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In-depth analysis of NFT market overview and application scenarios

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NFT's main investment tracks include: premium public links, publishing and mobility platforms, and tokens themselves.

Original title: "HashKey Research Journal | Understanding the whole ecology of NFT"

原文作者：肖琪凡，HashKey Capital Research

NFT is an emerging niche encryption field, which has been attracting more and more attention since 2020. More and more celebrities and high net worth collectors enter and invest in NFT products, and well-known institutions participate in the deployment of NFT projects. The rapid development of NFT benefits from the popularity of DeFi. And become one of the future directions of the chain circle after DeFi high hopes.

NFT has a small market capitalisation but is increasingly active. The main application scenarios are game props, crypto artwork and social tokens. The uniqueness and scarcity of NFT makes it ideal for marking ownership of assets in blockchain, truly connecting digital and physical assets in the virtual world.

未来 NFT 的流动性会越来越高，更多的实物资产会上链，会更趋于金融化发展，但是也有生态环境不够完善和安全监管问题。我们认为 NFT 主要值得投资的赛道包括：优质公链、发行和流动平台以及 Token 本身。

I. Market overview

在区块链领域，从可交换角度， Token 可分为同质化和非同质化两种。同质化 Token ，即 FT（Fungible Token），以 ERC20 为基本标准，是互相可以替代、可接近无限拆分的 Token。

但同质化 Token 有局限性，现实生活中真正具有价值的事物往往是不可替代的，也无法进行无限拆分，具有唯一性的资产是无法用同质化 Token 进行锚定的。

非同质化 Token NFT（Non-Fungible Token），则是唯一的、不可拆分的 Token，如 token 化的游戏道具、门票、艺术品等。NFT 以 ERC721 为标准，之后又出现了 ERC1155 协议，即每个 ID 代表的不是单一资产，而是资产的类别，允许一次批量创建多个 Token 。

1.1 The NFT industry is becoming increasingly active

The NFT market has been around for more than three years, starting with Crypto Cat in 2017, and NFT projects are almost entirely active on Ethereum and WAX chains.

如下图可见，目前排名前十的 NFT Token 包括 Enjin，Flow，Decentraland，RedFOX Labs，Gala，SAND, Ultra，NFTX, WAX, Bondly，其中 Enjin 币 24 小时内交易额可达到一亿美元左右。

According to Dappradar's NFT industry report for q3 2020, ethereum saw a 350% increase in NFT daily active wallets and a 57% increase in NFT transactions compared to the previous quarter, with CryptoPunks leading the way in daily active wallet addresses and transactions. WAX blockchain saw a 24,375% increase in the number of NFT daily live wallets and a 10,086% increase in transactions compared to last quarter.

In addition, it is worth mentioning that Flow is another public chain focused on NFT crypto games and crypto art in 2021. It was developed and created by Dapper Labs, the development team of CryptoKitties. Unlike most Layer2 expansion solutions, the blockchain is sharded. Flow can be scaled up without reducing blockchain sharding: nodes no longer participate in the entire transaction verification process, and there is a division of labor among nodes.

Participating in only one part of the collection, consensus, execution, and validation process increases speed and throughput significantly. The 2021 card project NBA Top Shot was developed based on Flow, and in February 2021 Flow announced the inclusion of the NFT trading platform Opeansea into the ecosystem.

1.2 The total market value grows rapidly, but the scale is small

As of February 25, 2021, THE market value of NFT reached about $3 billion, among which Enjin currency accounted for 16.7% of the market value of NFT. A total of 5.31 million NFT works were sold, with an average transaction price of $60.

On February 22, 2021, the average price of NFT peaked at USD 4,334.21. However, six months ago, this figure was about USD 100, a 40-fold increase. On February 21, Historic turnover of NFT assets also reached a new peak of $20m, about 45 times what it was six months ago.

