Are NFTs Dead or Alive?

The NFT space seems eerily quiet. We investigate whether anything of substance is happening behind the scenes.

Author

Nilotpal Mukherjee
November 21, 2023

Are NFTs Really Dead? 😵

Source: BoredApes

Mainstream media is shouting this out loud 🔈️ 

Mainstream media has always been quick to proclaim the demise of what was once the hottest trend, especially in Web3/crypto. This time, it's the NFTs under scrutiny, with pundits declaring "NFTs are dead."

Simply take a look at some of these recent article headlines from mainstream publications, you’ll know what we mean -

👉️ “Your NFTs Are Actually — Finally — Totally Worthless” - The Rolling Stone publication, 20Sep23

👉️ “ Are NFTs really dead and buried? All signs point to ‘yes’” - The Conversation,1Oct23

👉️ “It’s finally official: NFTs are dead and buried” - Dazed Digital, 21Sep23

What we think - “NFTs are dead” is the new “Bitcoin is dead” 🤷 

We think these headlines are an echo of the familiar "Bitcoin is dead" refrain that has been heard throughout the cryptocurrency journey. You might find this Bitcoin “obituary” website interesting - it has collected over 450 headlines proclaiming BTC “dead” over the past 13 years -https://99bitcoins.com/bitcoin-obituaries/ - and we all know how that has turned out.

Yes, it's undeniable that NFT volumes, valuations, and Google searches have significantly waned since their peak in 2021. The frenzy and media spotlight have dimmed. Yet, there's a clandestine buzz, a simmering innovation behind the scenes - that challenges this declaration.

Total NFT Trading Volumes Across Chains. Source: CryptoSlam

As Dan Gardner, co-founder of the Stagwell agency Code and Theory, aptly puts it, "Worthless art and fake utility is dead for NFTs." (1)

Brands that rushed to capitalize on the NFT craze have indeed cooled their enthusiasm, abandoning some of their Web3 projects. But this doesn't spell the end of the road for smart contracts and NFTs.

What's emerging is a shift in focus. Companies are redirecting their efforts towards the long-term potential and practical applications of blockchain technology and NFTs. It's a narrative that transcends the superficial and delves into the enduring utility of this groundbreaking technology. In this article, we'll uncover what's happening behind the scenes and explore the evolving role of NFTs in the realm of digital assets.

What the experts say… 💬

Insights from Twitter Space on “NFTs - Gate, Utility or Collectible?“ hosted by Symbiote 

We recently hosted Calvin (@clu.crypto) from Puzzle Ventures and chatted about what’s been going on in the NFT world, and what Puzzle Ventures is upto. Here are some of the highlights from the Space 👇️

  • 🌐 Diverse NFT Use Cases: Explored NFT applications beyond collectibles, emphasizing potential in music, real estate, education, and in-game assets.

  • 🧩 Puzzle Ventures' Perspective: Puzzle Ventures focuses on building tools for NFT traders and enhancing infrastructure, showcasing commitment to supporting crypto natives.

  • 🚀 Challenges in Brand Integration: Brands entering the crypto space face challenges in product-market fit and need knowledgeable individuals behind projects.

  • 🔍 Advice for New NFT Traders: Encouraged newcomers to spend time on crypto Twitter, observe the community, and consider personal branding for online identity.

  • 🏢 Role of Leading Brands: Highlighted the responsibility of leading brands in advancing NFT adoption, emphasizing genuine understanding and commitment.

  • 🎨 Favorite NFT Collections: Speakers recognized various NFT collections, showing appreciation for projects like CryptoPunks, YC, Zuki, Doodles, and others.

  • 💼 PFP Evolution and Investment Thesis: Explored the evolution from PFPs to unlocking asset value through lending and fractionalization, examining new ways to interact with NFTs.

  • 💻 Digital Ownership and Copy-Paste Culture: Emphasized the importance of digital ownership and IP protection, acknowledging copy-paste culture in NFTs and the need for strong IP protection.

What trends are shaping the future of NFTs? 📈

NFTs are far from dead. In fact the ecosystem is very much alive - and growing. Here are some of the trends from recent times that are shaping the NFT world going into 2024 and beyond.

