The NFT space sometimes feels overloaded with copycat projects, and there can be prolonged periods when an overriding theme or aesthetic takes hold. At these moments, multiple new launches will be configured similarly, and originality takes a back seat.
At the same time, though, crypto and NFTs move quickly, and so, despite the constant presence of mimicry and trend-chasing, innovations can unfold seemingly overnight, and the urge to experiment is ever-present. This is all in the nature of an ecosystem where regulation and traditional corporate boundaries have been, up to now at least, more or less non-existent.
With all that in mind, it should be no surprise that NFTs are changing rapidly, and there are some new approaches that are currently grabbing attention.
The Royalties Debate
One of the initial often touted benefits of creating and selling art (and other content) via NFTs was that creators could take a fixed royalties payment every time one of their NFTs was sold. This was on top of being able to profit directly from initial sales, meaning creators could have a strong relationship with buyers, exercise close control over what they released, and then, through royalties, receive ongoing income from secondary sales.
This model attracted artists to work with NFTs, and while profiting from one’s art is still a tough process, it at least provided one more approach to experiment with, while creating an interesting, sometimes artistically inspiring crossover between the worlds of art, crypto and finance. However, a flaw in the model is that royalties are not hard-coded into NFTs. That is, royalties are enforced by NFT marketplaces in a traditional web setup that, in this particular respect, doesn’t make full use of blockchain technology.
While everyone was talking about web3, this arrangement was decidedly web2, and competitor marketplaces have since come along that, to the benefit of traders, but not artists, allow NFTs to be bought and sold without royalties. This bypassing of royalties by newer platforms has generated often heated debate, as artists, not for the first time, felt that they were getting a rough deal: creating the content on which NFT markets thrive, but having a valuable income stream abruptly severed.
Most observers are sympathetic to creators, but at the same time, the culture around crypto and NFTs are tech-oriented, meaning what can be done (such as royalty-free marketplaces), will be tried, and the dominant ethos is that problems should be solved mechanically and on-chain.
Check out the FMLS22 session on NFTs for Fintechs: From Asset Class to the Machinery of Ownership.
Limit Break
A well-known web3 gaming company called Limit Break is now furthering the debate with its own solution to problems around NFT royalties. Limit Break was founded by Gabriel Leydon, a prominent and influential voice in both gaming and NFTs, and the company’s DigiDaigaku NFT collection is highly valued.
The forward-thinking gaming company has already stirred the pot by pushing a new approach to web3 gaming branded as free-to-own (meaning, as the name suggests, that in-game NFT assets are initially distributed for free), and has now posted its plans for on-chain, programmable royalties.
The system they propose is opt-in and involves staking
Staking
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve distributed consensus.This notably differs from Proof-of-Work (PoW) blockchains that instead rely on mining to verify and validate new blocks.Conversely, PoS chains produce and validate new blocks through staking. This allows for blocks to be produced without relying on mining hardware. As such, instead of competing for the next block with heavy computation work, PoS validators are selected based on the number of coins they are committing to stake.Users that stake larger amounts of coins have a higher chance of being chosen as the next block validator. Staking ExplainedStaking requires a direct investment in the cryptocurrency, while each PoS blockchain has its particular staking currency.The production of blocks via staking enables a higher degree of scalability. Moreover, some chains have also moved to adopt the Delegated Proof of Staking (DPoS) model. DPoS allows users to simply signal their support through other participants of the network. In other words, a trusted participant works on behalf of users during decision-making events.The delegated validators or nodes are the ones that handle the major operations and overall governance of a blockchain network. These participate in the processes of reaching consensus and defining key governance parameters.
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve distributed consensus.This notably differs from Proof-of-Work (PoW) blockchains that instead rely on mining to verify and validate new blocks.Conversely, PoS chains produce and validate new blocks through staking. This allows for blocks to be produced without relying on mining hardware. As such, instead of competing for the next block with heavy computation work, PoS validators are selected based on the number of coins they are committing to stake.Users that stake larger amounts of coins have a higher chance of being chosen as the next block validator. Staking ExplainedStaking requires a direct investment in the cryptocurrency, while each PoS blockchain has its particular staking currency.The production of blocks via staking enables a higher degree of scalability. Moreover, some chains have also moved to adopt the Delegated Proof of Staking (DPoS) model. DPoS allows users to simply signal their support through other participants of the network. In other words, a trusted participant works on behalf of users during decision-making events.The delegated validators or nodes are the ones that handle the major operations and overall governance of a blockchain network. These participate in the processes of reaching consensus and defining key governance parameters.
Read this Term one’s NFT for a wrapped token which has royalties programmed in. Furthermore, those royalties can take a variety of formats, thereby opening the door, for example, to royalty sharing and all the commercial applications that might permit.