In terms of total transaction volume, the total transaction volume of 2020 is 1.8 times that of 2019. By February 25, 2021, the total transaction volume of 2020 has reached 170 million yuan. The transaction volume of the first two months of 2021 is 2.7 times that of the whole year of 2020. From these data, industry interest in the NFT market is growing. At present, NFT accounts for only 0.2% of the total crypto market capitalization, which is very small. The NFT market is still in its infancy and is a niche market.

Souce:nonfungible.com

1.3 Well-known institutions participated in deployment, celebrities participated in investment, and popular projects performed well

Some projects in the NFT field, such as MEME, NBA Top Shot and Hashmask, have brought great economic benefits and performed well, making many participants believe that NFT will become a new breakout plate.

In addition, some influential celebrities are also participating in NFT, such as linkin Park members who launched a music NFT auction on Zora in February 2021. Some well-known organizations are also involved in NFT deployment, including Marvel, THE NATIONAL Basketball Association (NBA) and LVMH, owner of luxury brands such as Louis Vuitton. The influence of institutions will strongly promote the further growth of NFT.

2. Landing application scenarios

2.1 Encryption game -- the earliest landing attempt, one of the main applications of NFT

We believe that NFT gives players true ownership of game assets, disintermediating the transaction of game players' assets, transferring and using them seamlessly across multiple games. The game data is stored securely on the chain, while the game code is open source, allowing players to create rules creatively. In the future, the degree of decentralization of crypto games will be more thorough, and there will be more high-quality public chains dedicated to game development.

2.1.1 Development history

Since 2013, there have been a number of online games that incorporate Bitcoin, which is the inspiration behind today's blockchain games. At the end of 2017, CryptoKitties emerged, which is widely regarded as the beginning of the blockchain gaming industry. CryptoKitties set a record of 14,000 + daily active addresses in a single day (December 9, 2017) and briefly blocked Ethereum transactions.

By April 30, the total transaction volume is 43067.04 ETH, about 200 million RMB. Ether Go, the first blockchain placement game launched in April 2018, once had nearly 5,000 users daily and completed more than 40,000 transactions in just one day. In the following two years and more, the number of blockchain games has achieved a huge growth, especially represented by EOS, Ethereum and other platforms, a number of phenomenon games have emerged, but they have maintained a temporary popularity.

2.1.2 Major projects

The following table shows some of the major projects in blockchain gaming: & NBSP;

2.1.3 Featured Project -- NBA Top Shot

2.1.3.1 Market Overview

2.1.3.1 Total transaction volume of A ranks first. NBA Top Shot set card game public test less than six months after the rapid rise of 2021, according to the historical total transaction volume, NBA Top Shot transaction volume has reached more than 200 million DOLLARS, ranked the first encrypted collection.

That's about three times as much as CryptoPunks, which ranks second in terms of transaction value, with nearly 1.7 million participating wallet addresses and about 90,000 collectors. A digital collection card featuring a classic Slam Dunk shot by Los Angeles Lakers star LeBron James sold for $71,400, making it the most expensive card to date.

Source: Cryptoslam

2.1.3.1b Development based on Flow blockchain. Unlike most NFT projects based on Ethereum and WAX, NBA Top Shot is based on the Flow blockchain, a public chain developed by CryptoKitties' development team Dapper Labs, SPoCK cryptography technology is adopted, and Layer 2 is used to achieve decentralized high performance.

Flow can upgrade and protect developers' codes through PoSy consistency algorithm, which is highly friendly to developers, with strong security and high throughput, and can better meet the needs of district-centric games. The ecosystem is also improving, with Opensea, a famous NFT exchange, joining the Flow ecosystem on February 24, 2021.

2.1.3.2 History of traditional star card

2.1.3.2 A originated in the United States, mainly with baseball cards. The first baseball cards were issued in the 1880s, around the time of the advent of professional baseball. Each Card had a picture of a player on it. The cards were called Trade cards. The early players' cards were mainly used as giveaways to buy cigarettes, and candy and toy manufacturers followed suit, gradually becoming an American collectible.

