The Rebirth Of NFTs: Moving Beyond The Initial Hype

Swelling in popularity in the first quarter of 2021, this year appeared to be the year of non-fungible tokens (NFTs) as prolific celebrities, athletes, and musicians poured into the space awash with buzz and excitement over the revolutionary creative possibilities the nascent ecosystem presented. But just as quickly as the NFT phenomenon emerged, NFT marketplace activity had frozen over, leaving creators, collectors, and other market participants questioning whether the NFT market was dead and a prolonged multi-year bear market would ensue.

In recent weeks, through the emergence of new community-led NFT products and platforms, the NFT space has seen renewed hope that life is coming back to the market and the burgeoning technology is not just a short-lived fad of celebrities cashing in on the hype.

NFT weekly trade volume across the top NFT marketplaces surged 3,300% from the beginning of the year ($5.9 million) to its peak in February ($198 million) before diving 82% to $35.3 million in May. Since then, NFT activity has been grinding higher reaching $78 million in transaction volume the last week of June, a rebound of 120% month-over-month.

Source: DappRadar, TheBlock

The recent rebound can be attributed to renewed interest in the space as NFT creators began to understand how to build communities and layer incentives into their NFT constructs to properly energize community members and cultivate natural evangelists.

For a collector, it is now a badge of social status to proudly display her NFT on social media, signaling she is a member of a community that embodies vanguard values of open technological experimentation and social engagement. Akin to exclusive luxury brands and goods, high value NFTs are beginning to confer cultural capital as they rapidly pervade the public consciousness and are embraced by community leaders and influencers.

CryptoPunks were originally released in June 2017 as one of the very first NFT projects and set the standard for the modern crypto art movement. Inspired by a combination of London punk scenes, the cyberpunk movement, and electronic artists such as Daft Punk, the digital collectibles represent the online zeitgeist of digital exploration that is instantly mimetic and viral.

Only 10,000 CryptoPunks will ever be minted, and each one has unique traits with varying degrees of rarity algorithmically generated through computer code. They were originally released for free and could be claimed by anyone, but they are now heavily demanded with secondary sales exceeding millions of dollars for individual CryptoPunks. CryptoPunk owners proudly display their avatars to signal they are early adopters of the ethereum-based NFT ecosystem and they value an irreverent culture willing to push the boundaries of society’s pre-conceptions of artistic expression and value.

Adding his credibility and reputational weight to the project, Jay-Z recently purchased a CryptoPunk and set it as his Twitter profile picture, exposing the project to his three million followers for the first time. He reportedly purchased it on April 25 for 55 ETH, worth $126,000 at the time.

To capitalize on the success of CryptoPunks, similar NFT communities and projects have appeared and implemented additional innovations to incentivize increased participation amongst a larger cohort of collectors.

One such project, Bored Ape Yacht Club (BAYC), created 10,000 unique digital ape avatars that provides owners access to special features such as a digital graffiti wall called The Bathroom. The BAYC Bathroom is a canvas accessible only to wallets that own at least one ape, and it serves as a communal digital mural where community members can draw, scrawl, or write expletives. Community members are able to paint a pixel on the bathroom wall every fifteen minutes, culminating in a collaborative and emergent art experiment that is open only to members and resides in the internet-native metaverse.

The BAYC also included other fundamental changes such as clear intellectual property rights for ape owners. This means the NFT token holders can create t-shirts or other merchandise with the art linked to their ape, effectively commercializing their digital avatars without fear of copyright infringement or messy legal battles. Additionally, the BAYC lead developers recently released the Bored Ape Kennel Club, rewarding ape owners with a free drop of a canine companion NFT for each ape.

Cool Cats is another recent project that launched on July 1^st and minted 10,000 programmatically randomly generated cartoon cat avatars. Each Cool Cat possesses a unique body, hat, face, and outfit comprising 300,000 total possibilities. Future Cool Cat developments will include breeding capabilities, monthly exclusive custom Cool Cat airdrops, merchandise giveaways, liquidity pools to fractionalize and stake Cool Cats to receive token rewards, and potential community-made cat derivatives such as 3D cats or cat comics. The creative possibilities to increase engagement are truly endless, and community members are incentivized to come up with new ideas to increase the market value of their Cool Cats.

Imbedding Once-in-a-lifetime Experiences And Historical Tributes Into NFTs

In addition to the creation of scarce digital cartoon avatars, NFT content creators are teaming up with top talent to deliver unforgettable experiences. Launched by renowned NFT artist Mike Winkelmann (known professionally as Beeple), WENEW is an NFT platform that curates and provisions iconic moments and powerful cultural artifacts. Winkelmann is best known for the $69 million sale of his NFT piece “Everydays: the First 5000 Days”, and WENEW represents his next act as an entrepreneur building a premier NFT platform.

WENEW’s first NFT auction memorializes tennis star Andy Murray’s historic 2013 Wimbledon victory. The top edition provides the auction winner the chance to play tennis with Murray at the All England Club, two VIP tour experiences and Centre Court tickets to the Wimbledon Gentlemen’s Final in 2020, as well as a variety of physical and digital memorabilia. The auction was completed July 5^th with the winner bidding $177,777 for the top edition.

Beyond sporting events, NFTs may also serve as an artistic tribute to momentous historical events. J-P Metsavainio is a Finnish astrophotographer that has spent his life capturing mesmerizing images of our universe.

One of J-P’s most prolific pieces, “Voices of Apollo 11”, is a tribute to Michael Collins and the Apollo 11 crew who completed the first moon landing in 1969. “Voices of Apollo 11” will be auctioned on the SuperRare NFT marketplace to celebrate the 52-year anniversary of the historic trip to the moon. The sale will start on July 20, 2021 which corresponds to the lunar landing in the Sea of Tranquility and end on July 24, 2021 which was the date that the crew landed safely back on Earth.

In the NFT, J-P placed the transcribed audio from the Apollo 11 mission over his image of the moon to create a magnificent artistic piece that combines and transcends the audio and visual senses. J-P’s artwork signifies the great work Collins has done to bring the study of space to the public, particularly through his efforts as the head of NASA and the National Air and Space museum.

“Because he was a director of educational STEM projects for the Air & Space Museum, I decided that I would donate a large part of the funds from the sale of the NFT to help fund the Virtual Moon project creating multi-user virtual experiences for kids and providing access to the Apollo 11 landing site for educational institutions worldwide,” said J-P.

A portion of the proceeds from the NFT sale will also be donated to Janet’s Planet, a charitable organization that teaches young people about Science Technology Engineering Art Mathematics (STEAM) and outer space.

Like any other market with public liquidity, the NFT space will experience hype cycles with valuations that fluctuate as sentiment ebbs and flows. The NFT ecosystem may have just completed its first market cycle with considerable volatility in user engagement and NFT valuations, but new projects and innovations are breathing life back into the market.

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