Dragonfly: The Rise and Fall of the iBox and the Road to China’s “Digital Collection”

Users’ trust in these “digital collections” is limited.

“NFT” that is not so NFT?

For a number of reasons, China has banned (at least not promoted) cryptocurrencies on a regulatory level, but has a vibrant market for “digital collectibles.” These “digital collections” are similar to JPEG (a file format for images), with one key difference from NFTs: they are not based on a decentralized blockchain.

Dragonfly: The Rise and Fall of the iBox and the Road to China's "Digital Collection"

Data shows that China is the country most interested in NFTs

Buying NFTs on Ethereum (ETH) is cumbersome and has poor user experience. First you have to have an exchange (CEX) account, buy ETH, transfer ETH to a crypto wallet, connect the crypto wallet to the NFT market, buy NFT, and keep the wallet safe from hackers. The entire operation can take days to complete, and there is a risk of “mismanagement” at each step.

To purchase digital collections with centralized features, the process is much simpler. Download the APP (application) of the “Digital Collection” platform, and then pay with a credit card, Alipay or WeChat. Most “digital collection” platforms have their own enterprise chains and run their own nodes in them, which also means that these “digital collections” platforms are not interoperable.

The streamlining of the buying process has driven the mass adoption of this model. According to the China Youth Daily, there are more than 500 local “Shu Zang” trading platforms, including those supported by some local Internet companies: Alibaba’s WhaleTalk, Tencent’s Magic Core, JD.com’s Lingxi, Xiaohong R-space of books, Planet of Netease, digital collection of Bilibili of Bilibili.

One of the most interesting platforms is Xiaohongshu’s R-space, which drives a large user base (mainly upper-middle-class women) into the ranks of sharing and collecting AR clothing, boosting the fashion NFT industry. At the same time, in April, the platform cooperated with Shanghai Fashion Week, which attracted a lot of attention, and topics related to “digital fashion” received more than 5.6 million views.

Dragonfly: The Rise and Fall of the iBox and the Road to China's "Digital Collection"

“NFT” dress by user Kira0131

It’s May this year, which is the 100th anniversary of the Communist Youth League of China. Although the general environment does not advocate cryptocurrency, the official cast 54,000 centennial edition “Digital Collections” on the blockchain developed by Hangzhou Shunwang Technology. , and sold out within an hour.

On July 15, Beijing Youth Daily reported on the cost quotations of building a custom “digital collection” market, including functions such as minting, transferring, listing, selling (and the ability to comply with or avoid cryptocurrency-related regulatory sanctions). The current price is 150,000 RMB ($25,000) and demand continues to increase.

The rise of iBox

Dragonfly: The Rise and Fall of the iBox and the Road to China's "Digital Collection"

iBox secondary market sales page, sorted by latest listing

By far, the largest “digital collection” platform is iBox (without the backing of traditional internet giants). According to data from the analysis platform MData, iBox’s DAU (number of daily active users) at its peak reached a staggering 500,000, which was comparable to OpenSea’s heyday and about 10 times that of Opensea’s June daily active users (30,000-50,000).

Dragonfly: The Rise and Fall of the iBox and the Road to China's "Digital Collection"

OpenSea, LooksRare, CoinbaseNFT Daily Active

As of July 20, the market value of iBox’s “digital collection” was 3.8 billion yuan (about 560 million US dollars), accounting for about 2.2% of the Ethereum NFT market value (25 billion US dollars) calculated by Nansen (Note: It is difficult to come up with OpenSea’s precise market cap, but assuming it’s closer to $20 billion, iBox has 2.8%).