Goodwin & Co., Maker of Old Judge and Gypsy Queen tobacco was the first company to manufacture star player cards, and Topps was the first company to officially specialize in player cards, monopolizing the market for a time after 1951. After the antitrust Act, Topps only retained the right to distribute NBA basketball star cards, and the American player card market entered the warring states era.

2.1.3.2 B carries cultural value. Traditional sports like baseball and basketball are an important part of American culture, and player cards sometimes represent a storied era or a great team and are highly collectible. In addition to baseball, the influence of basketball culture represented by NBA in the world is self-evident. There are many superstars like James and Kobe Bryant.

Nowadays, star cards are no longer just cards with a picture of one or two players on them. There are more new ways to play, such as limited edition cards, rookie cards, jersey cards, and star autographed cards. These cards are scarce and have higher collection value over time.

2.1.3.3 Advantages of NFT star card over traditional star card

2.1.3.3 A has more diversified forms: In addition to the traditional star card star pictures and basic information introduction text, NFT star card also has the form of short video or GIF, record NBA star "wonderful moment", NFT star card form is more diversified, more attractive, interesting, investment and collection value is higher.

2.1.3.3 LOW storage difficulty of B: The cards may be oxidized, discolored, damaged and other problems in the process of storage as time goes by. The ink on the players' autograph cards may also fade. NFT star card as an asset on the chain after, does not exist there will be a real star card storage or transportation problem, NFT assets can be stored in the wallet, the storage cost is almost zero, it also makes the star card collection threshold, attract more players to participate in, the other assets in the chain of more liquidity given the NFT star card collection is more ideal investment properties.

2.1.3.3RISK reduction of COPYcat C Cards: the trading market of traditional football star cards is unregulated. After the official issuance of cards, copycat cards are likely to be sold in the secondary market between individuals. Players may buy counterfeits with very low costs if they make a mistake in judgment. With smart contracts, the provenance of the NFT star card and every address where it is held or transferred can be traced, each card is unique, non-replicable and information cannot be tampered with, and the chances of a fake card are low.

2.1.4 Advantages of cryptographic games

Crypto games have the following advantages over traditional games:

2.1.4.1 Ownership of Game Assets by Players: In traditional games, the ownership of game assets belongs to the developer, and the player only has the right to use the game. The developer can transfer or change the user's game assets at will, while in encrypted games, the user can really own the ownership of game assets through smart contract.

2.1.4.2 Game Data can be stored permanently and safely: In traditional games, game data has the risk of being stolen by hackers, while in cryptographic games, hackers cannot invade and attack distributed ledgers based on blockchain technology, so game data can be stored permanently and shall not be tampered with.

2.1.4.3 Open Source Game Development: The code of the traditional game is not open source, that is, the game manufacturer makes the rules of the game, and the encrypted game is a point-to-point ecosystem different from the single point of trust of the traditional game. The code of the game is open source and transparent, and developers can give full play to the creative freedom and innovation to make the game more playable, which also reflects the concept of Web 3.0.

2.1.5 Development prospects

2.1.5.1 More thoroughly Centralized, Decentralized Community governance (DAO) enables NFT games: One of the problems of NFT games is that the underlying facilities in the game ecosystem are not perfect and the degree of decentralization is not thorough. Even though the player nominally owns the game assets, what form the NFT takes on the front end is determined by the game vendor's centralized servers.

而 DAO 是指通过一系列社区成员都认可，公开透明的规则，社区在无人治理的情况下都可以自主运行。NFT 游戏社区中任何的 Token 奖励、投票、交易都是得到整个社区认可的。数据公开透明，任何成员都可以查询且无法篡改，一旦部署后将不受创建者和外界力量的影响。DAO 将在 NFT 游戏中的「去中心化」抗争中发挥重要作用。

2.1.5.2 Building game-specific Public chain Ecology: At present, most NFT games are developed based on Ethereum, but Ethereum has disadvantages such as low TPS and high Gas cost. High-quality public chain infrastructure dedicated to NFT game development is also one of the development directions of NFT games in the future.