However, the system doesn’t begin and end with royalties, as many other variables could be incorporated, on-chain, into a wrapped NFT. Some of Limit Break’s suggestions include setting price parameters on secondary sales, enabling rewards such as airdrop
Airdrop
An airdrop is defined as the distribution of a cryptocurrency token to numerous wallet addresses, in most instances free of charge.Airdrops are primarily utilized as a way of a project garnering higher levels of attention and new followers. Such efforts are important in culturing a larger user-base and a wider disbursement of coins.Airdrops can be seen as a marketing tool. They are usually used as a promotional effort to encourage liquidity in the markets for these coins, since users are more likely to trade them. There are two ways that token creators select the recipients of air-dropped tokens.Recipients can be selected in a randomized way, or rewarded for helping promote tokens. For example, publishing an event in airdrop-related bulletin boards or newsletters. This was commonly used with Ethereum accounts whose value was higher than a defined threshold. In this instance, many accounts were gifted with unsolicited airdropped tokens. Airdrops ExplainedAs a more established marketing technique, several websites now also exist to help promote cryptocurrency airdrops. Social media also is a powerful tool for airdrops, helping spread news and build up enthusiasm.Airdrops are seen as a reward for promotional efforts by users. This symbiotic relationship helps all parties. For example, cryptocurrency proponents can be rewarded with free cryptocurrency by supporting projects who release coins through an airdrop. Airdrops traditionally have basic requirements such as joining a certain Telegram channel, retweeting a tweet, or inviting new users to a project.Airdrops do not involve the contribution of capital towards any project however. Doing so is considered to be an Initial Coin Offering (ICO).
An airdrop is defined as the distribution of a cryptocurrency token to numerous wallet addresses, in most instances free of charge.Airdrops are primarily utilized as a way of a project garnering higher levels of attention and new followers. Such efforts are important in culturing a larger user-base and a wider disbursement of coins.Airdrops can be seen as a marketing tool. They are usually used as a promotional effort to encourage liquidity in the markets for these coins, since users are more likely to trade them. There are two ways that token creators select the recipients of air-dropped tokens.Recipients can be selected in a randomized way, or rewarded for helping promote tokens. For example, publishing an event in airdrop-related bulletin boards or newsletters. This was commonly used with Ethereum accounts whose value was higher than a defined threshold. In this instance, many accounts were gifted with unsolicited airdropped tokens. Airdrops ExplainedAs a more established marketing technique, several websites now also exist to help promote cryptocurrency airdrops. Social media also is a powerful tool for airdrops, helping spread news and build up enthusiasm.Airdrops are seen as a reward for promotional efforts by users. This symbiotic relationship helps all parties. For example, cryptocurrency proponents can be rewarded with free cryptocurrency by supporting projects who release coins through an airdrop. Airdrops traditionally have basic requirements such as joining a certain Telegram channel, retweeting a tweet, or inviting new users to a project.Airdrops do not involve the contribution of capital towards any project however. Doing so is considered to be an Initial Coin Offering (ICO).
Read this Term eligibility, and including in-game utilities.
Above all, the emphasis is on flexibility and moving NFTs beyond their current stage of development. If NFT use, up to now, has been static, as a vehicle for art and design, then Limit Break is pushing for a more dynamic approach, which should allow NFTs to be integrated more usefully in gaming and other fields.
Layer 2 Collections
While Layer 2 is a technical term referring to protocols that operate on top of a main blockchain (such as Arbitrum on top of Ethereum), in a much looser sense of the term, we’re now seeing an experiment with a second layer NFT collection, meaning a project that is created on top of an already existing collection.
The new project in question is called Mutant Hounds, and it’s been performing well, but the aspect of note is that it’s built around existing content from the Yuga Labs company, in particular, the Mutant Ape Yacht Club collection.
Mutant Hounds is slick and well-executed. When it comes to continuity, the artwork and world-building splice together seamlessly with the Yuga Labs NFTs it draws on, and Mutant Hounds has now established value of its own, while (temporarily, at least) adding value to and drawing attention towards Yuga’s pre-existing Mutant Apes collection.
Where Mutant Hounds is headed long-term, remains to be seen, but it has demonstrated that in a field as inherently permissive as NFTs, existing assets can suddenly be taken in unexpected creative directions by new parties.
Taking these two developments together, enhanced NFT programmability, and the creation of projects on top of projects, we see, in NFTs, a fertile area of development, in which flexibility and creative experimentation are always at the forefront.
While the results might seem a little chaotic, and the landscape can, at times, be disorienting to navigate, we should expect, in the long term, a wealth of new concepts and novel applications.
The NFT space sometimes feels overloaded with copycat projects, and there can be prolonged periods when an overriding theme or aesthetic takes hold. At these moments, multiple new launches will be configured similarly, and originality takes a back seat.