Dragonfly: The Rise and Fall of the iBox and the Road to China's "Digital Collection"

According to the data of Analytics MData, the total market value of iBox’s “digital collection” (Note: it may be high, but because it is not on the public chain, there is no other way to confirm it)

OpenSea’s daily trading volume currently stands at $14.3 million, with the highest earning record being $476 million from Yuga Lab’s Otherdeeds. According to iBox insiders, during the peak period, the daily revenue of the iBox platform was about 10 million yuan (about 1.5 million US dollars); according to the 4% transaction fee, it can be estimated that the transaction volume at that time was 250 million yuan (about 3,700 US dollars) per day. $10,000), which does not include the minting revenue of “Digital Collections” (more on this below). While iBox sales have been declining since then, the numbers are still staggering.

iBox is a project incubated by Huobi in May 2021 and registered under the name of Hainan iBox Technology Co., Ltd. To replicate the success of OpenSea, Huobi incubated iBox and channeled exchange users to the platform, forming the first core user base of 100,000 DAU. However, just as the entire NFT market is heating up, Huobi founder and largest shareholder Li Lin is being investigated by official government officials and forced to sell the platform for 100 million yuan (about $15 million) to Xuanyuan in January 2022. Song Tao and Tang Ling.

The way iBox works is fundamentally different from OpenSea: OpenSea is just a platform for trading NFTs, while iBox is both the platform and the only “digital collection” issuer. Of course, NFT project parties can choose to cast with OpenSea, but the official of iBox is to spontaneously find attractive IP and promote the “Shu Zang” project on its own. At present, iBox’s most successful “digital collection” is the “Westward Journey to the West” series of collections. The founding price of related collections is 99 yuan (about 15 US dollars), and the highest price was ever sold for 10,000 yuan (about 1,500 US dollars). iBox claims to have licensed over 500 IPs, spanning art, streetwear, celebrities, animation, film and television, sports, China’s national cultural heritage and many others.

Dragonfly: The Rise and Fall of the iBox and the Road to China's "Digital Collection"

Dahua Westward Journey Collection

Buyers who buy a “digital collection” can sell the collection on the secondary market (for some reason, the price is capped at 100,000 yuan). But digital assets cannot be transferred to other places (such as wallets), nor displayed elsewhere (such as social platforms), and are only visible to other users within the application. iBox uses this old bottle to put new wine (new IP) to provide the platform with another huge source of income in addition to transaction fees.

There are also violations of iBox’s IP curation, such as the illegal use of the image of Taiwanese singer Tao Zhe for its “Shu Zhe” series. After Tao Zhe’s legal team said it would take legal action, the platform deleted the collection series.

Dragonfly: The Rise and Fall of the iBox and the Road to China's "Digital Collection"

“Shu Zang” advertisements at that time

Interestingly, iBox is also adopting new “routines”, introducing airdrops and whitelist mechanisms to better stimulate the FOMO (fear of missing out) emotions of collectors.

Although OpenSea’s NFT collection supply standard is 10,000 pieces, most iBox “digital collections” have a supply of 400 pieces with a mint price of 100 yuan ($15), similar in function to ArtBlocks’ generative art NFTs. This makes it easier for “whales” to collude, with big players forming monopolies, buying up most of the supply, and then promoting the project.

Dragonfly: The Rise and Fall of the iBox and the Road to China's "Digital Collection"

iBox Home

Undoubtedly, this led to the mass accusations against iBox of defrauding consumers and manipulating the market.According to an insider, many of these allegations came from within the iBox team. Although it is difficult to verify the authenticity of this claim, after all, the platform itself is the one who arranges the project update or announces the airdrop, and insider trading has become “reasonable.” “.

The amazing development of iBox has also attracted the interest of scam gangs. Many professional scammers like to run multi-level “marketing schemes”, and iBox also provides a hotbed for deception. According to iBox insiders, these people negotiate with the platform to buy iBox collections, then recruit college students and retired aunties to work for them, sell the collections to the outside world (classmates, friends, relatives), and pay according to the number of people recruited.

