NFT’s four major application markets: art, collectibles, meta universe, and games

Editor’s note:

Meta universe has exploded in the science and technology circles and the game circles. On March 10 this year, the market value of Roblox, a meta universe concept stock, exceeded US$40 billion on the first day of listing, and its market value soared 10 times within a year. Domestic Tencent and Netease have successively invested in Genvid and Imvu, the concept companies of the universe. What is the meta universe? Can it exist without Crypto? If not, what kind of chemical reaction can it have with NFT, Social Money, and DAO? This article is the third part of the translation, mainly explaining the four major application areas of NFT and related investment and financing situations.

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In the short term, many behaviors are likely to be driven mainly by speculation. However, the previous bubble has strengthened the mentality of Crypto users. Although there was a large-scale crash in 2018, most of the people who stayed have had a pretty good life. In this system, there is still a large amount of speculative capital.

According to the Nonfungible 2019 annual report, the scale of NFTs market transactions in 2020 will reach 250 million US dollars, but facts have proved that this is a low estimate. Therefore, we occasionally see some headlines, such as art sold for 750,000 US dollars or NFT cars sold for 113,000 US dollars, which inevitably attracted the attention of everyone around. Broadly speaking, so far, four categories of NFTs have begun to attract different audiences: art, collectibles, virtual worlds, and video games.

art

The art world is often very avant-garde and willing to try new technologies, so I am cautiously optimistic about some meaningful art experiments. What’s interesting is that “encrypted art” seems to be the first NFT asset class that truly achieves a perfect fit between the product and the market. Here, the technical conditions required to realize its core value proposition are mature. When artworks are transferred on the chain, due to the reduction in transaction frequency, scalability issues are relatively less important, and users can tolerate them, at least not causing much interference to the user’s use process. The encrypted art space has attracted creators with a large audience, such as Beeple, who sold 3.5 million US dollars of art in a single weekend. Since then, sales in the secondary market have almost doubled.

Collectibles market

Another NFT category that is about to bear fruit is the collectibles market. Brand IPs such as the NBA, Global Football League and UFC are selling their NFTs to fans. In a global fantasy football game (translator’s note: the game refers to Sorare), Mbappé (translator’s note: a famous football player of the Paris Saint-Germain Football Club) star card was recently sold at a high price of 66,000 US dollars , It is rumored that this game will complete this round of financing with a valuation of 300 million US dollars. In the NBA Top Shot game, Ja Morant’s dunk card for the Phoenix Suns was sold for $100,000. Both of these collectible games have seen significant growth in 2020, but NBA Top Shot has surpassed its total sales in 2020 in the first three weeks of January 2021. The sports collectibles market is another area that attracts a large number of viewers, and is likely to attract the most passionate group on the planet-sports fans.

virtual reality

The third category of NFTs is virtual worlds based on blockchains. After the initial boom is over, these virtual worlds can still sell plots for more than $50,000. Users can own a piece of land in it and build anything they like freely on it. Other virtual reality (VR) worlds that incorporate encryption elements, such as Somnium Space (a VR social application) and CryptoVoxels (a virtual world game based on Ethereum), have achieved a certain degree of interactive operation, and you can be in one of the worlds Enter another world. These places and platforms are like games, and seem to be resonating with global, asynchronous game players. Gangs, collectives, and even large companies have begun to develop virtual headquarters, where employees and fans can meet in this virtual world.

video games

Axie Infinity is a digital pet game inspired by Pokémon, allowing users to trade, breed, fight, and even develop virtual real estate. (Disclaimer: Delphi Digital Corporation built and invested in their tokens). Driven by a solid economic pillar and an enthusiastic user base, it seems to be entering a stage of parabolic growth. Axie may be our best example of a game, demonstrating the power of Cryptoeconomics-attracting users (user base increased by 11.6 times in 2020), increasing loyalty and providing the right incentive structure for promoting games.

Axie Infinity upholds the spirit of blockchain gaming. All data and game assets can be accessed by third parties so that others can build tools and experiences for the Axie universe. In addition, the team is also committed to making Axie Infinity the first game that is truly owned and operated by players. Therefore, the team’s goal is to slowly transform it into a decentralized autonomous organization (DAO). In order to achieve this goal, the game has (and will continue to) issue a thing called governance tokens to system players, which is roughly proportional to their participation. Tokens give holders the right to vote, and they can vote in the key decision of allocating community treasury funds (smart contracts stored on the chain). Looking further, imagine these ideas. Players can vote to decide on resource allocation, such as new maps, weapon adjustments, cross-game partnerships, and even eventually decide which development team to sign to develop the next version of this user-autonomous game.