  1. Adoption in Gaming & Gambling 🎮

  2. Fractional NFTs are catching on 🏠

  3. Big brands are consistently launching NFTs 👟

  4. NFT Marketplaces are Focusing on the User Experience ✨

  5. It’s a great time to be an NFT creator 💻

  6. New tech is improving NFT rails and enabling new utilities ☑️

Let’s dive into each of these…

#1 - Gaming & Gambling - the big adopters 🎮

NFTs and Gaming:

Axie Infinity was the first NFT-integrated p2e game to go mainstream | Source: Axie Infinity

  • The gaming world is on the cusp of an NFT boom, with major tech companies eyeing this sector.

  • P2E (play to earn) games like Axie Infinity are pioneering the integration of NFTs into gaming, signaling a transformative shift in the gaming industry.

  • “In-game NFTs forecast to grow into $15B market by 2027” - S&P Global Market Intelligence2 

🎙️ "In gaming, NFTs have parallels with the trading of in-game assets, like Counter-Strike skins or items in World of Warcraft." - Calvin, Puzzle Ventures in the recent Space

NFTs in Gambling:

ZedRu, the digital horse racing game

  • In the highly competitive gambling industry, NFTs are being used to attract and retain users in novel ways.

  • NFTs serve as betting options for events, casino prizes, and even specialized games like Zed Run, where users create, improve, and race NFT horses for rewards.

#2 - Fractional NFTs are catching on 🏠

Depiction of fractional NFTs | Source: Christian Edwards 5

Fractional NFTs are a way to split valuable digital assets into affordable shares, enabling multiple co-owners. They have several compelling use cases:

  • Real Estate Investment: In the metaverse, fractional NFTs allow many to collectively invest in virtual real estate, reducing individual financial burden and promoting collaborative management.

  • Collectibles and Memorabilia: Limited edition collectibles can be divided, expanding supply and building stronger connections between collectors and creators.

  • Music and Entertainment: Musicians and content creators use fractionalization to fund projects, deepen fan engagement, and align fan support with creator monetization.

These fractional NFTs offer benefits like increased liquidity, enhanced governance, secondary market growth, financial innovation, and reduced ownership costs. 

🎙️ "In the realm of NFTs, tokenizing real-world assets, including commodities and real estate, has gained traction." - Calvin, Puzzle Ventures in the recent Space

Recent Example of a fractionalized real estate sale using NFTs-

Atlanta home that was fractionalized and sold in under 3 mins | Source: Blockworks

In a pioneering move, an Atlanta home was tokenized as an NFT and sold for $214,882 within three minutes.

This happened through a collaboration between Roofstock and RealT, enabling fractional real estate investments using blockchain technology.3  

In total, there were 722 orders placed with 670 unique token holders by the end of the sale. The transaction would take two minutes and 46 seconds, and the average purchase would be worth approximately $298 in ETH.

This innovative approach empowers individuals to own and trade fractions of real estate properties as NFTs on various marketplaces, lowering the capital barrier to real estate investment.

#3 - Big Brands Adopting NFTs 👟 

NFTs have become a popular way for brands to engage with their fans, create new revenue streams, and showcase their creativity. Here are some examples of big brands that adopted NFTs over the last couple of years.

Adidas: The sportswear giant partnered with Coinbase to launch its own NFT collection called “Adidas Originals”. The collection features 30,000 NFTs that represent iconic Adidas products, such as sneakers, tracksuits, and accessories. Each NFT grants the owner access to exclusive perks, such as discounts, early access, and VIP events. 6

Adidas Originals | Source: Coinbase

Louis Vuitton: The luxury fashion brand created a virtual museum called “LVxNFT” in the metaverse platform Decentraland. The museum showcases the brand’s history, heritage, and innovation through NFT artworks, videos, and interactive experiences. Visitors can also purchase NFTs from the museum’s gift shop or bid on rare NFTs from Louis Vuitton’s collaborations with artists and celebrities. 6

