The $69.3 million paid for the NFT Everydays: The First 5,000 Days by the digital artist Beeple is the third highest amount ever paid for any type of art at auction. March of this year saw the hype surrounding NFT reach an absolute fever pitch and this sale was the pinnacle. What followed was a scramble involving seemingly every celebrity to have ever existed to get a piece of the NFT action. Grimes sold a series of gifs as NFTs for $6 million, Jake Paul minted NFTs of himself as a Pokemon character. There was a frenzy that surrounded every NFT minted that had any kind of notoriety.
The prices being paid for some have been well documented in the crypto world but it bears being reminded of the hysteria. The excitement surrounding NFTs continues with Tom Brady and WWE’s The Undertaker recently dipping their toes in the market. However, the mania of early March has somewhat died down.
This can only be good for the future of NFTs. The market seems to be reaching a sustainable level. Already we are seeing projects based around making NFTs more accessible for the general public. Projects like, Roseon Finance’s NFT Gallery which can integrate with a phones camera and instantly upload pictures to the blockchain as NFTs. People can now share memories with the special people in their lives with a picture that is completely unique to them.
More than that though, the respite from the mania around NFTs allows them a little more room to breathe. It allows NFTs to be looked at in a new way so that their potential can be properly realized.
More Than Just Collectibles
All the NFTs that were at the center of the hysteria had one thing in common. They were all released as pieces of art. They had no utilization other than as collectibles. NFTs are a perfect way to share digital art. Duplication is the biggest problem that digital artists have and NFTs fix that by creating a unique and traceable digital file.
However, digital art is just the first of many use cases for NFTs to be popularized. Now that the original hype has abated a bit, we are about to see just how revolutionary NFTs can be. NFTs have the ability to truly disrupt not just the crypto world but the worlds of finance and e-commerce.
A New Way to DeFi
The popularity of NFTs within the DeFi space has been growing recently. NFTs represent an incredibly useful way to store value on the blockchain. Now, new DeFi projects are giving NFT owners a chance to earn more crypto off the back of this crypto.
One such project is Drops. Drops allows users to stake their NFTs and to earn dPoints based on their value. It also provides the ability to use NFT assets for permission-less loans where the value of the NFT asset is determined by the associated ERC-20 tokens. Drops also gives instant access to NFT liquidity, making NFTs fungible by converting them into ERC-20 tokens that have liquidity pools.
The way Drops uses NFTs though, is still quite similar to real world art. Drops essentially allows users to collateralize an NFT like one would a valuable painting. Even in this context though, it is already clear that NFTs have the potential to be utilized in many more ways than they are now.
Charged Particles is a project that treats NFTs in a completely different way. With Charged Particles, users can deposit multiple ERC-20 tokens and even other NFTs into a single NFT. Input any interesting-bearing token and the NFT becomes what they call a “charged particle”. The interest accrued is what gives the particle its “charge”.
In this way, NFT technology is used to allow people to build what could be seen as individual indexes. A way to spread risk across multiple interest bearing tokens and trade them as a single entity. The world of DeFi is itself relatively new. But NFT technology will be an essential part of it as it grows.
A Step Further For DeFi
Gamification of the blockchain is something that is gaining more and more momentum. NFTs are a huge part of this process, of course. Storing characters or items from different games is only possible thanks to blockchain. However, it would be too easy to dismiss this gamification as just another way to turn NFTs into a novelty.
Games on the blockchain are just another way for people to engage in DeFi. Take a game like The Crypto Prophecies as an example. In this game, players challenge each other's price prediction abilities to win a pre-agreed amount of staked crypto assets. Each player is shown a series of trading candles and they must predict whether the candle will close up or down.
However, the players are represented in this challenge by NFT characters known as “Crypto Prophets”. The Crypto Prophets, depending on their value, have spells and abilities that give a player an advantage in the contest.
My DeFi Pet is another example of DeFi moving into a more colorful direction. In My DeFi Pet, players can win rewards based on a team of monsters that they breed and assemble.
The thing that both these games have in common is that the NFTs that correspond to characters in the game can earn a return directly proportional to the amount of time and value that is put into them. They are an investment. These games have a bright and cartoonish veneer but at their heart they are about allowing players to build a profitable NFT portfolio.
The Future of NFTs
A huge talking point about DeFi and crypto in general is how to get it to a point it can be adopted for the masses. How can institutions and retail investors be brought onto the blockchain in the same way they are in centralized finance?
NFTs have already been mass adopted. Any technology that is utilized by a group diverse enough to include Tom Brady, Grimes and The Undertaker has well and truly captured the general public's interest. The next step for NFTs is to show how many different ways they can be utilized, how many different problems they can solve. NFTs started as collectible novelties but already that is beginning to change.