In the past two years, the popularity of NFT has continued to rise, and it has also been selected as the first place in the 2021 hot word of the “Collins Dictionary”. Stimulated by the star effect and the money-making effect, NFT is sweeping the world with an unstoppable trend. From Cryptopunks to plain text Loot, the market has changed at an alarming rate. From community meme-type NFT to Metaverse application-type NFT, people are witnessing the update and iteration of NFT gameplay, but also witness the Davis double-click moment of NFT.
So, what exactly are NFTs? Is it a new way to get rich, a future trend, or a short-lived bubble? The following content will take you from 0 to NFT.
First of all, what is an NFT?
At the standard level, Token can be divided into Fungible Token and Non-Fungible Token . Among them, Non-Fungible Token is a non -fungible token . The popular analysis is that each NFTs is different.
The essence of NFT is a digital asset certificate built on the blockchain. This asset can be any form of digital asset such as a picture, a piece of audio, a piece of video, a string of codes, a digital signature, etc.
NFT is a token generated through smart contracts ERC721, ERC1155 and other standards, with unique, indivisible, programmable and tradable characteristics.
The development status of NFT
The industrial value chain of NFT
To understand the development status of NFT, we must first understand the industrial value chain of NFT.
Jasmine Zhang and Fiona He, partners and investment managers of A&T Capital, will divide the NFT industry value chain from bottom to top and divide it into three layers according to the liquidity of NFT:
- Infrastructure layer: including the underlying public chain, Layer 2, storage, wallet, development tools and other infrastructure.
- Protocol layer: It is mainly the minting protocol of various NFTs, as well as the volatility protocol.
- Derivative application layer: mainly include NFT data protocol, curation application, social networking, pan-secondary market, etc.
In 2021, CreditEase Blockchain Research Institute has also done a similar layering of the NFT industry value chain in “Understanding the Development Status of Metaverse and NFT in One Article”. Overall, we feel that it can still reflect the current development status of the NFT industry value chain.
Overall NFT Market Data
According to NFTGO statistics, the total market value of NFTs in the market is currently US$16.78 billion, and the number of addresses holding NFTs is 1.9 million, of which 1.18 million addresses have been transacted at least once. Among them, there are 450,000 active addresses that have traded at least once in 30 days.
There are as many as 1859 NFT projects, and the number of NFT projects has exceeded the number of digital currencies in the last bull market . At the end of 2017, the number of global digital currencies was only 1,372, which means that after nearly a year of rapid development, the number of NFT projects has now exceeded the number of digital currencies in the last bull market.
But the NFT market is still small. At present, the total market value of digital currencies exceeds 1.5 trillion US dollars, andthe total market value of NFTs only accounts for about 1% of the total market value of digital currencies . In terms of transaction volume, it is not comparable to the FT market. At present, the 24-hour transaction volume of the NFT market is about 150-200 million US dollars, accounting for about 0.5% of the 24-hour transaction volume of the FT market of 117 billion US dollars.
NFT monthly sales and number of active buyer addresses
According to Cryptoslam data, the monthly sales of NFTs and the number of active buyer addresses have grown significantly in the last year.
As can be seen from the above figure, NFT germinated at the end of 2017, and after a period of silence in the bear market, it broke out in 2021-2022.
NFT total market capitalization curve and number of holders curve
Both the total market value of NFTs and the number of NFT holders have shown significant growth in the past year.
The vast majority of NFT transactions are currently on the Ethereum chain
At present, the vast majority of NFT transactions occur on the Ethereum chain, and the proportion of NFT transactions on blockchains such as Solana, Ronin, Avalanche, and Flow is still small.
Gradually there are other NFT trading platforms competing with OpenSea
With the rapid development of the NFT market, more and more entrepreneurial teams are eyeing the “NFT trading” cake. Although OpenSea is still the largest NFT trading platform, competitors that cannot be underestimated have begun to emerge.
Recently, the competition between NFT trading platforms has become increasingly fierce, and the development strategies of LooksRare and X2Y2 have frequently caused heated discussions in the industry.
Classic 10 NFT projects
It may be that for many people, NFTs in general still do not have a specific concept and understanding of NFTs. Let’s take 10 NFT projects with a large historical total transaction volume as examples to analyze the NFT projects in detail.
CryptoKitties, the earliest popular NFT in the currency circle. It can be reproduced and collected, but it cannot be destroyed or copied.
Since encrypted cats can be bred, the current total has exceeded 2 million+, but the transaction volume has so far been only 70,000 ETH, and there is less speculation now.
Cypherpunk, born in June 2017, was originally intended to pay tribute to the punk art of the early 1970s in London. At the standard level, it is the first NFT project recognized in the industry, because it is 10,000 Punks issued through the “improved ERC20” contract. It is the first exploration of “non-fungible” tokens and is ERC721 standard. One of the sources of inspiration.
CryptoPunks has generated 10,000 24*24 pixel art image NFTs through algorithms. Each punk pixel avatar NFT has its own data information, including their attribute characteristics and ownership and circulation information.