Flow, developed by Dapper Labs, is a leading public chain dedicated to games. It has obtained the exclusive cooperation right with NBA and other organizations. NBA Top Shot is developed and established on Flow. Flow has the advantages of low cost, low latency, high throughput and friendly development environment and user experience.

2.2 Crypto art -- the most suitable application for NFT

We believe that the crypto art market can bring economic benefits that traditional systems cannot. Through smart contracts, the historical transaction information of works of art, including originator, exhibition record and sale record, is completely open and transparent, which greatly reduces the transaction cost of works of art.

And the creator also has the ownership of the artwork in essence, and the artist can also obtain secondary sales compensation through demonstrable programming. Artworks anchored by NFT have scarcity and uniqueness, and it is this scarcity that drives people's demand for artworks.

2.2.1 Disadvantages of traditional digital art trade

In addition to the art itself has the upper chain pieces, the disadvantages of the traditional art trade is also an important reason to promote the emergence of encryption art. The disadvantages of traditional artworks are as follows:

2.2.1.1 Poor mobility of works: in the traditional art market, the trading places are mainly galleries and auction houses. Creative artists exhibit works in galleries or auction houses through intermediaries, and buyers can copy works with USB after payment. The disadvantages of this trading mode are obvious: the exposure rate of works is low, limited by time, region and crowd, low liquidity and popularity.

2.2.1.2 Creators cannot own the real copyright: after obtaining a work from creators, buyers can copy a copy of the same work and continue to trade it in the secondary market. The scarcity of artistic works decreases in the continuous replication and dissemination, and the value of collections declines. Compared with the initial sales revenue, the economic benefit of resale appreciation is objective.

Over the years, original artists have been fighting for royalties from secondary sales, known as the "right of renewal". The concept of "right of renewal" was first introduced in France in 1920, and the tax rate of renewal is usually very low. In France, artists can get 3% of the resale price. Artists can earn 4% on resale.

In the United States, California legislated to recognize the right of renewal in 1976. In 1991 and 2011, the Congress solicited public opinions on the right of renewal system, but failed to pass it. In 2012, the California Right of renewal Act was abolished. In addition to the imperfect legislation, law enforcement is also very difficult, often requires the participation of the legal layer to collect the benefits of secondary sales, legal costs are high.

2.2.2 Major projects

The following table summarizes NFT's major projects in the field of crypto art and features of each project:

2.2.3 NFT enables the art field -- take SupeRare as an example

2.2.3.1 SuperRare Market Overview

SuperRare is one of the major crypto art marketplaces founded in 2017. The platform has gallery, auction house, museum, social, commercial and other functions. At present, the platform has more than 600 creators, and works are generally sold at ETH price. The total transaction volume reaches about 20 million yuan, and the total transaction volume is about 16,000 pieces. At present, the unit price of the most expensive work is 165ETH, about 85,000 US dollars.

Source:nonfungible.com

2.2.3.1 The average transaction price of A commodity rises sharply: The figure above shows the average transaction price of NFT goods in SuperRare. Up to the end of February 2021, the average transaction price of goods fluctuated and rose, peaking at $8,135 on February 16, an increase of more than 47 times from the beginning of 2020. And in 2021, the increase is greater than before.

Source: Dune Analytics, queried by rchen8

2.2.3.1 Increasing demand for B collections: The figure above shows the growth of the number of artists and collectors in SuperRare in 2020. The gap between collectors and artists keeps widening. At the end of 2020, the number of collectors is about twice that of artists, and the total amount of collectors and artists keeps increasing, indicating the increasing demand for collectibles.

