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Looking back on the road to NFT capitalization, what opportunities are there in the future?

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Game> IP> Pass

Original title: "NFT Capitalization Road and Future Trend"

Original author: 0xMoonda, WAGMi Ventures

A meme symbol that emerged from the community

In 2005, Pepe, the comic protagonist of Boy's Club, relied on The unique appearance and humorous style became popular on the Internet and became the most popular character in the hearts of the public. Pepe soon became the creative prototype of the members in the 4chan forum, and a large number of second-generation pictures of different styles sprung up like mushrooms after rain.

As more and more people use the second creation Pepe, there are two problems: 1. It is impossible to identify the real second creator; 2. In line with According to the principle of "rare things are more expensive", the more widely used Pepe is, the more the characteristics that represent unique personality will be missing, which stimulates the author's awareness of copyright protection. So Pepe, the second creation, was logically listed on eBay for sale for netizens to use.

In 2016, a wallet engineer named Joe Rooney created a platform dedicated to trading Pepe on the Bitcoin network, and the Bitcoin network is used very well Once the attribution of creative rights and ownership is clarified, this business begins. It is also at this moment that the "small pictures" in the blockchain are officially associated with money, laying the foundation for the arrival of a new era.

So it is understandable why some people are willing to pay a high price for a seemingly ordinary or even funny "picture" that is not created by artists. The essence behind it is the birth of a new expression of subculture and the manifestation of its unique identity in this cultural circle. And this clue will continue to run through the subsequent development of NFT.

The Prosperity and Individual Belonging of Crypto Community Culture

In 2017, graduated from the University of Toronto Hall and Watkinson founded Larva Labs, inspired by their niece collecting dolls, they issued the first 10k PFP (Profile Picture) Collection --- CryptoPunks on the Ethereum network. At the beginning of the release, almost no one cared about it. Later, they moved their positions to galleries and auction houses. With the support of the encryption market reaching a stage climax, CryptoPunks sold at a good price. However, the success and failure are also Xiao He, and the ensuing encryption winter caused the price of CryptoPunks to fall to the bottom.

History is always surprisingly similar, even now the process is still repeating itself. With the release iteration of PFP collection and the development of market operations, different crypto subcultures with distinct personalities have gradually formed, such as BAYC representing "yacht rich man", Azuki representing Japanese trends, 3D dynamic characters Meebits and so on. At this time, the upper limit of the market value of a single NFT collection depends on the operational capabilities of the project issuer, the number of community members, and the recognition in the circle, and the source of income is relatively single, mainly relying on the sale of NFT and platform transaction royalties.

In addition to different collections, a variety of analysis and transaction tools have catalyzed the financial attributes of NFT and the development of its upstream and downstream industry chains. From the end of 2021 to the beginning of 2022, OpenSea's NFT transaction volume on the Ethereum network will reach a historical peak of 2.162 billion US dollars. From the initial "tribal self-healing" has spawned a multi-billion dollar market.

While the market value has reached its peak, it is far from enough to continue to expand the market only in the encryption circle. The support of a larger market value requires a more grand narrative, and pure community cultural attributes and identity symbols can no longer meet the needs.

The intervention of Web2 giants and the birth of functional NFT

NFT market value The rapid growth and development of Web2 naturally arouse the interest of Web2 practitioners. They are keenly aware of the potential opportunities in this emerging market, and put them into practice from silent attention. The most representative figure is Kevin Rose, the founder of Proof. As an angel investor, his projects include Twitter, Facebook and Square in the Web2 field and Solana, Filecoin, Blockstack, Art Blocks in the Web3 field, etc.

Due to his own industry resources and social influence, his joining has raised the upper limit of the valuation of NFT projects to a new height, and at the same time proposed a new concept " "Membership Token" is also known as "Membership Pass". In addition to having a status symbol, NFT holders also have circle resources as added value, which injects practical functions into NFT. It also means that the valuation of projects of the same type will largely depend on the founder's ability to realize value, and market expectations become "visualized".

With the gradual clarity of the industrial structure, income and economic models are also gradually clear, and the ceiling of the narrative returns to the Web2 valuation system, with an upper limit of expectations. However, this does not mean that the industry is regressing but progressing, because a clear revenue model will attract more fresh blood to continuously join the industry for construction. At the same time, the NFT market ushered in its second peak, followed by the emergence of a second upper limit of market value, which is also the current situation that the NFT market has to face.

So, where is the future direction of NFT?

Think from three angles:

< p>·Beta income direction

NFT "Peak Three Giants"

The picture above shows the details and classification of the three top projects in the current NFT industry, from which we can get some inspiration:

* IP: First of all, let me explain that most of the IPs mentioned above come from the Ethereum ecology and are positioned as a single variable for vertical development, so now you might as well switch to horizontal Comparing perspectives, observe the direction of IP development in Ethereum's competition against L1 and the new generation of L1 ecology, and whether there is a suitable opportunity. For example, Dust Labs, which recently received financing in the Solana ecosystem.

*Pass: As mentioned earlier, the upper limit of Pass is the value of resources that the founder or his organization can provide, but it cannot be ruled out that there will be more Web2 elite practitioners in the future The move to Web3 brings new surprises for everyone.

*Game: Observing the market environment, it is not difficult to find that games are most likely to become an important entrance for Web2 users to "frictionless" transition to Web3 in the future, and NFT is currently an important part of blockchain games. Even with the blessing of the top IP halo, in order to obtain a higher valuation, the project will turn to game production to carry users and extend its life cycle.

Therefore, according to the upper limit of potential and estimated investment income, the investment directions can be arranged as: Game > IP > Pass

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·Alpha revenue direction

Back to the beginning of the NFT story, "small picture "The main reason for the closed loop with the blockchain is to solve the needs in real life scenarios from the technical level, and then create economic value (although financial bubbles are inevitable in the process). According to this idea, we might as well start from the emerging Token standards of Ethereum and other public chains, analyze which practical problems it mainly solves, and find potential value space. Token standards that have not yet been put into large-scale application include but are not limited to:

ERC-1155

ERC-4626

ERC-3525

...

Another potential direction of alpha income refers to the development history of ERC-721. It is to help the audience of the agreement have a smooth user experience and lower the barriers to entry. Both analytical tools and trading platforms have the opportunity to give birth to unicorns in the next cycle.