At the same time, though, crypto and NFTs move quickly, and so, despite the constant presence of mimicry and trend-chasing, innovations can unfold seemingly overnight, and the urge to experiment is ever-present. This is all in the nature of an ecosystem where regulation and traditional corporate boundaries have been, up to now at least, more or less non-existent.
With all that in mind, it should be no surprise that NFTs are changing rapidly, and there are some new approaches that are currently grabbing attention.
The Royalties Debate
One of the initial often touted benefits of creating and selling art (and other content) via NFTs was that creators could take a fixed royalties payment every time one of their NFTs was sold. This was on top of being able to profit directly from initial sales, meaning creators could have a strong relationship with buyers, exercise close control over what they released, and then, through royalties, receive ongoing income from secondary sales.
This model attracted artists to work with NFTs, and while profiting from one’s art is still a tough process, it at least provided one more approach to experiment with, while creating an interesting, sometimes artistically inspiring crossover between the worlds of art, crypto and finance. However, a flaw in the model is that royalties are not hard-coded into NFTs. That is, royalties are enforced by NFT marketplaces in a traditional web setup that, in this particular respect, doesn’t make full use of blockchain technology.
While everyone was talking about web3, this arrangement was decidedly web2, and competitor marketplaces have since come along that, to the benefit of traders, but not artists, allow NFTs to be bought and sold without royalties. This bypassing of royalties by newer platforms has generated often heated debate, as artists, not for the first time, felt that they were getting a rough deal: creating the content on which NFT markets thrive, but having a valuable income stream abruptly severed.
Most observers are sympathetic to creators, but at the same time, the culture around crypto and NFTs are tech-oriented, meaning what can be done (such as royalty-free marketplaces), will be tried, and the dominant ethos is that problems should be solved mechanically and on-chain.
Check out the FMLS22 session on NFTs for Fintechs: From Asset Class to the Machinery of Ownership.
Limit Break
A well-known web3 gaming company called Limit Break is now furthering the debate with its own solution to problems around NFT royalties. Limit Break was founded by Gabriel Leydon, a prominent and influential voice in both gaming and NFTs, and the company’s DigiDaigaku NFT collection is highly valued.
The forward-thinking gaming company has already stirred the pot by pushing a new approach to web3 gaming branded as free-to-own (meaning, as the name suggests, that in-game NFT assets are initially distributed for free), and has now posted its plans for on-chain, programmable royalties.
The system they propose is opt-in and involves staking
Staking
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve distributed consensus.This notably differs from Proof-of-Work (PoW) blockchains that instead rely on mining to verify and validate new blocks.Conversely, PoS chains produce and validate new blocks through staking. This allows for blocks to be produced without relying on mining hardware. As such, instead of competing for the next block with heavy computation work, PoS validators are selected based on the number of coins they are committing to stake.Users that stake larger amounts of coins have a higher chance of being chosen as the next block validator. Staking ExplainedStaking requires a direct investment in the cryptocurrency, while each PoS blockchain has its particular staking currency.The production of blocks via staking enables a higher degree of scalability. Moreover, some chains have also moved to adopt the Delegated Proof of Staking (DPoS) model. DPoS allows users to simply signal their support through other participants of the network. In other words, a trusted participant works on behalf of users during decision-making events.The delegated validators or nodes are the ones that handle the major operations and overall governance of a blockchain network. These participate in the processes of reaching consensus and defining key governance parameters.
Staking is defined as the process of holding funds in a cryptocurrency wallet to support the operations of a blockchain network. In particular, staking represents a bid to secure a volume of crypto to receive rewards. In most case however, this process relies on users participating in blockchain-related activities via a personal crypto wallet.The concept of staking is also closely tied to the Proof-of-Stake (PoS). PoS is a type of consensus algorithm in which a blockchain network aims to achieve distributed consensus.This notably differs from Proof-of-Work (PoW) blockchains that instead rely on mining to verify and validate new blocks.Conversely, PoS chains produce and validate new blocks through staking. This allows for blocks to be produced without relying on mining hardware. As such, instead of competing for the next block with heavy computation work, PoS validators are selected based on the number of coins they are committing to stake.Users that stake larger amounts of coins have a higher chance of being chosen as the next block validator. Staking ExplainedStaking requires a direct investment in the cryptocurrency, while each PoS blockchain has its particular staking currency.The production of blocks via staking enables a higher degree of scalability. Moreover, some chains have also moved to adopt the Delegated Proof of Staking (DPoS) model. DPoS allows users to simply signal their support through other participants of the network. In other words, a trusted participant works on behalf of users during decision-making events.The delegated validators or nodes are the ones that handle the major operations and overall governance of a blockchain network. These participate in the processes of reaching consensus and defining key governance parameters.
