From CryptoKitties to Flow: How Dapper Labs Became the Most Influential NFT Developer

Original title: "From CryptoKitties to Flow: How Dapper Labs Became the Most Influential NFT Developer"

Original Author: Nicole Laporte, Fast Company < /blockquote>

Original compilation: chain catcher

In the 2022 World's Most Innovative Companies announced by Fast Company magazine, NFT developer Dapper Labs became the only encryption project shortlisted and ranked first among the most innovative game companies. At the same time, "Fast Company" magazine published an in-depth interview with Dapper Labs, analyzing the company's development history and vision. The following is Chain Catcher's translation of the article:  

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The Peninsula Hotel in Beverly Hills has long been a luxury hotspot for Hollywood upstarts, who strike movie deals on single malt whiskey. On a chilly January afternoon in Los Angeles, most of the people in the hotel rooftop café were wearing puffy jackets under the heater lamps. Not Roham Gharegozlou, co-founder and chief executive of Dapper Labs (the company behind CryptoKitties and NBA Top Shot), in a light-colored hoodie and jeans. The Iranian-born Vancouver resident was here amid the COVID surge for the same reason as everyone else: He was looking for talent, anyone interested in creating new, exciting blockchain applications for the masses.

“In Silicon Valley, everyone is working for these big Web 2.0 platforms like Facebook. Here, no one is really happy with the way things are .So the vision of a new way of doing things is inspiring," he said with a laugh. "We're giving power back to creators. That's the mission, that's why I'm here."

Creators are attracted to Dapper because It is known for disrupting the complex and intimidating world of Web3 (a broad definition of building the next phase of the Internet, based on the principles of decentralization and ownership). The company that makes and sells NFTs created NBA Top Shot — a virtual trading card featuring basketball video highlights — and helped turn 2021 into the year of the NFT. Dapper, which earned $100 million from NBA Top Shot last year, introduced millions to the idea of collecting scarce digital assets.

The company's early success was a product of Gharegozlou's foresight and patient approach in an otherwise frenetic industry. Conversations with the NBA began in 2018 and were finalized a year later. Top Shot will not open to the public until October 2020. During that time, Dapper was building its Flow blockchain to process transactions quickly and its own crypto wallet to facilitate credit card payments, something it had never done before. When Top Shot finally launches, even the non-crypto crowd will be able to use NFTs. “Two years ago, you thought you needed a Ph.D. in physics to figure out how to create wallets and buy NFTs,” said Chris Jacqupin, head of digital strategy at talent agency WME. “Dapper has successfully crossed NFTs into the lexicon.”

In what is now crypto basics, when CryptoKitties was launched by Gharegozlou's former Dapper crypto firm Axiom Zen in 2017, it crashed the Ethereum network. It turns out that a game that allows users to buy, trade, and "breed" NFT cats cannot scale quickly without congesting the platform. To make matters worse, while the game's popularity drives revenue -- it made $40 million in its first year, and a cat sells for $170,000 -- the complexities of cryptocurrencies are far from real. The number of people involved is negligible. “We saw a conversion rate close to 2 percent from clicking ‘I want this cat’ to being able to buy the cat,” said Mik Naayp, Dapper’s co-founder and chief commercial officer.

Based on CryptoKitties, Gharegozlou and company could easily cash out through an initial coin offering (ICO), which Naayp said was beyond everyone's imagination. Instead, in 2018, Dapper Labs was formed with a mission to build not only NFT games and apps, but blockchain tools as well. All of this will be built on the premise that it will be easier to use than existing applications and platforms. Leading the technology behind the scenes is Dapper's CTO Dieter Shirley, a chatty, goateed engineer who first coined the term "non-fungible" token and wrote the ERC-721 protocol that became the standard for NFTs. standard contract. This effectively makes Dapper the birthplace of the NFT movement.

The timing of the NBA Top Shot is not intuitive. Back in 2018, cryptocurrencies entered a so-called "winter" as ICO scams and a sharp drop in bitcoin's price sapped its mainstream appeal. “Four years ago, Roham gave a talk on NFTs at TED, when the concept was crazy to everyone else,” said a16z partner Chris Dixon. The company has supported Dapper since 2018. "I think people sometimes underestimate the vision that Roham has,"

Longtime digital innovator Trevor McFedries founded the tokenized community Friends With Benefits in 2020, And sold his other startup, Brud, to Dapper in 2021. “His thinking was that most things in life were irreplaceable,” McFedries said. “Roham saw that and stuck with it through the winter and the capital flight.”

Meanwhile, negotiations with the NBA have dragged on for a year, with both sides trying to tie one of the world's most iconic and protected brands to the NBA in a variety of ways. Marrying it, and opening it up to a guy on the street could effectively own a piece of it, but it's incongruous in many ways. This slow pace is also due to Dapper's thoughtful approach to the product. It never rushes to market in order to profit from a trend. Market research and data collection has always been in the spotlight.

What brought the two parties together was their shared belief in making Top Shot easy to use. "Our main concern is making sure the product is accessible," said Adrienne O'Keefe, the NBA's vice president of global partnerships and media. For this reason, the words "blockchain" and "NFT" did not appear in any of the onboarding steps initially. Dapper launched the Dapper Wallet, which allows people to buy NFTs with their credit cards.