Axie Infinity provides a “play to earn” (P2E) ecology that is clearly different from the existing games. The gold operation in the existing games may only be a fuzzy approximation of P2E. Of course, P2E is incompatible with these modes. Do not conflict. During the COVID-19 pandemic, this game exploded in the Philippines. In fact, playing this game allows many families to earn more than they earn from a real job. One of the attractive aspects of these technologies is to make us realize that the virtual game world has the ability to build an economic playing field (the economic playing field) on a global scale.

When more and more people discover these opportunities by chance, don’t underestimate how fast word-of-mouth will spread in the community. Over the years, we in the crypto industry have been used to the empty slogan of “providing banking services for the unbanked”. Even if crypto does this, what can we do? If the game that leads the virtual economy becomes a Trojan horse that uses blockchain and encryption technology to empower billions of people around the world, what will it be like?

“The anonymity provided by the virtual economy eliminates the traditional features that prevent disadvantaged groups from enjoying the opportunities brought about by industrial changes. The distinguishing feature of the virtual economy is that almost anyone, regardless of gender, race, religion, , Geographic location, heritage or social status, as long as they have the intelligence, courage and technology to identify the opportunities in them, they can achieve success.”–L’Atelier “The Virtual Economy” (The Virtual Economy)

A documentary film that tracks the early evolution of the virtual economy-“Play Money”, what impressed me is how sticky the game was after the farmers became players. (Translator’s Note: Gold Farmer refers to some players who earn game currency or game equipment in online games. They sell these virtual items to foreign players in exchange for real currency through the Internet. American players call them “Chinese Gold Farmer” “, meaning “Chinese gold farmer”) Of course, most people might think that Chinese gold farmers never want to touch this game after 10 hours of gold for Western game accounts every day. Interestingly, this is not the case. Once the gold is over, they will log in to their game account and continue to play gold coins. I often hear that once a game becomes “play for money”, the game loses its meaning, because the game is pure entertainment, but I haven’t seen an example that proves this point. I have personally learned that in MMORPGs (massively multiplayer online role-playing games), many players who participate in high-risk player battles use it as supplementary income. Excellent FPS players will often participate in money tournaments through third-party platforms. Although I have never experienced a life in which my personal income is completely dependent on games, I believe that money factors can actually enhance the fun of games. These situations seem to have appeared in the game ecosystem like Axie Infinity.

Investment agency

Finally, I think that if I don’t ask you to look at the investment institutions behind some of the early core projects, it would be my dereliction. For example, DapperLabs, the development team of the well-known “Cryptokitty” (a cloud-raising cat based on Ethereum), completed another round of $12 million in financing in 2020. Their total financing is currently 50.9 million U.S. dollars, behind which are traditional big-name venture capital firms such as USV, Samsung Ventures, a16z, Venrock and Warner Music Group. They are developing the Flow blockchain, which is based on their experience in developing the largest crypto game to date (ie, Cryptokitty) and the congestion problems encountered in Ethereum. In addition to the obvious fact that these projects have been fully capitalized, their supporters unite with each other to form a strong network of relationships. I have noticed some of them. They are already working with well-known brands such as Dr. Seuss, NBA, UFC and Ubisoft. It is also encouraging that high-profile sports celebrities such as Spencer Dinwiddie invested in Dapper and André Schürrle invested in Sorare-a A global fantasy football game driven by limited edition NFTs (such as the sold Mbappe card).

As mentioned above, it is not clear whether these blockchains (referring to Flow), which focus on subdividing the track, have a better opportunity to promote to the market than Ethereum, but for the entire virtual world ecosystem, real brands are introduced into this The new world is a victory.

In the medium term, we hope that these companies can achieve some influential results (I think Axie may be the first to do it) to prove the feasibility of these business models, and this will encourage large studios and various creatives to participate. Coming in this career. Currently, most consumers don’t think twice about their deep-rooted trading habits—people still don’t know or care about any alternatives. I think it really depends on the encryption industry to create a compelling experience, show all the new features we can use, and make a sharp contrast between the restrictive old model and the emerging open, new model that promotes cooperation. If we can do this, I believe that these technologies can be self-sustaining. The granularity of using tokens to motivate and reward certain fans’ behavior is unprecedented.

