As of February 25, 2021, the price of Bitcoin has risen by 476% in the past year. After nearly 10 years, the cryptocurrency has gained the favor of more financial institutions and top technology companies. For example, the well-known American listed company Tesla used about 10% of Tesla’s cash reserves to invest USD 1.5 billion in Bitcoin in January 2021, and Dan Bin, the founder of the well-known Chinese private equity fund manager, Oriental Harbor Investment Management Company, is also in 2021. On February 18, 1% of the total share of the Bitcoin ETF (ETF-Purpose Bitcoin ETF) listed in North America was purchased for the first time.
As the “story” of cryptocurrency is gradually accepted by the world’s top investors, the underlying technology blockchain and its application ecology are once again sought after by venture capital institutions and hedge funds that represent “smart money”. Sequoia China announced on January 12, 2021 that it has officially become a strategic partner of the fund Dragonfly, dedicated to exploring opportunities in the blockchain ecosystem.
Unlike the cryptocurrency bubble brought about by Ethereum crowdfunding in 2017, the blockchain infrastructure in 2021 has undergone major upgrades, and Ethereum-based decentralized financial applications (DeFi) have been proven to be sustainable Profitable business model. As of February 2021, mainstream DeFi protocol revenue is about 117 million U.S. dollars. In addition to investing in Bitcoin, overseas institutions have begun to “quietly” explore new business models based on blockchain.
Ethereum NFT token and digital collection business
Purchasing collectibles is a manifestation of personal hobbies and self-identity. Before 2015, hedge fund manager and pharmaceutical company founder Martin Shkreli bought the sky-high hip-hop music album “Once Upon A Time In Shaolin” for US$2 million on the online auction platform Paddle8. This magnified his personal influence and became a hot topic among American millennial netizens at that time.
NFT (Non-fungible Token) non-homogeneous tokens, different from the design of Bitcoin, the important characteristics of NFT tokens are uniqueness and the smallest unit is 1 and cannot be split. They are often used in games in blockchain game applications. Proprietary confirmation and pricing transactions.
In recent years, with the favor of digital artists and card game players, the blockchain-based digital collection field has gradually attracted attention. In February 2021, the well-known auction house Christie’s announced that it will cooperate with MakersPlace to auction the works of digital artist Beeple, 2021 On February 12, 2010, the well-known hedge fund Coatue Management (which invested in Didi Taxi, Hicha, Manner Coffee, Luckin, etc.) led the financing of USD 250 million for the NFT blockchain game development team Dapper Labs, with a valuation of USD 2 billion The scale shocked the blockchain industry.
Compared with the nearly one million dollar financing scale of the blockchain DeFi application, the financing amount of the NFT blockchain ecology of tens of millions of dollars is obviously more favored by capital. According to data from DappRadar, the transaction volume of the NFT market will be on February 22, 2021. The single-day trading volume reached 64 million U.S. dollars, compared with only 37,000 U.S. dollars a year ago, and the market size has increased by more than 1,000 times annually.
According to DappRadar data, the top three NFT products currently auctioned by transaction volume are the NBA Top shot game based on the Flow blockchain, the Crypto Punks collectible based on the Ethereum blockchain, and the NFT exchange OpenSea. As of February 25, 2021, the daily transaction volume of NBA Top shot was 10.64 million U.S. dollars, with 84,000 users, ranking first in the NFT field.
At present, the NFT field is divided into an infrastructure layer and an application layer. The active infrastructure layer (public chain) includes Ethereum, WAX, and the new blockchain application dedicated chain Flow. The Ethereum-based NFT product ecosystem is mainly based on digital collectibles trading platforms. The platforms OpenSea and Rarible live at the thousands level on Sundays, with weekly trading volumes reaching millions of dollars. Suffering from the expansion of Ethereum, more DApp game developers began to try “NFT exclusive chains” after 18 years, such as WAX and the recently launched Flow public chain. At present, we look at the largest NFT basic public chain in the market. And the user ecology is the Flow public chain and its card game NBA Top shot. The weekly transaction volume on the Wax chain is close to one million U.S. dollars, and there are more than 100,000 users on Sunday. Currently, there is only one NBA Top shot based on Flow, with 84,000 weekly active users. The exclusive NFT chain of “non-Ethereum” is gaining more users’ funds.
Institutional capital layout NFT
Millennials and Generation Z in the United States grew up in the Internet environment and have a relatively high acceptance of blockchain games. With Coinbase, Robinhood and CashApp, these Internet products commonly used by young Americans, they can easily buy Trading digital currencies and digital assets based on blockchain.
Blockchain art collection and card trading games are gradually entering the field of vision of Internet users in North America, and many world-renowned artists are also beginning to try to embrace the digital wave of art collection, such as Christie’s, which will end on March 11, 2021. ) In a digital art auction based entirely on NFT, the artist Beeple’s works had a maximum bid of US$1.8 million.
Since January 2021, after the well-known listed company Tesla purchased 1.5 billion bitcoins, more Internet venture capitalists and hedge funds representing “smart money” have also begun to focus on the native application of blockchain. Well-known Internet investment institutions and hedge funds such as Coatue Management and Benchmark have invested in the well-known development team Dapper Labs (the development team of Flow Blockchain and NBA Top shot) and Sorare in the field of blockchain NFT. These two investments are in sports cards. Brands (NBA and football cards) are well-known in the field, and their financing amounts are 250 million and 50 million US dollars respectively. In particular, the total value of Dapper Labs is about 2 billion US dollars, which represents the market’s confidence in this vertical field. NFT art trading platforms Rarible and Async Art also received millions of dollars in financing in the same month, and well-known funds focusing on blockchain applications have participated in the investment.
Professional investment institutions are usually sensitive to the cycle of the industry. With the obvious institutional characteristics of digital currency and blockchain ecology, NFT investment in the first quarter of 2021 has become the main theme of the market, and perhaps the market will be a hot spot in the next year. Will welcome the change.
Fred Ehrsam, the co-founder of Paradigm and Coinbase, a top venture capital firm, published a post on Twitter on January 25, 2021, summarizing the cryptocurrency frontier. From 2009 to 2017, it belongs to the Store of Value, 2018 From 2020 to 2020, it belongs to Decentralized Finance (DeFi), and 2021 may be a non-fungible token (NFT).
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.