Gharegozlou calls the credit card decision a "stake." The real heart of Top Shot is the experience of opening a video card pack and enjoying its contents. Dapper is obsessed with improving the experience. In the process of buying NBA Top Shot video packs, the company created an exhilarating, even joyful feeling, very similar to the fun of ripping open a pack of trading cards (without seeing the "blockchain" and "NFT" ). Dapper is also learning from a generation of digital natives like YouTube and TikTok influencers who wow fans by unboxing makeup or toys. "We looked at where people spend their time," Gharegozlou said. They note the popularity of watching users unlock extra player and football kits in games like FIFA Ultimate Team,

Top Shot Closed Beta May 2020 At the time of publication, the world had been upended by the new crown epidemic, and the NBA suspended its season. Gharegozlou calls this period his "darkest hour". By October, when it opened the beta to everyone, the league was gearing up for a new season starting in December. The combination of home audiences and NBA excitement led to a surge in interest in Top Shot. Registrations jumped from 4,000 to 400,000 by January 2021, putting Dapper into insane scale mode. “We have one person for customer support and one person for identity verification,” Gharegozlou said. “We have to scale up the team by 100 times.”

The NFT craze has officially begun . In March, a Beeple artwork fetched $69 million at a Christie's auction. In August, the LeBron James Moment sold for $387,600. Things are leveling off, though, as new products centered around avatars (Bored Ape Yacht Club) and games (Axie Infinity) enter a more saturated market.

According to Messari analyst Mason Nystrom, sales of Top Shot Moments on the secondary market soared to a monthly about $200 million, and then drop to between $20 million and $40 million per month by the end of the year. "It's nothing, considering they charge royalties," he said. (Dapper takes a 5% fee from secondary sales, which it splits with the NBA and the Players Association.)

Unlike other popular NFT projects, Dapper shares with the likes of the NBA A beloved brand collaboration that makes Top Shot an evergreen prospect. As the 2021-2022 NBA season heats up, second-hand NFT sales jumped 72% in the first three weeks of January, in part due to Kevin Durant’s new ad campaign, according to analyst CryptoSlam. A mobile app will launch later this year, and Dapper and the NBA are working to add more gaming-like and fantasy sports elements. “We’re going to start promoting Top Shot more aggressively as a web experience,” Gharegozlou said. “Through players and influencers, through paid media, through doing more TV. We want to build a lot of products and go mainstream before mobile apps.”

Top Shot's success led to deals with other premier sports entertainment partners such as the NFL, La Liga and UFC. La Liga’s popular Real Madrid football club released an enhanced ticketing experience on the Flow blockchain last fall, and Top Shot-like platform UFC Strike launched in January. These are just some of the experiences Dapper aims to achieve.

After the collapse of CryptoKitties, Dapper decided to build its own blockchain, which would solve the problems it had on Ethereum. Gharegozlou originally dubbed it "Bamboo," renaming the platform Flow while meditating. “It’s a concept in flux—connecting with creators in different ways,” he said.

The main difference between Flow and Ethereum is that Flow has lower transaction costs and can handle more transactions: 1,000 TPS, compared to Ethereum 13 compared to 15. In other words, Flow can handle projects that go viral. It also has a simpler, more developer-friendly programming language and can support non-cryptocurrency transactions. Despite being a newer platform, Flow has fewer established resources and tools for developers.

In addition to the sports-related collectibles experience running on Flow, Gharegozlou also wants to have separate worlds - such as Matrix World already exists in Flow The Metaverse on the Internet, and eventually games such as Fortnite and Roblox, although none of the popular games have crossed over to the blockchain, nor have they made deals with Dapper. Additionally, he wants Dapper to be home to decentralized autonomous organizations (DAOs), community groups that allow members to contribute their expertise and vote on their collective actions.

Last October, Dapper secured $250 million in new funding to acquire startup Brud from McFedries, which uses artificial intelligence to generate social media influence. Famous for its creator Lil Miquela, Gharegozlou put him in charge of a new division of the company, called Dapper Collectives, dedicated to democratizing DAOs. In Web3, DAOs operate primarily as investment clubs. (The DAO, most famously, tried to buy a copy of the U.S. Constitution last November.) But Gharegozlou has a broader view. He sees them as "a group of strangers who can express themselves and direct the flow of anything: money, storytelling, action in games."

Trevor McFedries, CEO, Dapper Collectives  

McFedries' first move was to create Brud's idea The decentralized version of what the team did with Lil Miquela; on Flow, Lil Miquela can now be mentored by her fans. "Imagine being able to walk into Disney and have your voice heard," he said. “So, if you say, ‘I’m actually good at marketing. I want to go to a marketing meeting and say, you know what? You should do X, Y, and Z.’ With a DAO, you can effectively do that.”

Gharegozlou also said that Dapper is experimenting with a DAO on Top Shot, where a group of users can vote on things they want to buy together, and that "many of our ecosystem projects Already trying different ideas," he said. "Maybe this will be our first thing that goes as viral as CryptoKitties."

All these efforts are not just for the growth of Flow, but for the whole Blockchain market. As Gharegozlou co-founder Naayp puts it, Top Shot may not be “a complete, fully decentralized NFT,” but it could get people farther and farther down that rabbit hole. He continued: "We may not always be doing the most crypto-native stuff, but what we're trying to do is provide value to consumers in a way that they can understand, feel, and get more of a taste."

When I asked Gharegozlou about how big Dapper is, he said: "If you think about it, in the past few months alone, the volume of NFT transactions has $25 billion," he said, taking a calm sip of his espresso. “It’s bigger than trading cards. It’s bigger than FIFA Ultimate Team. It’s even bigger than the sneaker market (the secondary market for sneakers is about $20 billion). The product is starting to catch up and evolve . . . eventually , I think the target market is everyone with a mobile phone."

This will enable 3 billion people to use Dapper's blockchain. Will he see this happening anytime soon?

Gharegozlou laughed. "Probably not this year," he said, "but we will make a difference."

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