2.2.3.2 SuperRare enabling art transaction

2.2.3.2 An artist's primary sales income increases: Investors can through the platform around the world enjoy the artist's works, works of high exposure than traditional auction houses, and in point to point encryption art market decentralized ecological system, the artist is not affected by the high commission of auction houses, dealers and other middlemen, primary sales 85% earnings attributable to their charge 15% commission (platform), Revenue from primary sales of artists increased.

2.2.3.2 B artist and secondary sale rights binding: The ethereum smart contract has added the secondary market sales franchise. In Superare trading market, after the artwork is traded in the secondary market, the originator can get 10% commission and passive income from resale. Because the smart contract has the right to control the assets, the payment will be automatically made immediately after the second transaction, without the need for third-party legal personnel to execute, and the artist really owns the rights of the second sale.

2.2.4 Advantages of encryption art

In general, the advantages of cryptographic art over traditional art can be summarized as the following three points:

2.2.4.1 Cost reduction: Compared with traditional art transactions, encrypted works of art can reduce high transportation costs, storage costs, maintenance costs, legal costs, etc.

2.2.4.2 Increase exposure and fluidity: At present, traditional art transactions are limited by time, region and audience. Major art exhibitions are only concentrated in big cities such as New York, Berlin, Paris and Hong Kong, and the audience is mainly rich social class. However, cryptographic art successfully connects the global market through blockchain and smart contract, integrating global art resources. Bringing together artists, collectors, investors and critics from all over the world, players can choose to invest in NFT asset fragments, the collection threshold is lowered, you can browse the art in the crypto art comprehensive trading platform at any time.

2.2.4.3 明确作品所有权：加密艺术的展览、流转信息全部会被记录在链上，便于审核、跟踪特定艺术品，出现仿造品、山寨品可能性大大降低。ERC721 协议明确了 Token 的出处，明确了作品所有权，二次销售的剩余价值归创造者所有。

2.2.5 Future vision of crypto art

There are four main trends in the future development of crypto art:

2.2.5.1 New asset classes are formed by combining or bundling with more elements: such as finance, construction, etc. These innovative bundling combinations will unleash greater potential of cryptographic art.

2.2.5.2 Works of art will be combined with more fashion products or toys: the cash flow income of fashion play market is higher than that of art, and personalized design and fashion attributes have become the consumption logic of many young people today. The popular scale of fashion play market will continue to expand. This trend is already seen in the traditional art world, such as the work of artist Takashi Murakami, whose paintings and sculptures have a strong toy-like quality.

2.2.5.3 Increased liquidity: There may be more comprehensive trading platforms and second-hand trading platforms similar to Opensea in the future. Secondly, another source of liquidity is DeFi. When users pledge high-quality NFT assets in DeFi and then borrow to buy new assets, the liquidity of NFT will increase.

In addition, in addition to the single edition of limited art, there will be more editions of limited art trading circulation. Multi-edition art works are a series of identical art works commissioned or made by artists according to their own ideas. Multi-edition art works have lower collection threshold, stronger social attributes, increased liquidity and higher appreciation space for players.

2.2.5.4 Upgrade of art authentication and anti-counterfeiting technology: With the upgrade of the chip technology of authentication and traceability, the possibility of players encountering forgery will be reduced.

2.3 社交 Token ——NFT 未来最有潜力的增量市场之一

我们认为社交 Token 集中体现了 Web3.0 点对点传输的内涵，有助于减少创意者对中心化平台的依赖，增加创意作品的流通性和变现能力，也可以真正实现创意者和权益绑定。相比实物资产上链，这类互联网社区中的原生资产的价值捕获将会更高。目前人们还只是触及了社交 Token 的浅层潜力，社交 Token 未来可能成为 NFT 最有潜力的增量市场之一。

2.3.1 社交 Token 分类

社交 Token （social tokens）是一种由个人声誉、品牌或社区支持的 Token ，是 NFT 领域中一个较新的应用。社交 Token 是建立在社区价值会不断提高的前提之上的。社交 Token 大致分为两类：个人 Token 和社区 Token 。