This story has circulated on the Internet: three college students took loans to buy hundreds of “cybercat” collections, with a total value of about 300,000 yuan (about 44,000 US dollars). The floor price of the collection then plummeted, leading one student to commit suicide.

iBox has denied the veracity of the story, but in early June it updated its age policy to 21-60 (that is, excluding college students); meanwhile, iBox has opened a “rumour-busting section” on its website, where anyone can Post the uncertain information you see to the forum, and the official account is responsible for verifying the authenticity.

Dragonfly: The Rise and Fall of the iBox and the Road to China's "Digital Collection"

iBox team denies pyramid scheme allegations

In general, the “digital collection” market has downplayed the elements of transactions, focusing on the functions of “collection” and “IP promotion” through NFT technology. Unlike iBox, Alibaba’s (Alipay) whale finder only allows free transfer of collections after 180 days, and can only be transferred to the user’s friends (subject to KYC certification); the new owner can only transfer it again after 730 days. To circumvent these restrictions, collections are often traded on some secondary platforms (Xianyu, Taobao or WeChat groups) through word-of-mouth communication of middlemen; although the spreads of such transactions are quite large, they are still dynamic.

time of recession

The transaction volume of “digital collections” has been on a downward trend since March, and on June 21, the WeChat platform cleaned up a large number of NFT-related official accounts, including iBox’s official account, which dealt a blow to the industry.

In addition, China’s three major Internet associations have also introduced stricter regulations. Under the leadership of the China Cultural Industry Association, nearly 30 Chinese enterprises and institutions jointly launched the “Proposal for the Self-discipline Development of the Digital Collection Industry” on June 30. The parties involved in the initiative included professional institutions and associations in the cultural tourism industry, some State-owned enterprises, as well as Internet technology companies such as Ant Group, Tencent, Baidu and JD.com. Its purpose is to oppose secondary transactions and excessive speculation, promote high-quality development of the entire industry, and require platforms to undergo strict supervision to ensure the “safe development” of blockchain technology and the platform’s compliance with KYC policies.

This has exacerbated the downturn in the “digital collection” market. There are no longer “sold out” collections in an instant, and the “doomsday” of speculators seems to be coming. Along with the stagnation of the primary market, the secondary market has also experienced turmoil, and some platforms have almost zero transaction volume; small platforms with less cash flow such as HiNFT and iBear were forced to close down, and even Tencent’s Magic Core is under regulatory pressure China was forced to stop sales of “digital collections” despite Tencent’s statement assuring users that “owners of existing collections can still hold, display or request their return.”

But VCs still seem to be interested in the field of “digital collections”, perhaps not wanting to lag too far behind their global counterparts and actively deploying in a “bear market”.

in conclusion

To date, there are mainly two ways of recording data information: in the database of a private company or on a public chain. So when some people object to the use of NFTs to record ownership of digital artworks, they may mean: “It’s better for a company to centrally manage our ‘who’ owns what.”

The advantage of NFTs is that they take “managed” out of the recording process. You can control your wallet, control your own tokens, freely buy or sell, freely choose to display in any virtual space, and interact with people from all over the world in an open Metaverse. But at the moment in this “land”, we seem to have few choices.

Right now, iBox mode isn’t ideal, and I wouldn’t be surprised if it fails outright one day. We still need NFTs, even overseas, platforms like Element and X2Y2 are still developing (both teams are Chinese or support Chinese), we are still optimistic and find a way to integrate into the industry.

I think the decline of iBox can be simply boiled down to: users’ trust in these “digital collections” is limited, because they vaguely understand that these “collections” are only hidden on iBox’s servers: who is the digital collection? iBox’s or “me”?

In my opinion, there is no doubt that public chains such as Ethereum will survive longer than platforms such as iBox. When the regulatory “black swan” comes, the “digital collection” market almost collapses, many platforms fail, and the ‘s “digital collection” also evaporated.

Maybe they never existed.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/dragonfly-the-rise-and-fall-of-the-ibox-and-the-road-to-chinas-digital-collection/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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