The founding members of CryptoPunks are only 2 people, John Watkinson and Matt Hall. Initially they kept 1000 Punks for themselves, and the remaining 9000 were all given away for free to anyone who wanted it, and even then no one picked it up.
Bored Ape Yacht Club
Abbreviated as BAYC, the Boring Monkey Yacht Club will be launched in April 2021, with a total of 10,000 ape image NFTs.These monkeys are randomly composed of 10,000 monkeys through programming. The clothing, accessories, background, and expressions of each monkey are unique. The Boring Monkey Yacht Club is laid out on the Ethereum blockchain.
The founding team of the Boring Ape Yacht Club consists of just four people: Gordon is a cryptocurrency trader, Garga is a media practitioner, and Tomato and Saas are software engineers. The four of them are friends in real life and are also interested in the crypto world. They entered the circle in 2017 and witnessed the birth and development of CryptoPunks and CryptoKitties.
The background story of the Boring Monkey Yacht Club is actually just a YY: The story takes place ten years later, every ape who devotes itself to the crypto field will be wealthy and free, but at that time there is no more to mine, so the apes start in the swamp Getting bored, so the monkeys set up a private club for all the monkeys to play. Every holder of the Bored Ape NFT can draw as much as they want on the wall canvas of the Bored Ape Yacht Club Bathroom, drawing a pixel every 15 minutes.
BAYC already has more than 6300 holders and the floor price is as high as 91 ETH. If CryptoPunks is a community of rich and common people, BAYC is undoubtedly a pure rich club. At present, these celebrities mainly hold BAYC: well-known collector Pranksy, NBA Rookie of the Year LaMelo Ball, Curry, star Shawn Yue, Lin Junjie, Xu Jinglei, Wu Jianhao, etc.
Mutant Ape Yacht Club
The Mutant Ape Yacht Club, referred to as MAYC, can be understood as the forked currency of BAYC.
Can only be created by exposing an existing Bored Ape (The Bored Ape) to a vial of Mutant Serum or by casting a Mutant Ape on public sale.
Decentraland is a virtual land-like Metaverse project, in which the virtual land is NFT, and the land of each coordinate is different. Decentraland is also based on the Ethereum blockchain, and MANA is required to buy and sell land NFT assets.
On August 17, 2017, Decentraland launched an ICO and raised 86,206 ETH. The total design of Decentraland is 90,601 plots, each of which is a 16m*16m plot. After purchasing the land, construction and decoration can be carried out, but 3D modeling is required, and the threshold for creating content is slightly higher.
Today, there are about 800,000 registered users and more than 20,000 monthly active users. There are currently more than 6,700 holders of parcels in Decentraland, and OpenSea shows that the floor price of the parcels being sold in Decentraland has exceeded 5 ETH.
The Sandbox （Land）
It is also a digital real estate game with a relatively low threshold. Xiaobai users can also create a small Metaverse through the modules provided by the platform.
Sandbox land is limited to 166,464 plots, including 3*3 plots, as well as 6*6, 12*12, and 24*24 plots. The floor price is 3.78 ETH, which is slightly lower than that of Decentraland.
The virtual human project, jointly launched by RTFKT and Takashi Murakami. Clone X has 3D model files that can bring in multiple Metaverse platforms.
RTFKT was co-founded in 2020 by the old guns of the group of trendy players, including Benoit Pagotto, Chris Le and Steven Vasilev. The spaceship-like shoes that Musk wore at a party before were designed by RTFKT; Takashi Murakami is Japanese Ukiyo-e master, a well-known artist in the animation industry, he participated in the design of Clone X.
According to RTFKT’s expectation, in the future, the virtual human Clone X can be implanted with AI chips, interact with the owner, and then enhance the experience through VR equipment. In this way, the trinity of NFT+AI+VR is realized, and it can span multiple Metaverses. This is actually NFT Avatar .
The Japanese anime-themed NFT released in January 2022, with exquisite style, will be released in 10,000 pieces for the first time. Each NFT has differences in dimensions such as hairstyle, eyes, mouth, neck, clothing accessories, background type, etc.
The goal of the Azuki founding team is to build Azuki into the largest decentralized brand in the Metaverse, and Azuki’s community ownership allows players to explore the upcoming Metaverse.
Loot is a black and white NFT with 8 lines of English words. In fact, each Loot represents a set of adventure equipment with random scarcity. The 8 objects contained in the equipment correspond to the adventurer’s weapon, head armor, breastplate, belt, gauntlet, leg armor, necklace, and ring.
Loot is actually an image in SVG format. When it was first created, it once detonated the popularity of the currency circle.The total design is 8000 pieces, of which Loots numbered 1-7777 can be claimed and minted by anyone by calling the smart contract deployed on Ethereum, and the remaining 222 pieces can only be claimed by the contract deployer, that is, Dom himself. 22 coins have been claimed, so the current circulation is 7779 coins. As of today, there are more than 2500 holders and the floor price is 2.54 ETH.
Loot still has some consensus in the industry. If the community continues to develop in the future, it is possible to take the Metaverse game path. Develop these NFTs into parameters in the hero’s gear.