2.3.1.1 个人 Token ：由个人创建，会随着个人价值的增长而升值，但捕获价值有限，受个人品牌影响大，创作者可以通过发币来管理自己创建的社区。

2.3.1.2 社区 Token ：通常用于进入有特定成员资格才可以进入的社区，比如必须拥有该社区创建者发行的 Token ，才可以进入特定的 telegram 讨论组，获得资讯或服务等等，同时这些社区也会通过发放 Token 鼓励人们对社区做出贡献，社区 Token 大多是去中心化自治组织（DAO）的治理 Token ，社区通常比个人成就更广，增长潜力更大。

总体而言，个人 Token 早期投资者可能获得巨额回报，社区 Token 可能会捕获更多增量价值。下图是 Messari 归纳的两种社交 Token 的主要项目以及其 Token 价值：

Source: According to Messari

2.3.2 社交 Token 价值

2.3.2.1 Increase the cash ability of creative works. The Internet provides a platform for creators to share their works, but their commercialization ability, work sharing, communication ability and appreciation space are all limited, that is, their works lack the ability to monetize.

但 Web 3.0 的出现有望解决这一问题，创意者可以在社区内通过发放社交 Token ，让支持者共享所喜爱的作品，从而提高流动性，达到作品增值的目的，而且创意者可以根据社区内用户的活跃度以及贡献度划分层级并享受 Token 化权益。

2.3.2.2 创意者和权益绑定。创作者可以利用社交 Token 允许粉丝访问该创作者全社交平台的作品，粉丝可以不再去依赖平台支持创作者和喜爱的作品，这种方式通过 Token 化工具统一对创作者支持。创作者可享有作品增值空间的全部利润，实现创意者和权益的绑定，这也体现了 Web 3.0 的点对点生态系统的核心内涵。

2.3.3 Featured project -- Whale

目前社交 Token 的特色项目是 WhaleShack 发行的 Whale, WhaleShark 首次发行是在 2020 年 5 月，它由大量的 NFT 资产组成的金库支持，包括大量的艺术品、收藏品、虚拟物品 Token ，创作者可在 Opensea 上用 Whale 标价出售其作品。

The following chart shows the estimated value of WhaleShark's NFT asset pool (January 2021 audit by Nonfungible.com). The NFT assets in the pool have been on an upward trend for several months and were valued at approximately $2.7 million as at 31 December 2020. It was worth nearly $6 million at the end of January 2021, up 120% in a month.

It's worth noting that Nonfungible's valuation method relies more on historical data, and most NFT assets are valued based on average unit sales over the past few months, with little forecast for the future. This valuation method is conservative, and the current value of the vault assessed by Nonfungible can be considered the lowest asking price.

Souce: Nonfungible

Whale is not only supported by the NFT asset library, but also has various functions within the community, such as gaming, purchasing virtual assets, etc. Whale has also created a DAO (Decentralized Autonomous Organization). Whale is a completely participant-led, non-centralized organization.

2.3.4 Ecological environment

如今的社交 Token 不仅价值升高，其生态也在快速崛起，下图显示了社交 Token 生态的主要构成部分：

Token 发行平台：提供 Token 发行者铸造和发行社交 Token 的平台。

Token 创建加速器：主要作用为孵化社交 Token ，比如帮助创作者设计 Token 模型，创造 Token 标准等。

Management tools: mainly used for the governance of the community, the main functions include group authentication, authentication, voting, proposal, initiating DAO, airdrop, reward, asset sales, profit farming and so on.