Projects like Socios are using football fan tokens. Although NFTs are not strictly used, fan tokens give users rights and make them feel like they are stakeholders of the brand. A typical recent example is that Juventus fans were able to vote for the goal song at Juventus at home. All these models are directly driven by improving the user experience of the brand’s own fans, while creating a digital, safe and transparent additional cash flow for the brand. Ultimately, these types of agreements can become a platform for brands to gather users together. For example, PokemonGo-style AR “hunting”, which uses game positioning data to motivate users to complete certain real-world tasks. Maybe when you line up for a new fashion show outside the store, you may receive an NFT based on location proof, which allows you to be eligible to purchase limited edition products.

The only limitation of the current application of these technologies is actually our imagination. As the world becomes more familiar with this new tool, I am very excited to see how they can enhance existing consumer behavior and lead us to a more interactive and engaging digital world.

Social token

An interesting area is the rise of social tokens. Social tokens and NFTs have many similarities, but they pay more attention to the coordination, interaction and maintenance of user groups. This kind of token gives people more interesting insights into speculative assets-the transaction object is the personal brand behind it, and in an unheard of way. In addition, these tokens can be used to reward fans for participating in the entire creator community, such as subscribing to newsletters, participating in product internal testing, or other types of projects that creators want to test.

Once the positive feedback of token-community matching is achieved, these tokens will become an important force that cannot be underestimated in the entire creator economy. They allow enthusiastic fans to bet on the future success potential of these creators at a very early stage, usually before the artist goes out of the circle, or when their social tokens are issued. Although these tokens have vague problem areas when it comes to securities laws, I believe that the structure of social tokens and the laws governing them will eventually be coordinated and agreed.

The digital future

From a longer-term perspective, it is obvious that the world is becoming more digital. The COVID-19 pandemic is a super catalyst for many potential trends. The feasibility of remote work has been widely proven-it has changed our perception and relationship with the “work environment”-which in turn allows people to spend more time in the digital world, and this has promoted a trend. Combining the huge investment in network infrastructure with the advanced satellite internet network being launched by Starlink, we can begin to imagine what the future will look like.

Do people end up living in densely populated cities, or do they live more dispersed (as technological infrastructure from drone delivery to advanced solar technology provides more options for the vast population)? I bet the latter. As people separate in a local sense and become more connected in a global sense, viable alternatives to the interaction patterns that have prevailed in the past will emerge. Dynamic technologies such as real-time audio translation, and the integration of virtual reality simulation technologies such as eye contact, body language, and shared spatial awareness will further break down the barriers of international business. Although many people are skeptical about the function of virtual reality as a substitute for physical interaction, I believe that the fruitful changes brought about by these technologies that I mentioned will shock these skeptics in particular.

I have never seen anyone who has experienced virtual reality and would be skeptical of this new technology. ——Tim Sweeney (Tim Sweeney)

Generally speaking, the era of AR (augmented reality) is approaching. Virtual devices may soon be all over our lives, helping us increase our perception of the natural world. With the continuous enhancement of technology, one day, each of us’s digital identity may even be more important than the physical body in the real world. People will continue to provide digital identities with various digital products. The D2C model (Direct to Consumer) is likely to be Turn to D2A mode (Direct to Avatar).

The infrastructure of such a beautiful new world is constantly being developed and improved, and one day everyone can choose to live, work and play in the “meta universe” entirely. In such a world, the importance of decentralized mechanisms for the circulation and management of scarce products will be self-evident.

Anything that is scarce will eventually be tokenized, because the benefits of digitization and increased liquidity are very large.”-Balaji Srinivasan

An interesting project I invested in is called Crucible, which is the pioneer of the D2A business model mentioned above. This company is developing a product called Emergence SDK, which provides entry points for game engine developers to connect to the new decentralized Web3.0 technology (NFTs+DAO+DeFi), and at the same time helps game developers to access a more A vast network and market (billions of dollars) of players with more “money way”. These users will get tools that can be used to maintain the identity of the meta universe, as well as tools to prove ownership of assets such as skins/digital collections and other in-game assets. This is the most solid foundation for realizing the “meta universe” economy centered on player supremacy.

Crucible also planned the blueprint of the cross-industry alliance Open Metaverse, which is committed to advocating the establishment of “metaverse” on the basis of open standards. Although it is still in the early stages of development, cleverly embedding these technologies into the game engine in advance can speed up the process, so that developers and players can participate in the experiment earlier, so that the popularization of the technology can be realized earlier.

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.