The 10x Improvement NFTs Offer
Breaking down the 10x improvement NFTs have made to the art world...
In today’s edition of the Ground Floor we will be breaking down the opportunity that exists today for the Web3 world to create tangible value.
Why We Need NFTs
The Web3 world has reached an inflection point.
Throughout the last 3 years, the Web3 world has provided countless NFT projects with copious amounts of capital to bring their visions to life, however, I can count on one hand the number of projects that have lived up to the expectations they created.
In today's edition of The Ground Floor we will be exploring what led to the proliferation of projects making promises they couldn't keep, where these hollow promises have brought us to today, and the opportunity for the Web3 world to pursue an alternative path.
It Begins With BAYC
Bored Ape Yacht Club is hailed as the most successful NFT project in recent times.
Created in April 2021, BAYC has appreciated 750x in price since its mint when denominated in ETH, while providing its token holders with an additional $78K USD in value as a reward for holding a BAYC based on current prices.
While we can't say with absolute certainty what caused BAYC to achieve all of this success in such a short period of time, what's crystal clear is that Bored Apes pioneered a model of making its token holders rich with rewards for holding onto its assets.
In the time since, we have seen countless projects attempt to follow in BAYC's footsteps by airdropping their token holders assets, however, in order for these assets to have value ~ projects have simultaneously sold their collectors on the idea that while these assets don't have utility today, the team will work to ensure they have utility in the future.
Commonly this comes in the form of these assets being in game assets for games that are yet to be developed, games that will revolutionize the gaming industry.
Incentives Rule The World
Why do NFT projects purposefully make promises they will struggle to keep?
The competition for limited capital.
In a world whereby one NFT project is willing to tell a tale of how collectors will receive immense value from owning the assets they are selling ~ projects are heavily incentivized to create high expectations, or they run the risk of not selling out their NFT collection.
Examples of collections that created high expectations:
❌ Whiskers raised over $2,700,000 ~ these tokens are down 96% since mint.
❌ Starcatchers raised over $3,200,000 ~ these tokens are down 90% since mint.
❌ World of Women Galaxy raised $34,000,00 ~ these tokens are down 88% since mint.
In order to take 3 steps forward, the Web3 world needs to take 2 steps backwards.
Yes, it's certainly possible that we will see NFTs incorporated into games to enable users to re-sell in game assets (likely at a fraction of the cost people paid to mint many of these NFTs), however, our over reliance on this reality being brought to life in the near term is an anchor preventing people from understanding the value of NFTs today.
🎨 Digital Art
As opposed to rewarding projects making promises they will struggle to keep, the Web3 word can instead focus on the tangible improvements NFTs have made to artwork today.
The ability to verify the creator of an NFT collection on chain is the easiest, and perhaps only example that exists today whereby NFTs have made a 10x improvement.
Whereas once a collector would have to rely on the expertise of an individual familiar with a collection to confirm the authenticity of artwork ~ thanks to NFTs, this act of authenticating artwork is now a frictionless experience with marketplaces such as OpenSea making it incredibly easy to identify the authentic NFT collection.
The beauty of artwork minted on a blockchain is its portability ~ regardless of what wallet a collector adopts, they are given full autonomy to take their NFTs wherever they would like, with zero costs required to keep this artwork in absolutely pristine condition.
While I would not consider portability a 10x improvement, it's certainly a significant improvement vs the tedious task of transporting physical artwork, and the costs collectors incur to maintain the condition of physical artwork today.
📡 Looking Forward
The tangible improvements NFTs have made to artwork in the form of provenance and portability is a story the Web3 world can take immense pride in.
Where the Web3 world has significant room for improvement moving forward is rewarding the people building on this technology with good intentions, as opposed to the projects that purposefully make promises they will struggle to keep to achieve short term success.
💡 Web3 Roundup
The Ground Floor
See you next week ~ Mattob.eth / OB1👋
This newsletter is for informational purposes only and does not constitute financial or business advice to any person or entity.