The speculative wave of NFTs has surely reached its peak. We’re ready for the underlying tech to unlock a new wave of innovation. This will be based on mainstream brand adoption and new types of customer connections.
This time last year, a buyer could have landed a Bored Ape Yacht Club for around $300. Today, even the cheapest primates will cost a minimum of $90,000. Conversely, projects like Cool Cats have seen their value cut in half over the past couple of months – from an all-time high of 16 ETH to below 5 ETH.
The top NFT collections are brands. Make no mistake, membership of BAYC or WoW says something about you and means something to you. Using your NFT as your profile picture or as your vehicle license plate is a very public form of brand association.
In the next wave – NFT 2.0 – we will see exciting innovation from the top NFT collections. They will extend into metaverse, gaming and real-life partnerships with mainstream brands.
But more interestingly perhaps, we will see mainstream brands enter the fray with purpose. This will move us beyond the underwhelming promise of “utility” to a new level of sophistication in NFT technology adoption. At its core is bringing people closer to the brands they love.
The hunt for utility
To date, utility has tended to include anything from merchandise and the promise of future airdrops. Or access to a forthcoming game in which the NFTs can be used to earn income.
Whatever the case, utility more often than not tends to be conflated with empty promises that will likely never come to fruition. For NFTs to deliver on their perceived value, it is crucial that collectors are granted utility beyond the ownership of the asset.
Nifty Tailor is one such platform that restructured NFT utility to generate ongoing value for collectors. While owners of the Bored Ape (BAYC) and Mutant Ape Yacht Clubs (MAYC) are surely excited to be in such exclusive company, the utility of ape ownership does not need to end there. Nifty Tailor launched the first-ever on-chain verifiable derivative collection, allowing BAYC and MAYC holders to create derivative Apes dressed in different outfits chosen by the original holder.
The holder receives royalties from secondary market derivative sales. Not only does Nifty Tailor deliver collectors and creators a secondary economy, but it also gives major brands access to the world of NFTs without having to launch their own collections.
Perhaps the value of a Cool Cat or a pixelated stoner is not evident to the traditional Web2 consumer. However, as more brands like Nike, Adidas, and Asics make concerted NFT efforts, it is clear they identify value in the digital assets. With that said, for NFTs to deliver meaningful utility to Web2 or Web3 audiences, brands must rethink tokens and how they present value to users.
NFT 2.0: Reimagining Tokens
Looking beyond static images is crucial to truly extracting value from NFTs. Although the recent Cambrian explosion within the NFT space is only a year old, a variety of future NFT use cases have begun to emerge. From healthcare and passports to real estate and art verification, the endless possibilities of NFTs are coming to light. But for NFTs to truly emerge and realize their potential, it is imperative that builders reimagine what these tokens represent. This is so they can deliver utility that is of interest to their users. And for NFTs to truly deliver utility, there needs to be immediate, real-world application. Especially pertaining to the Web2 audience – clear, tangible benefits far outweigh future roadmaps.
Smart Token Labs asserts that tokens will be the basis upon which the future of Web3 is built, and that they can serve as a bridge across worlds. To this end, the team has established a wide array of partnerships to assist Web2 brands incorporate NFTs into their digital strategies.
One clear example of this can be seen in event ticketing. Smart Token Labs has worked alongside several high-profile events including the FIFA Cup, UEFA Cup, and the Ethereum Foundation’s DevCon. This is to deliver attestation-based derivative NFTs to event-goers, which they used as their admission tickets.
In addition, the event websites would recognize the NFTs held within their wallets and deliver them access to particular parts of the event based on the NFTs held. This would simplify the ticketing process for attendees. They would not need to carry a physical ticket. And, they can carry their assets with them.
NFTs as a Web3 onramp
The overwhelming sentiment among blockchain enthusiasts is that for Web3 to find success, Web2 must crumble. While conventional wisdom may contribute to that notion, the reality is that Web3 will find more success working in lockstep with Web2.
How, then, will Web2 seamlessly interact with Web3? Perhaps surprisingly, the answer is NFTs. While NFTs are admittedly limited in their use cases at the moment, the potential for NFTs is not to be underestimated. Looking beyond the digitized animals, these tokens represent something far greater: verifiable ownership. Placing an emphasis on ownership allows us to foresee a wider array of potential use cases – from provable identification to something as simple as the title to a vehicle.
Although many within Web2 remain skeptical of the NFT movement, once Web3 consistently demonstrates value to those in Web2, NFTs will become a gateway through which users are welcomed into Web3.
Carla Chan’s recent partnership with La Prairie is indicative of how NFTs present Web3 onramp for major Web2 brands. As two of the premier names in their respective spaces, Chan and La Prairie collaborated to unveil an NFT campaign that delivers both a unique NFT to collectors and drives real-world social good. Each NFT features 31 of the most populated cities across the globe and is tied to current weather patterns, giving holders constantly-evolving NFT artwork. More importantly, proceeds from the sale of the artwork going towards protecting glaciers in Switzerland, this initiative proved that NFTs can and should have a positive, tangible impact.
NFT 2.0 Going into the future
The NFT space has not yet realized its immense potential. Of course, the emergence of new projects, the huge sales, and the incredible community mobilization are all exciting and worth celebrating. Even more exciting, however, is what NFTs will be. This current iteration of NFTs showed us that provable ownership is even more valuable than we’d thought. The next iteration of NFTs, or NFT 2.0, will punctuate the fact that tokens can revolutionize our approach to every vertical of life – from marketing to healthcare and everything in between. As major brands continue to foray into the space, it is crucial that they are carefully ushered into Web3 so they can understand the impact of their NFT initiatives, and how to dream bigger when thinking of tokens.
About the author
Victor Zhang is the CEO of Smart Token Labs, which is creating a new standard for a tokenized future with TokenScript, the smart token interface for composable smart tokens across NFTs, PlayFi, DeFi and the entire Web3 spectrum.
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