Coca-Cola: The beverage company celebrated its 100th anniversary by releasing a series of NFTs inspired by its iconic bottle design. The NFTs were created by digital artists and featured animations, sound effects, and augmented reality elements. The NFTs were sold on the OpenSea marketplace, and the proceeds were donated to the Special Olympics. 6

Source: Coca Cola

Dolce & Gabbana: The Italian fashion house launched its first NFT collection called “Collezione Genesi” (Genesis Collection) in collaboration with UNXD, a luxury digital marketplace. The collection consists of nine NFTs that represent Dolce & Gabbana’s haute couture creations, such as dresses, suits, and jewelry. Each NFT is linked to a physical item that can be worn by the owner. 6

McDonald’s: The fast-food chain celebrated its 70th anniversary by releasing a limited edition of 70 NFTs that depict its iconic menu items, such as Big Mac, fries, and nuggets. The NFTs were minted on the Ethereum blockchain and distributed to randomly selected customers who ordered via the McDonald’s app. The NFTs also came with coupons for free meals at McDonald’s. 6

Here’s how NFTs from big brands have performed (as of September 2023)-

Performance analysis of large brand' NFT projects on Ethereum Blockchain | Source - Dune Analytics (Dashboard by @kingjames23) 4

🎙️ "Brands entering the crypto space face challenges in product-market fit, demographic alignment, and expertise in blockchain integration." - Speaker from recent Space

#4 - NFT Marketplaces are Focusing on Improving the User Experience ✨

User friendly marketplaces reduce friction for the average NFT buyer/seller - this plays a huge role in boosting volumes.

OpenSea UX Focused Updates 10

OpenSea, the leading NFT marketplace, has rolled out consistent updates focused on improving the user experience.

  • Jan2023 - Updates included improved speed for collectors, support for on-chain creator earnings, new category pages, multi-chain compatibility, and various additional features to enhance the user experience.

  • Feb2023 - Their Private Beta Testing Program was aimed at actively shaping the user experience by providing early access to new features, encouraging feedback, and enhancing the overall user journey.

  • Apr2023 - OpenSea Pro, formerly Gem v2, enhanced the user experience for power NFT collectors with advanced features, real-time data, sophisticated tools, and optimized gas fees, catering to distinct user segments and offering special NFT rewards.

OpenSea Pro has enhanced the user experience for power NFT collectors | Source: OpenSea

Rarible introduced Rarible 2.0 with many UX Updates 9

  • Aggregated NFT Marketplace: Rarible now combines NFT listings from various sources, making it easy to find Ethereum NFTs at the best prices.

  • $RARI Rewards Program: Users can earn $RARI tokens by buying and selling NFTs from specific collections.

  • Lock $RARI for Benefits: Locking 100+ $RARI tokens grants benefits like 0% seller fees, governance rights, and more.

  • Cart Functionality: Users can create shopping carts to buy multiple NFTs in one transaction, saving on gas fees.

  • Enhanced Market Monitoring: The homepage offers stats on trending collections, filters, and price range settings for shopping.

“Shortlist the NFTs you want via bag. Multi-buy them in one transaction.” | Source- Rarible blog11

#5 - It’s a great time to be an NFT creator💻

No-code / Low-code Tools for Creators ✨

No-code or low-code NFT creation is a trend that allows anyone to create and mint their own non-fungible tokens (NFTs) without needing to write any code.

OpenSea Studio (introduced 3rd Oct 2023)

OpenSea has introduced OpenSea Studio, a no-code hub for NFT creators, aiming to simplify the NFT creation process and enhance the storytelling aspect8. This platform offers creators the ability to:

  • Create and Manage NFT Drops: OpenSea Studio allows creators to manage their NFT drops end-to-end, from setting up allowlist phases to uploading media and metadata. This simplifies the launch process.

  • Mint NFTs with No Coding: Creators can mint NFTs into their own wallets without requiring coding or technical skills. This reduces the technical barriers to entry.

  • Multi-Blockchain Compatibility: OpenSea Studio supports various blockchains compatible with OpenSea, offering flexibility for creators to choose their preferred blockchain.

