August 14, 2023 - 9 min read
While some of your NFTs have certainly become digital Beanie Babies, the value of non-fungibility in cyberspace remains largely untapped thus far.
“Far better it is to dare mighty things, to win glorious triumphs, even though checkered by failure, than to take rank with those poor spirits who neither enjoy much nor suffer much, because they live in the gray twilight that knows not victory nor defeat.” This quote from former US president and famed orator Teddy Roosevelt sums up the spirit of developing technology at the cutting edge rather well.
Consider the above along with Joseph Schumpeter’s concept of creative destruction and you understand the spirit of Web3 – dynamism. Interestingly, researchers at MIT suggest that the process of creative destruction accounts for over 50% of economic productivity growth. Adaptability is the name of the game in order to survive an ever-changing technological and regulatory landscape; it is not for the faint of heart.
For users of emerging technology, we collectively go through successive strings of failed attempts by daring and well-capitalized entrepreneurs, imaginative researchers, and innovative builders. The thrill of adventure, the wild wild west nature of building DeFi is part of what characterizes this space; many of us were born in it, molded by it. The volatility of digital assets is well known even to those who’ve never considered taking part in all of this.
The same sentiment rang true in the early days of the Internet, and it holds true to this day as well. Instead of retiring in shame, individuals with far-reaching influence have retained their influential positions as professors, journalists and “experts.” This, despite being wrong time and again about technology’s economic impacts, setting aside additional, unrelated instances in which expert or “official” opinions have been found wanting. Yet, I digress.
That being said, questions about NFTs being dead reveals something telling about the status quo: most people still don’t understand the underlying value of non-fungibility in the digital space. Perhaps people got too caught up with acronyms and cute profile pictures selling for millions of dollars worth of ETH.
Perhaps we should celebrate the utility of NFTs, and less on the wild price points that wealthy speculators bid them up to when markets are elated. Yet, the initial hype and price discovery of NFTs remains an integral part of the background story, so we’ll reminisce a moment before we get into the current state of affairs regarding the utility and inherent value of NFTs before getting into the current state of affairs.
In the latter stages of the 2021 bull run, the NFT market experienced a surge of TVL as well as some truly breathtaking sales, inspiring the imaginations of investors across the world. Of course, celebrities, high-profile athletes, and social media influencers played a role in pumping NFTs as they were keen to co-market their own brand with that of the crypto craze. Everyone was the next NFT messiah, spreading the gospel of digital asset ownership with their followers – with many choosing to launch their own projects to varying degrees of success.
For a time NFTs seemed to be an unstoppable force, and even non-crypto native folks seemed to be following the latest NFT drops, like NBA Top Shot for example. Play-to-earn games sprung up with NFT minting embedded into the incentive structure of the games, exemplified by the likes of Axie Infinity. The game had absolutely caught fire there for a while.
Nevertheless, a major slowdown in trading volume coincided with the market cap of the entire crypto market over the recent past. This has caused many to raise questions about whether NFTs are the real deal, or if NFTs are actually dead. To make a long story short, the former is almost certainly the case.
Despite a spike in NFT trading volume in the first half of 2023, it dwarfs in comparison to 2022’s record-breaking $5.5 billion worth of NFTs being traded across major markets. That is to say that the recent resurgence in trading volume is no longer in a bubble, but the market is certainly not dormant, nor are NFTs dead.
If any doubts remain, let’s check in on a few NFT initiatives that are alive and well, being run by international conglomerates and enterprise brands to this very day. Are they chasing a bubble, or do they understand something that most don’t? Let’s find out.
While this section will highlight a few notable examples of NFT initiatives, let it be known from the start that the list is not to be considered exhaustive. There are way too many to list, or else we may need to cover it in more detail in another full article.
That being said, readers may have heard of brands called Adidas and Nike, both of which are still moving forward with their NFT plans. Adidas is rolling out their 3rd ‘Into the Metaverse’ rendition, offering participants the chance to acquire dynamic NFT avatars which evolve over time, and provide special utility to a variety of interactive and unique experiences.
As for Nike, they are focusing on sneaker aficionados with a collection on their iconic Air Force 1. After going through a quick KYC to join the .SWOOSH community, participants can purchase sealed boxes from the Our Force 1 collection on Polygon. Playing on nostalgia resulting from the long-running sneaker series, the community voted on their favorite Air Force 1 sneakers in order to prepare the limited, numbered NFT editions.