2.3.5 社交 Token 价值思考

2.3.5.1 相比实物资产上链，社交 Token 原生资产价值捕获更高。社交 Token 在粉丝经济持续发展的背景下是有实际价值支撑的，拿个人 Token 举例，发币者个人影响力越高， Token 的价格就会越高，发行 Token 由发起人的个人品牌和声望背书。相比资产上链，这类互联网社区中的原生资产的价值将会更高，只是在 Web3.0 时代正式到来之前不够明显。

2.3.5.2 对识别人才及品牌的增值预测能力有要求。社交 Token 主要由个人声誉、品牌或社区支持，会随着个人或社区价值的增长而升值，对投资者识别人才的能力有要求。

2.4 Other Applications

除了前文提到的 NFT 在加密游戏、加密艺术以及社交 Token 中的应用，NFT 在其他赛道也有颇多令人兴奋的项目，下表梳理了 NFT 在综合性交易所，数据库，去中心化域名，金融以及和 DeFi 结合的一些代表项目：

3. Prospects and Bottlenecks

3.1 High quality assets enhance market liquidity.

First, the NFT space is expected to see the emergence of more high-quality comprehensive trading platforms, providing players around the world with a place to forge or trade NFT. In addition, DeFi can provide liquidity for NFT. High-quality and widely recognized NFT assets can be mortggated and lent in DeFi agreement, and users can purchase new assets after mortgating NFT. High-quality NFT assets will improve market liquidity.

3.2 More real assets on the chain.

The real meaning of NFT is to provide an upchain channel for real-world objects, acting as a bridge between the physical world and the blockchain world. In addition to the existing game props, art collections and other applications, in the future, more real assets such as real estate, copyright, etc., can be linked to exist in the form of NFT. In addition, NFT can also be seen as a real interest on the chain process, such as film, music, drama, fashion, etc., can be on the chain, the gameplay will be more diverse.

3.3 Increase in financial attributes.

商业票据例如债券、保单等在金融市场流通、交易的过程中需要承载着大量信息，具有唯一性，NFT 作为非同质化 Token ，可以对标不同实物，票据的信息可被追踪。NFT 可以为金融领域赋能，未来金融属性将会增加。

3.4 The ecological environment is not perfect.

Compared with the previous popular DeFi ecology, the ecological improvement of NFT at the present stage is not perfect enough. Different from the similar business and investment logic of all tracks in DeFi field, NFT tracks are obviously divided, with great differences in projects, and only a few tracks are mature and have investment value. As a result, NFT's project and track have insufficient synergy and limited influence.

Secondly, the concepts of private key, wallet, mnemonic words and so on involved in NFT have high barriers for players, and many players are put off. In addition, the NFT market is less liquid than DeFi projects because it is an emerging niche.

3.5 High Security Risks.

首先全球在 NFT 领域政策的监管尚处在空白阶段，NFT 发展属于无监管的「野蛮生长」状态，根据 NFT 非同质化 Token 对标实物的特点，可能会出现不法分子利用 NFT 洗钱、交易违禁物品这类犯罪活动。此外，随着 NFT 资产价值不断增加，生态系统逐渐扩大，可能成为继 DeFi 之后黑客新的攻击目标，网络安全问题漏洞也是潜在风险。

Four. Investment and track evaluation

4.1. 有投资价值的赛道包括：优质公链、发行和流动平台、 Token 本身

4.1.1 High-quality public chain

Ethereum's high Gas fee, slow speed, and network congestion limit the development of many applications, and the user experience is poor. New L2 solutions such as Flow, as game-specific blockchain or Matic, and xDai Chain have the potential to support the game or streaming media industry.