Sorare is a fantasy football game where official digital collectibles can be traded. Sorare already has the backing of European giants such as Atlético Madrid, Juventus and Bayern Munich, as well as Major League Soccer, the Korean league and the Japanese league.
Sorare has received investment from SoftBank, and also received investment from Pique and Griezmann in the early seed round.
Sorare currently has nearly 330,000 star cards, including Di Maria, Davis, Suarez and other stars. Each card is marked with information such as the player’s number, nationality, age and location, which can be used as collectibles or used in games.
The above 10 NFT projects mainly include several picture NFTs such as community avatars, Metaverse land or Metaverse virtual people, game hero cards, etc. With the explosive growth of NFTs, more and more types of NFTs are born, mainly based on the development idea of combining NFTs with Metaverse games.
Mainstream NFT trading platform
The benefit effect in the NFT field has detonated the issuance and trading of NFTs, and at the same time, more and more teams have entered the NFT trading platform. The current mainstream NFT trading platforms include: OpenSea, Rarible, Nifty Gateway, SuperRare, Binance NFT, LookRare, X2Y2, etc. Among them, in addition to the leading NFT trading platform OpenSea, LookRare and X2Y2 have attracted wide attention from NFT trading enthusiasts with their special incentives.
OpenSea: Early layout, long-term deep cultivation, with first-mover advantage
OpenSea is the most widely used NFT trading market, accepting more than 150 cryptocurrencies, making it a versatile NFT trading platform.
OpenSea can host and trade all types of NFTs, including Art, Music, Domain Names, Photography, Collectibles, Sports, Trading Cards, Virtual Worlds, Utilities, etc.
Three blockchains are supported, Ethereum, Polygon, Klatyn. Recently, OpenSea supports Polygon, which can realize minting transactions without paying fees.
LooksRare: Anonymous Team + Trading Mining + Staking Dividends
In response to the drawbacks of OpenSea not issuing platform coins, a vampire attack was launched. LooksRare’s transaction mining mechanism allows LooksRare to quickly gain huge transaction volume.
Since OpenSea’s code is open source, the LooksRare team was able to identify those active users who traded at least 3 ETH in a 6-month period and airdropped LOOKS Token to them. But in order to claim these tokens, these users must issue an NFT on the LookRare platform.
In order to lock the liquidity of LOOKS Token, the LOOKS lock-up activity is also launched: users only need to lock the LOOKS in the smart contract, and then they can get all the handling fee back.
However, LooksRare does not lock in high-quality NFTs in the market. When the mining rewards are no longer attractive in the later stage, the platform growth may be weak and sticky.
X2Y2: Pre-sale whitelist + token pledge + listed mining
The core method of X2Y2 is to list mining. Users must list blue-chip NFTs, and the price is low enough to get mining rewards. This enables the X2Y2 platform to quickly obtain high-quality NFTs trading products. Moreover, the product interface of X2Y2 is more like an exchange. It can be seen that its founding team should have a good understanding of the needs of NFTs trading users.
X2Y2’s platform token is mainly for fair sale. 1.5% of the token distribution is pre-sold to 1,000 users, 1.5% is reserved in the LP pool, 10% is the team, 12% is airdropped, and 65% is pledged for mining.
However, X2Y2 only stimulates the listing of NFTs, and the incentive trading behavior is insufficient. At present, the platform trading volume of X2Y2 has not shown strong competitiveness.
Overall, there is no NFT trading platform that can truly shake the leading position of OpenSea in the short term.
4. How ordinary investors can invest in NFTs
There are generally three ways for ordinary investors to participate in the investment of NFT projects: obtaining whitelisted Mint, publicizing Mint at a specific time, and secondary market trading.
Whitelist round: Issue a whitelist to specific users to limit Mint NFT for a certain period of time. The whitelist can be understood as a priority admission ticket. The main purposes of setting the whitelist include: avoiding network congestion and motivating core community members. Whitelisted users can mint NFT before the public sale time set by the project party to avoid the phenomenon of network congestion and high gas fees caused by users’ centralized minting when Mint is opened during the public sale time. At the same time, it can also be used as an incentive for core community members. Each project party needs the cooperation of some specific roles (investment institutions, community V, community contributors). In order for these specific users to continue to empower the community, generally Will give them a whitelist incentive.
Public Mint Round: Open Mint NFT at a set time. If the popularity of the project community is very high, it may be possible to grab it only by technical means in the public Mint round. If the project is not very popular in the community, there may be more time to open Mint calmly.
Secondary market transactions: After the Mint time point is disclosed, NFTs can be traded normally in the secondary market.
Generally speaking, among many NFT projects, to avoid bad NFT projects, at least the following points should be paid attention to:
- Stay away from NFT projects from anonymous teams;
- Stay away from bot-filled projects in Discord;
- Distinguish between projects with in-depth celebrity involvement and celebrity endorsements;
- The most important thing is to be wary of projects with excessively high Mint (mint) prices.
NFT is not only an important part of the digital economic ecology of the encryption industry, but also an important part of the Metaverse ecosystem, and a new model of brand economy in the Web3 world. We have reason to believe that the digital world with NFT will be more exciting.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/nft-ushered-in-davis-double-click-moment/
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