The winners were honored with four virtual OF1 Posters representing the different categories on which they voted. Anyone with a .SWOOSH ID by 3:00pm EST on 4/12/2023 was eligible for a chance to receive one of four OF1 Posters. According to Nike, members of a “social impact and diversity, equity, and inclusion communities” were given priority. In addition, in-person attendees at two related events had better chances of receiving an airdropped OF1 Poster NFT.
By simply owning a .SWOOSH ID, participants can buy up to four OF1 Box NFTs during the “General Access” sale. Once the First Access and General Access sales end, you’ll have the choice to open your box or to keep it closed. We can feel the FOMO from all the way over here.
What’s more, famed video game developer EA Sports and Nike announced a partnership in which NFT creations from the .SWOOSH platform will be integrated into the developer’s future sports titles. EA is perhaps best known for its FIFA games, with the franchise selling nearly 350 million copies since first coming to market in 1993.
In a similar vein, the football organization FIFA also debuted their own AI-powered game with plans to integrate NFTs soon. In FIFA’s game, developed by firm Altered State Machine, the characters are bright and cartoonish, reminiscent of a Pixar film.
Additionally, their outcomes are determined probabilistically by AI, with human participants acting more akin to coaches or strategists. In the near future, the same game developer intends to release an NFT marketplace so that characters generated in gameplay can be minted and recorded on-chain, although which chain has yet to be announced in this case.
Not to be outdone, Starbucks, besides selling millions of coffees and treats across the world each day, is also known to be dabbling in the NFT space in what has been called Starbucks Odyssey. The company started rolling out limited-edition NFTs to members of the invitation-only loyalty program for the first half of 2023, in fact.
The first, awkward launch of 2,000 NFTs took place in March. In April, the coffee chain dropped another 5,000-edition NFT collection this time around. Announced next is a collection in collaboration with former pro-baseballer turned NFT artist Micah Johnson, inspired by his Aku NFTs. The initiative will also include a $100,000 donation to Blessings in a Backpack, a non-profit focused on reducing children’s food insecurity.
French fashion brand Lacoste is also offering an exclusive, token-gated NFT experience for holders of the Lacoste UNDW3 Card. Holding one of these NFTs in a wallet grants access to a unique digital experience in which users solve quests, engage with the brand, and unlock exclusive benefits. Raffles are held each week, with winners taking home prizes, including physical merch.
On the other hand, not everyone is convinced by NFTs and the push for their inclusion in blockchain gaming experiences. Many have criticized early GameFi offerings for focusing too heavily on the financial aspects of the game and ignoring the most fundamental element of games, the fun.
In fact, Tokyo-based gaming veteran Sega announced a strategic pullback from the play-to-earn gaming market, with their COO going so far as to call the current market “boring” and asking rhetorically, “What’s the point if games are no fun?” We suppose it’s safe to say that we shouldn’t expect a play-to-earn Sonic the Hedgehog game any time soon, sadly.
Not everyone accepts defeat so easily, though. Perhaps game studios like Epic will be the first of many to garner some momentum in the AAA-quality GameFi space with their upcoming title called Metalcore. Immutable X’s Illuvium also looks promising, as does Star Atlas, though the latter has suffered from chronic delays and community controversy.
While the NFT market has undoubtedly experienced a major correction from the bubble of 2022, there is every reason to expect a new round of utility and price discovery for NFTs as innovation in the space accelerates. As we drift further away chronologically from the initial speculative hype, the future of NFTs looks really exciting as their true utility emerges.
Enterprise brands launching NFT initiatives suggests a growing acceptance and recognition of NFTs as a lucrative and effective marketing tool, yet so much more. Capital from big players will continue advancing the development of NFT offerings by leveraging their inherent properties and ability to think outside the box, boosting community engagement by combining AI, token utility, returning value to ordinary users and stakeholders, and user-generated content, among other things.
Based on the sheer number of major brands still pursuing NFT initiatives, we’re certain that NFTs will continue gaining traction in market niches where it makes most sense. Pretty soon we’ll be using NFTs without knowing we’re using NFTs, and that’s when the real fun begins.
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