投资 L1 或 L2 上支持 NFT 项目开发的有更高吞吐量的优质公链或扩容解决方案是一个有潜力的 NFT 投资方向。但与更为集中的 Token 本身投资相比，公链这类较为广泛的投资带来的收益可能较少。

4.1.2 Distribution and mobile platform

NFT 是非同质化 Token ，具有唯一性，和同质化 Token 不同，其商品属性大于货币属性。既然 NFT 商品属性更大，商品的发行和流动平台就是主要投资方向之一，例如 Opeansea、Superare 这类交易平台。

Opensea 和 Superare 目前尚未发币，交易平台 Rariable 的平台治理 Token Rari 允许玩家买卖 NFT 商品，进行流动性挖矿，获得 Token 奖励，投资者可以布局这类 Token 。但是，过于小众的市值很小的交易平台不建议布局，第一深度不够，价格波动大，用户容易遭受短期损失，第二平台规范性没有保障。

4.1.3 Token 本身

前文提到的艺术收藏品、游戏道具、社交 Token 、NFT 金融产品、平台治理 Token 都具有投资价值。收藏品和艺术品往往因为不同的原因或背景变得有价值，这些原因通常不可复制，具有稀缺性，投资者需运用自身艺术品知识储备评估其收藏价值，游戏道具也根据游戏本身的热度和趣味性价值不同。

鉴于 NFT 的稀缺性、唯一性，NFT 在金融领域的应用是未来发展的重要方向，其中保险、衍生品、指数是 NFT 在金融领域的投资主要投资机会。平台治理 Token 的价值取决于其治理的资产以及生态系统的质量，代表该平台上 NFT 价值的索引。随着「粉丝经济」、「所有权经济」的兴起，标的个人价值和社区价值的社交 Token 也是有潜力的 Token 投资方向之一。

4.2 NFT works themselves, artists, trading platform quality and external evaluation are important indicators of NFT evaluation

Investing in NFT in the cryptocurrency space is similar to alternative investments by traditional investment institutions. Compared with traditional investments, alternative investments are less liquid and have less effective information, which may earn excess returns, while also helping to reduce the overall portfolio volatility in the portfolio and increase investment diversity. Similar to traditional art valuation methods, there are four main factors that players should consider when investing in NFT:

4.2.1 NFT Works themselves: NFT works themselves are the most important indicators for evaluating NFT. Collections, art such NFT it's difficult to assess the intrinsic value of the product, art appreciation level have certain requirements for players, game props value maintained and added is the premise of the game itself has remained to attract users, the player can according to personal interests, artistic feelings and appreciation Angle to evaluate the investment value of the works of NFT.

4.2.2 Artists: If an artist is well-known, buyers are more inclined to buy the work, and only such artists with high market demand can sell their works at a high price. On the contrary, the works of new artists are less likely to sell at a high price. Active artists in the NFT field include: Matt Kane, Pak, Josie, Pascal Boyart, Hackatao, Coldie, Trevor Jones, JOY, etc. Players can choose from these artists first.

4.2.3. Quality of trading platform: Auction houses play an important role in the traditional art market. If an artist's work is purchased by a reputable auction house, the artist's status in the art world is recognized to some extent and the value of the work is further increased.

Now there are more and more NFT trading platforms, and players need to evaluate their quality. They must choose platforms with high reputation and guarantee the quality of NFT works. For example, users can purchase NFT assets from platforms where artists like SuperRare and their work are heavily vetted.

4.2.4 External evaluation: In traditional art investment, collectors can evaluate the value of artworks by collecting external evaluation data such as artist archives, exhibition news and auction results. In the NFT world, users can also evaluate the value of encrypted artworks by referring to news, market transaction data (such as transaction price, transaction value) or third-party audit reports.

4.3 Pay attention to protect assets and collect NFT safely

4.3.1 Users had better choose hardware wallet to store NFT: the private key of hardware wallet is stored separately in the chip, which is not easy to be attacked by malicious attacks. It is a safe way to store NFT assets, unlike software wallet, which faces more attack carriers.

4.3.2 Users need to consider the security of the platform's handling of metadata: If an NFT project stores its metadata on a third-party centralized server, users will suffer losses if the project eventually goes bankrupt or the third-party server is hacked. For collectors, the degree of uplink of NFT items is very important, and NFT items with high degree of uplink and metadata stored on the chain should be selected. For such projects, users can also trace the source of information in the Taifang browser or other query tools to track the status of NFT assets.