Read this Term one’s NFT for a wrapped token which has royalties programmed in. Furthermore, those royalties can take a variety of formats, thereby opening the door, for example, to royalty sharing and all the commercial applications that might permit.
However, the system doesn’t begin and end with royalties, as many other variables could be incorporated, on-chain, into a wrapped NFT. Some of Limit Break’s suggestions include setting price parameters on secondary sales, enabling rewards such as airdrop
Airdrop
An airdrop is defined as the distribution of a cryptocurrency token to numerous wallet addresses, in most instances free of charge.Airdrops are primarily utilized as a way of a project garnering higher levels of attention and new followers. Such efforts are important in culturing a larger user-base and a wider disbursement of coins.Airdrops can be seen as a marketing tool. They are usually used as a promotional effort to encourage liquidity in the markets for these coins, since users are more likely to trade them. There are two ways that token creators select the recipients of air-dropped tokens.Recipients can be selected in a randomized way, or rewarded for helping promote tokens. For example, publishing an event in airdrop-related bulletin boards or newsletters. This was commonly used with Ethereum accounts whose value was higher than a defined threshold. In this instance, many accounts were gifted with unsolicited airdropped tokens. Airdrops ExplainedAs a more established marketing technique, several websites now also exist to help promote cryptocurrency airdrops. Social media also is a powerful tool for airdrops, helping spread news and build up enthusiasm.Airdrops are seen as a reward for promotional efforts by users. This symbiotic relationship helps all parties. For example, cryptocurrency proponents can be rewarded with free cryptocurrency by supporting projects who release coins through an airdrop. Airdrops traditionally have basic requirements such as joining a certain Telegram channel, retweeting a tweet, or inviting new users to a project.Airdrops do not involve the contribution of capital towards any project however. Doing so is considered to be an Initial Coin Offering (ICO).
An airdrop is defined as the distribution of a cryptocurrency token to numerous wallet addresses, in most instances free of charge.Airdrops are primarily utilized as a way of a project garnering higher levels of attention and new followers. Such efforts are important in culturing a larger user-base and a wider disbursement of coins.Airdrops can be seen as a marketing tool. They are usually used as a promotional effort to encourage liquidity in the markets for these coins, since users are more likely to trade them. There are two ways that token creators select the recipients of air-dropped tokens.Recipients can be selected in a randomized way, or rewarded for helping promote tokens. For example, publishing an event in airdrop-related bulletin boards or newsletters. This was commonly used with Ethereum accounts whose value was higher than a defined threshold. In this instance, many accounts were gifted with unsolicited airdropped tokens. Airdrops ExplainedAs a more established marketing technique, several websites now also exist to help promote cryptocurrency airdrops. Social media also is a powerful tool for airdrops, helping spread news and build up enthusiasm.Airdrops are seen as a reward for promotional efforts by users. This symbiotic relationship helps all parties. For example, cryptocurrency proponents can be rewarded with free cryptocurrency by supporting projects who release coins through an airdrop. Airdrops traditionally have basic requirements such as joining a certain Telegram channel, retweeting a tweet, or inviting new users to a project.Airdrops do not involve the contribution of capital towards any project however. Doing so is considered to be an Initial Coin Offering (ICO).
Read this Term eligibility, and including in-game utilities.
Above all, the emphasis is on flexibility and moving NFTs beyond their current stage of development. If NFT use, up to now, has been static, as a vehicle for art and design, then Limit Break is pushing for a more dynamic approach, which should allow NFTs to be integrated more usefully in gaming and other fields.
Layer 2 Collections
While Layer 2 is a technical term referring to protocols that operate on top of a main blockchain (such as Arbitrum on top of Ethereum), in a much looser sense of the term, we’re now seeing an experiment with a second layer NFT collection, meaning a project that is created on top of an already existing collection.
The new project in question is called Mutant Hounds, and it’s been performing well, but the aspect of note is that it’s built around existing content from the Yuga Labs company, in particular, the Mutant Ape Yacht Club collection.
Mutant Hounds is slick and well-executed. When it comes to continuity, the artwork and world-building splice together seamlessly with the Yuga Labs NFTs it draws on, and Mutant Hounds has now established value of its own, while (temporarily, at least) adding value to and drawing attention towards Yuga’s pre-existing Mutant Apes collection.
Where Mutant Hounds is headed long-term, remains to be seen, but it has demonstrated that in a field as inherently permissive as NFTs, existing assets can suddenly be taken in unexpected creative directions by new parties.
Taking these two developments together, enhanced NFT programmability, and the creation of projects on top of projects, we see, in NFTs, a fertile area of development, in which flexibility and creative experimentation are always at the forefront.
While the results might seem a little chaotic, and the landscape can, at times, be disorienting to navigate, we should expect, in the long term, a wealth of new concepts and novel applications.
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