There's More To NFTs Than Just Collectibles and NFTfi

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As an asset class, NFTs have risen sharply in both value and popularity over the course of 2021. The token protocol that was once seen as a novelty has distinguished itself as a legitimate form of art. Now, more ideas are coming to the NFT space and offering collectors new ways to use and enjoy their NFT holdings.

NFTs vs DeFi

NFTs are inherently unique. The protocol was designed to be this way, and the global NFT ecosystem wouldn't work without this level of novelty. However, because each NFT is 100% original, some of the best aspects of the decentralized economy are difficult to apply to NFTs.

If 2021 was the year of the NFT, 2020 was the year of DeFi. **
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As a financial space, DeFi has many advantages over NFTs (not that it is a competition). When an investor is in the DeFi space, activities like staking allow them to gain an income from their holdings, much like lending fiat currency at interest.

In the NFT ecosystem, this kind of passive income is much harder to realize. In addition, NFTs suffer from a lack of general market liquidity. There is a reason why some of the largest art sellers globally are auction houses – art – for all it does for us – has never been an especially liquid asset!**
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The overall effect of more people entering the NFT space is higher market liquidity. However, there are platforms that allow people to unlock liquidity in NFTs via staking, a way of gaining an income that has been very popular in the DeFi space.

Liquidity in a New Asset Class

Much like any collectible, art has never been an especially liquid asset. Regardless of whether we are talking about the Mona Lisa or Beanie Babies, collectibles rely on a group of collectors that are highly interested in a specific kind of asset to have both value and market liquidity.

Until 2021 hit – the NFT market was very similar to any other market for collectibles or art. NFTs were traded in smaller groups, and most people weren't watching the space. The liquidity on offer in the NFT market was low, especially when compared to an asset like Bitcoin or Ethereum.

Now that NFTs are being issued by major artists, entertainers, and major media personalities, we can say without a doubt that the market for NFTs has changed radically. People who were never interested in cryptos are learning how to buy and own NFTs, and mainstream media figures are issuing NFTs.

As more people enter the NFT space, the overall level of liquidity has risen. However, there are some interesting aspects that NFTs have which may be going overlooked. By allowing people to both lend and stake NFTs, higher market liquidity will result. This is a huge advantage, and NFTs may become an income-bearing asset.

NFTs Pack Hidden Advantages

NFTs are widely compared to art, and to be sure, they are used to hold works by artists. However, because they are based on a digital protocol, NFTs can do a lot more than a standard painting. For example, NFTs can be designed to create more NFTs, much in the same way that animals do. This advantage is used extensively in NFT-based games, like the wildly popular Axie Infinity.**
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Another platform that is counting on the ability to 'breed' some forms of NFTs is Roaring Leaders, which is offering NFTs that can be bred, and also give their owners an income in the form of staking rewards. The platform allows users to breed the NFTs it created, but it also lets its users lend their NFTs for other breeders to use, which allows more liquidity to enter the overall ecosystem. The deflationary ecosystem even has a Tinder-like platform that helps NFT holders pair their NFTs in case they don’t have two of their own or want to sample more variety.**
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Community platforms like Gamerse could give NFT holders a place to look for potential NFT mating partners. Gamerse is a sort of all-in-one hub for NFTs in gaming. Although the Roaring Leaders project, in particular, is not a gaming project, it is offering a __regular poker match__with cash prize pools and live DJs. **
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While there are loads of new NFTs hitting the market, some of these are bound to become collectible in the way that the Bored Ape Yacht Club is. Imagine if you could breed other forms of artwork – like a few Picasso paintings giving birth to a new series of artwork.**
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The Synergies Might be Undervalued

Like physical artwork, many NFTs offer a unique viewing experience that has the potential to become a global phenomenon. Unlike physical artwork, NFTs can be seen by anyone that has access to the internet, and a means to view the tokens – this is very different from the kind of art you would find in a museum, which requires physical attendance.

With Facebook shifting to a highly opportunistic stance with Meta, it isn't difficult to see the writing on the wall. Massive online meeting places are coming, and Virtual Reality is going to be a part of the incoming Metaverse.

Of course, the wearable side of the Metaverse is a big factor, and companies like AEXLAB are working on the software solutions to the hardware. When people feel like they are a part of the Metaverse, it is very likely they will be willing to spend more money on their virtual life. Creating advanced wearable tech will be the next step for the new generation of Metaverse developments.

The Growing World of NFTs

For NFTs, a fully immersive online space creates the real possibility of a new way to both exhibit NFTs, and create income from them.

Leasing NFTs to an online museum has been pitched by a number of NFT platforms, and if the current crop of NFTs become popular with collectors, there will be no shortage of art for the Metaverse.

Like any new technology, there is still a lot of work to do. For the moment, we can safely say that 2021 put NFTs on the map, and they are unlikely to slip from the public mind anytime soon.