07 Oct Have NFTs Become More Than Just Another Crypto Fad?
In the 2020-21 crypto bull market we witnessed the meteoric rise and adoption of NTFs. Now that the market has cooled significantly, and many tokens have crashed in price, many are wondering if NFTs have any staying power, or if they’re just another passing fad.
Does The NFT Value Proposition Check Out?
With the predominance of Bitcoin as the world’s first cryptocurrency and the main quote cryptocurrency used on most exchanges for crypto trading pairs, we see a high degree of correlation with past crypto bull and bear markets and Bitcoin’s 4 year halving cycle.
In the past 13 years, Bitcoin has had 3 halvings, and with every market cycle, we have seen the creation of new and innovative token types, which trend throughout the cycle. Past examples include Stablecoins, Security tokens, DEX (Decentralised Exchange) tokens, DAO (Decentralised Autonomous Organisation) tokens, and more recently, NFTs (Non Fungible Tokens).
Some of the new token types of the past have gained serious traction and fully established themselves as a permanent part of the ecosystem, like in the instance of DEXs, DAOs, and especially, Stablecoins.
NFTs in particular have been in a unique position, compared to prior tokens trending during past bull runs, as during the first two market cycles, the crypto industry was still very new, and was considered to be too speculative and risky for mainstream adoption.
With the last market cycle, crypto adoption has increased spectacularly, and public perception has shifted dramatically. Many companies and brands jumped in head first this time instead of opting to cautiously observe from the sidelines, and enthusiastically adopted NFTs across a wide range of industries, from gaming, entertainment, food franchises, to fashion, and even toilet paper.
As the market sentiment flipped at the end of 2021 and became bearish, like in previous cycles, many tokens declined in value with some losing up to 90%. NFTs as a whole have been hit especially hard, with many plummeting from their bull market valuations.
For crypto veterans this volatility has become expected, but for newcomers, like the companies implementing NFTs into their branding and marketing, this has caught many completely off guard. This has many participants in the crypto sphere asking if NFTs have any value at all.
Which Companies Have Led The Way For NFT Adoption?
With the rise in popularity of NFTs, we’ve probably all heard about NFT projects like Bored Ape Yacht Club or Crypto Punks, but another surprising facet of the NFT phenomenon is major brands adopting NFTs to market their real world products.
It has been said that brands without an NFT strategy are analogous to brands without a web strategy during the rise of the internet. Despite the market downturn, many companies are still having resounding success with their forays into the NFT space.
Let’s take a look at some of the more recognizable brands and how their NFT offerings have performed. Data courtesy of Dune.com
With major brands still successfully releasing NFTs and doing so profitably even during the current crypto winter, it appears that NFTs do provide fundamental value for both the companies issuing the tokens and the collectors and traders scooping up the offerings and transacting on the secondary market.
Overall, this is a positive indicator that NFTs may be here to stay. Aside from companies seeing success with their own NFT projects, we are also still witnessing a slough of new NFT art offerings, on a variety of blockchains like Ethereum, Solana, Cardano, Shimmer Network, and Flow, to name a few.
In the world of Web3 platforms, having an NFT economy and NFT projects, marketplaces and minting platforms is an absolute must. Another fascinating aspect of NFT adoption is that NFTs have been a powerful driver for crypto adoption as a whole. Many people who weren’t initially interested in traditional cryptocurrencies, have become crypto-capable and proficient users, directly due to their interest in NFTs.
Many artists, content creators, and gamers who have typically shied away from purchasing or using crypto, have eagerly adopted NFTs, either by creating their own NFTs, or collecting and trading them on the secondary market.
NFT crypto gaming has also been remarkably successful with games like Axie Infinity, Defi Kingdoms, and Gods Unchained attracting thousands of users playing for the prospect of earning and collecting ingame NFTs.
What’s Next For NFTs? The Evolution Of Non Fungible Tokens
In addition to big brands with household names adopting NFTs for added “cool” for their brand image and a customer base that’s still interested in the newest NFT offerings, what technological innovations can we expect for the NFT space?
NFTs supporters have been celebrating NFTs as an important innovation since the days of Rare Pepes on Counterparty tokenization layer for Bitcoin, but essentially they haven’t changed that much since they were first introduced way back in 2016.
The process for creating NFTs has remained pretty much the same, choose a marketplace like Opensea or Rarible, pay a fee in crypto to mint your token and then offer it for sale to your fans. If you’re lucky it catches the eye of a crypto whale who purchases it for millions of dollars in crypto.
Now, all of this is set to change with projects like IOTA’s Shimmer Network innovation layer, and the advent of feeless minting and trading of NFTs. The only fee associated with NFTs on Shimmer is a small storage fee paid in $SMR, the native token of Shimmer Network.
NFTs on Shimmer have the additional ability to be standalone crypto wallets of their own, which allow you to store other tokens or NFTs within your NFT on Shimmer.
Shimmer’s Tangle allows for native assets created on Layer 1, to created wrapped assets from smart contract tokens created by IOTA’s smart contract chains on Layer2, enabling the Layer2 tokens to inherit the feeless nature and security characteristics of the Tangle and the qualities of Shimmer’s native Layer 1 tokens.
The way IOTA’s Smart Contracts Virtual Machine (ISC VM) works is that smart contracts run on their own blockchains, known as smart contract chains built on Layer 2 on top of the Tangle’s base layer. Each of these individual smart contract chains has the same network capacity as the Ethereum blockchain.
This means tokens created on Layer 2 in a smart contract chain can become a wrapped asset that’s wrapped into a native token on Layer 1, and can leverage Shimmer’s multi-asset base layer so that the Tangle can be utilised as a trustless, cross chain bridge with increased security and no fees for safer and costless cross-chain asset transfers.
An interesting example of this is the Genesis NFTs on Shimmer which will make users eligible for future NFT airdrops, deposited in the wallet of their Genesis NFT. This is the first such innovation to NFTs of its kind, and promises to create new use cases for NFTs and the types of interaction that they can have with Web3 decentralised services and platforms.
There’s already been a fair amount of hype surrounding Shimmer’s next generation NFTs, and thanks to Shimmer’s EVM compatible smart contracts, porting and migrating existing NFT collections to Shimmer should be relatively easy and painless.
There are already several NFT platforms slated for Shimmer when it launches, including NFT marketplaces like Soonaverse, and Pylon as well as NFT secondary market trading on DEXs like TangleSea, and ShimmerSea, both which pay homage to Ethereum’s NFT market Opensea with their names.
Bitfinex is happy to announce that we will be the only major centralised trading platform that will have the privilege of listing Shimmer when it debuts. Bitfinex customers will have the first CEX access to trade Shimmer’s $SMR token once the network goes live.
Will other blockchains and NFT platforms follow Shimmer Network’s lead and add additional features and capabilities to their NFTs as well? Maybe not, as there are some technological differences between Shimmer Network’s DAG-based multi-asset Tangle network and conventional blockchains, which don’t have multi-asset capabilities.
If executed correctly, we may see a major migration of NFT activity from other Web3 blockchains currently favoured for NFT minting and trading over to Shimmer Network, if the benefits and added functionality are the game changer they have been speculated to be.
Shimmer’s compatibility with a variety of other Web3 blockchains which also utilise Ethereum’s Virtual Machine (EVM) for smart contracts will make it easy to integrate with a variety of other NFT projects on multiple chains.