  • Credit/Debit Card Payments: It enables buyers to mint NFTs from a collection using credit or debit cards, making the buying process more accessible.

Future features of OpenSea Studio will include storytelling features for richer collection pages and a new product called "Editions" for quick and easy NFT uploads. Additionally, OpenSea is phasing out lazy minting, encouraging creators to deploy and mint NFTs from their independent contracts.

To sum up, OpenSea Studio streamlines NFT creation and management for creators, making it more accessible and user-friendly, with additional features like storytelling and Editions coming soon.

Some other useful tools for no/low code NFT creation7

Mediamodifier: A free online tool that lets you design and mint your own NFTs using a drag-and-drop interface.

  • You can choose from various templates, shapes, icons, fonts, and colors to create your NFT artwork.

  • You can also upload your own images or videos. Mediamodifier automatically publishes your NFT to the OpenSea platform, where you can showcase and sell your design.

Bubble: A visual web builder that allows you to create your own NFT marketplace like Opensea, Rarible, or LooksRare without code.

  • You can use Bubble’s visual design tool to shape the user interface of your platform, and configure your database to store the necessary data for your NFTs.

  • You can also use Bubble’s plugins and APIs to connect your platform to various blockchain platforms and wallets.

freeCodeCamp: A nonprofit organization that offers a tutorial on how to make an NFT in 14 lines of code.

  • The tutorial teaches you how to write a smart contract in Solidity, the programming language for Ethereum.

  • You will also learn how to use tools like Remix, Metamask, and Pinata to deploy and test your NFT on the Ethereum network.

Collections Powered by AI 🤖

Source: buenos.dias (https://staticpages.bueno.art/blog/nft-trends-and-predictions-for-2023)

AI is reducing the friction or aspiring NFT creators 

“While there will be plenty of friction against AI and art in general, there's a growing movement of artists incorporating artificial intelligence in some capacity into their collections.” - Jay G. Perlman, buenos.dias blog

The integration of AI into NFT collections is on the rise. Artists are exploring AI to create unique and innovative digital artworks.

Dedicated platforms for 100% AI-generated NFTs are emerging, showcasing the fusion of technology and artistry.

#6 - New tech is improving NFT rails and enabling new utilities ☑️ 

Layer2 NFT Solutions:

  • NFTs' surging popularity has strained the Ethereum network, leading to higher costs and slower transactions.

  • Layer2 solutions, including Optimism, Arbitrum, and ImmutableX, are addressing these challenges by enhancing blockchain scalability.

New NFT Standards and Protocols:

  • The NFT landscape has evolved with the introduction of standards like ERC-721A, designed to enhance efficiency and cost-effectiveness in creating and managing NFTs.

  • ERC-1155 has paved the way for NFTs representing multiple items, opening the door to collections of digital trading cards and more.

Soulbound tokens:

  • Soulbound tokens (SBTs) are a new type of NFT that is non-transferable.

  • SBTs can be used to represent a wide range of things, such as membership in a community, attendance at an event, or completion of a task. SBTs have the potential to revolutionize the way we interact with each other online and in the real world.

  • One example of an SBT platform is Proof of Humanity. Proof of Humanity uses SBTs to verify that humans are unique and can only be represented by one identity.

NFTs have transcended their initial hype and are poised to revolutionize industries, redefine art, and reshape the digital realm in 2024 and beyond. 🚀✨

The journey is far from over, and the possibilities are limitless as NFTs continue to evolve.

References

1) Are NFTs dead? How media agencies are framing the future of this blockchain tech, Digiday

2) In-game NFTs forecast to grow into $15B market by 2027, S&P Global Market Intelligence

3) The Future of Real Estate with NFT Transactions, NFT News Today

4) NFT Brands Case Study Overview

5) Fractional NFT Development — A Journey into the World of Fractionalized NFTs, Christian Edward

6) NFTs and Big Brands

7) No-code/low-code NFT tools

8) Introducing OpenSea Studio: OpenSea’s new no-code hub for minting and storytelling

9) 5 New Rarible Features That Will Make Your NFT Life Easier

10) OpenSea Product Updates Blog