tell you to copy-and-paste this string into the “recipient” field: 0x09FD6e05e703E96c242ce2c67F9278Aa5CDEaec6.
Or, I could just tell you to type cowdrey.eth into the recipient field and it’ll auto-populate my address. Pretty nifty, huh?
As the owner of that ENS domain, I can program the smart contract to direct funds to any wallet I please. Furthermore, I have all of the main cryptocurrencies programmed to send to the respective wallet.
But there’s more to this than making crypto wallet addresses simpler.
There are numerous text records I can program into cowdrey.eth such as a website URL, an email, a Twitter link, and more. Not to mention, they’re continuously working to add more features and functionality.
This one is more of our nontraditional thoughts for the future of NFTs. But when you look at blockchain domain names, there’s so much potential. Essentially, it’s a building block, a basic Internet function that will be ubiquitous in just a few years. I would consider blockchain domain names as some of the first basic applications built directly into the blockchain.
Some ENS-related campaigns we’d love to see happen in the next year:
- A non-profit run a funding campaign by directing you to donate through a catchy, brand-aligned ENS domain… like endhunger.eth or beatcancer.eth.
- A future-focused company entering NFTs to run an NFT promotion through their ENS domain.
In many ways, blockchain domain names remind me a lot of Cashtags created by Cash App. Once they reached a level of public awareness, you began seeing people use Cashtags in all sorts of ways on the web, Twitter specifically. GoFundMes were replaced by Cashtags. Creators used them to allow their fans to easily show support for their content. Today, Cashtags are as universally understood as websites are. We think that blockchain domains are on the same path.
Every company, influencer or personality, non-profit, etc. should be looking into scooping up the Blockchain domain names they find relevant to their brand or useful to future marketing.
Relatively speaking, they’re cheap right now. For example, Budweiser bought beer.eth for 30 ETH (~$120k). Considering beer.com is currently on sale for $10 million, I’d say they got that for a steal.
Overall, we’re excited about what the next year of NFTs is going to bring. While there’s a lot of BS in this market right now, there are so many creative minds creating novel experiences through NFTs. Is there likely to be a moment of reckoning where the market corrects itself? Most definitely. However, only the valuable projects will survive the storm.
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