2021 was a memorable year for non-fungible tokens. Several
highlights were responsible for this, just as we witnessed their mass adoption around the globe.
The record-breaking auction sale of Beeple's Everydays: The First 5000 days collage for a staggering $69.3 million was one of the major highlights, playing a significant role in attracting keener interest to the NFT market. Unarguably, the event was a catalyst for the hysteria that followed.
Since then, the NFT mania has continued to soar, fuelled by a spate of adoption across different networks outside Ethereum.
2017 was the year of ICOs. While 2020 is considered the year
decentralized finance (DeFi) reigned supreme in the industry, NFTs succeeded it in 2021, adding to the craze for blockchain and crypto adoption. Thus, it is not difficult to see that we are constantly met with new trends each year, which combine various primitives to foster adoption. However, with 2022 already off to a blistering start for NFTs, what is their fate?
Will we see the emergence of a new trend that will unsettle the industry just like NFTs did? Or will the NFT mania blaze on unencumbered?
NFTs have stormed the crypto space with numerous use cases.
They were most popular for art in their early days due to their close
connection with traditional art. While most mainstream artists had a tough time accepting NFTs in light of the entry barriers, the absence of high-handed intermediaries (auction houses) has been a major attraction, significantly influencing their transition into the space. Among these artists was Mike Winklemann, "Beeple," who, according to him, owes his first primer to NFTs to the anonymous digital artist and programmer Pak.
Beeple had only earned $100 as the highest amount he ever sold
a print for. However, his breakthrough happened in October 2021 when he sold out his first series. In December, Beeple amassed $3.5 million on another series. In March, the $69.3 million auction sale somewhat culminated into the attention pouring from several ends, including the mainstream and the crypto communities.
Today, NFTs are more than just collectibles. Collectors are
now faced with several utilities promised by daily NFT releases. Their utility
as PFPs is one of the most common. Many people take pride in displaying them as profile pictures on social platforms, especially Twitter. Blue-chip collections like the Bored Ape Yacht Club (BAYC), Mutant Ape Yacht Club (MAYC), CryptoPunks and a host of others fall into this category.
Beyond this, these collections also provide membership
access and privileges to their owners. Owning a BAYC NFT is a status symbol, confirming the owner as an Ethereum whale given the cost of acquiring it (the collection recently flipped its previous floor price—
which stood at 85ETH to 100 ETH. Last year at the NFT: NYC conference, some attendees had free access to eponymous merch and other items, courtesy of owning a BAYC or MAYC.
Speaking of membership access, NFTs are now finding
relevance in the food industry, following the arrival of Gary Vee's new collection, the Flyfish Club NFTs.
Owners of the 1501 tokens will enjoy membership access to Flyship Club, which features a restaurant owned by VCR Group (Gary Vee is a core member). Despite that the NFTs only grant membership access to the restaurant and not to the dishes (members will pay separately for their meals), the NFTs sold out, generating a total of $14 million in a week. Gaining access to the world's first NFT restaurant is a flex in itself. Furthermore, the Flyfish NFTs have a resale value as they are traded on the popular marketplace, OpenSea.
Owners can also lease them out, creating more avenues for passive income, similar to the Airbnb model. The membership utility is one of the hundred use cases that NFTs currently hold and would present in the coming months.
The newfound utility of NFTs in the metaverse and gaming world generated much commotion in the latter part of 2021. Platforms like The Sandbox and Decentraland are leading adoption in this regard, enabling the acquisition of digital assets and accessories in virtual worlds, as people seek to express themselves as they would in reality. Still, is that all there is to NFTs?
NFTs are yet to exhaust their use cases. The idea of asset
ownership being preserved with the help of blockchain technology points to infinite possibilities. And this is what NFTs represent, such that beyond the worlds of art and avatars, they can accommodate utilities in industries such as supply chain, science, real estate and even entertainment. The footprints of NFTs in entertainment have already appeared with projects led by American rapper Nas and DJ and EDM producer 3LAU. 3LAU's 2022 album release sold out as an NFT for $11.6 million within 24 hours on Royal.io— a music NFT platform still owned by him.
Just like their colleagues in the art world, music NFTs
water down the middleman (record labels) barrier that has continually plagued musicians, allowing them to exercise agency rights over their work. As an added benefit, royalties on secondary sales also accrue directly without the involvement of the record labels.
The relevance of NFTs in metaverse and gaming worlds will
continue in 2022, championed by projects that seek to address concerns around interoperability. The possibility of deploying a gear or weapon in Fortnite into another game has been primed as a driver for adoption. But this functionality might take longer to arrive due to the walled ecosystem in which these games are hosted. Even in the so-called decentralized games, enabling interoperability is likely to disrupt a game's economy unless developers find a way around it. A weapon in the Fortnite game is unlikely to find relevance in Axie Infinity since their gameplay differs.
However, Adrian Krion suggested an apt model in his "Tech isn't the barrier to NFT-Game Interoperability" article. According to him, developers could
collaborate, deploying new properties and functions supported by the game they are being imported into while retaining the asset's value in the original game.
So, for instance, depending on the asset's rarity, one could convert a weapon in Fortnite into a breeding potion in Axie Infinity. He outlined other models game developers can adopt to imagineer NFT interoperability.
Like blockchain technology, NFTs have not stopped evolving.
Although animal-themed NFTs like the BAYC are fast losing their steam, they will usher in a new set of appealing and unique collections with vast utilities this year. The involvement of mainstream brands and big players like Visa, Microsoft, Google and Twitter is a pointer to the growth and adoption in the coming months. You might as well prepare for it!