Ethereum’s rapidly growing NFT ecosystem has really taken off over the past few months. At the beginning of December 2020, the top five players in the NFT sector had seen over $1.2M USD in volume over the past seven days.
From gaming to real estate, NFTs are making waves—but regardless of the sector, they are fundamentally changing how we think about digital ownership. In this post, we cover some of our favorite projects that are gaining traction and driving a new digital economy. We explain how:
- Aavegotchi’s crypto collectibles are growing the DeFi space through gamification
- Axie Infinity is creating a digital pet universe with a player-owned economy
- OpenSea is making headlines as the world’s first and largest marketplace for NFTs
- Sequence (previously Arcadeum) is creating the infrastructure for digital ownership in gaming
- SuperRare is creating a marketplace for single-edition digital artwork and driving one of the world’s most interesting metaverse experiments
- Upland is letting users convert value from virtual real estate to real-world money
- Zora is increasing liquidity for limited-edition goods and putting the control back in the hands of creators
Aavegotchi: Unique Crypto Collectables Powered by DeFi
They’re more than cute pixelated ghosts—Aavegotchi are digital collectibles backed by interest-bearing aTokens from Aave, a lending protocol with $1.49B+ in TVL. One way NFTs derive monetary value is through scarcity—and in the Aavegotchi world, the unique traits of each Aavegotchi determine their value. By taking part in minigames and governance, users can increase the initial random rarity level assigned by Chainlink’s VRF back when their Aavegotchi was first summoned. Staking GHST, Aavegotchi’s utility token, is another way to obtain higher rarity levels, generate profit, and interact with the metaverse, helping grow the DeFi space through gamification. A proportion of GHST transactions are funneled into the AavegotchiDAO treasury, governed by the Aavegotchi community.
Axie Infinity: A Digital Pet Universe With a Player-Owned Economy
Axie Infinity is an NFT gaming dapp currently in 1st place among the most-used Ethereum games. In what might be compared to Pokemon, Axie Infinity creates a digital pet community where users can breed, raise, battle and trade digital creatures called Axies.
The game has gained impressive momentum both due to growing interest in NFTs and the ability to earn cryptocurrency by leveling up Axies through battle. In the Philippines and Indonesia, Axie Infinity has made some serious waves with their “play to earn” model, letting users earn tokens worth approximately $4-7 per hour. In the midst of a global pandemic, this is a meaningful income for many Axie players.
Axie has continued to gain momentum through its growing community and strategic partnerships. Earlier this year, Axie partnered with Aave to let Axie players battle to win a share of $10,000 in $AAVE. In November, they announced a partnership and integration with Chainlink’s decentralized price feeds and verifiable randomness tool. BloomX Org, Philippines’ leading OTC and crypto-powered remittance platform, recently celebrated a milestone of 1M pesos traded within only a week of launching their cash-in/cash-out service.
Axie’s Head of Growth Jeffrey Zirlin says it’s much more than a game. “It’s a budding nation with a jobs market and a complex economy.”
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OpenSea: The World’s Largest Marketplace for NFTs
OpenSea is a peer-to-peer marketplace for rare digital collectibles, often described as the world’s first and largest marketplace for NFTs. This year, OpenSea averaged over $1 million in monthly trading volume, which increased significantly in September and October and now stands at $3.5M.
While the average seller on OpenSea has sold just over $1k worth of digital assets, OpenSea has frequently made headlines as some very unique, famous, or expensive items have sold via the marketplace. Recently, the opportunity to add investment-grade diamonds to your portfolio via NFT tokens was announced.
At the end of November, LA Blockchain Summit collaborated with Giveback Heroes and OpenSea to launch a COVID-19 Relief NFT Auction. Releasing 265 conference speaker-inspired NFTs for purchase, all auction proceeds go to first responders and frontline workers impacted by COVID-19.
Sequence: Infrastructure for Digital Ownership in Gaming
Skyweaver is a digital trading card game where players can battle using cards they’ve bought, earned or traded. In an effort to shift the perception of ownership in games, Horizon Blockchain Games is using Skyweaver to showcase this concept and leverage Ethereum to create true digital ownership of in-game items.
Cards in Skyweaver get stored in a player’s wallet on the blockchain. Backed by Initialized Capital, DCG, and Polychain, Horizon has built Sequence—previously known as Arcadeum—to provide a seamless user and developer experience for Ethereum. A combination of a friendly smart contract wallet, SDK and APIs, Sequence handles in-game assets and allows items to be verifiably traded, sold, or given from player to player. If the player chooses, cards can be transferred to any other Ethereum-based wallet.
SuperRare: Digital Art Marketplace for Single Edition Work
SuperRare is a digital art marketplace and social network for art creators and collectors. Authenticated, single edition digital artwork are tokenized on the Ethereum blockchain, preventing forgery and providing an immutable record of ownership. Once a piece is purchased, it can be sold in the secondary market to other digital art collectors, or held as a long-term investment. Using smart contracts, royalties go back to the original creator as digital art is bought and traded. SuperRare has gotten a significant amount of real use and activity, consistently among the top ten NFT marketplaces in terms of volume.
SuperRare recently partnered with Lilmiquela, a CGI singer, activist, and model with an instagram following of almost 3 million. Described as “one of the most interesting metaverse experiments in the industry,” Lilmiquela recently raised over $80,000 for the nonprofit Black Girls Code with her first drop on SuperRare.
Upland: Trade Virtual Property Mapped to Real-World Addresses
Upland is a place to buy, sell, and trade virtual real estate based on real-world addresses. It originally began as a Monopoly-like property trading game where users could take over—and truly own—real-world locations. By advancing this concept to a metaverse based on blockchain and NFTs, it allows the value of virtual goods to be converted back into real-world money.
Previously, players were limited to conducting transactions in UPX, Upland’s in-game cryptocurrency. With the recent integration of Tilia Pay, players can now buy real-world properties and sell them for actual US dollars to other players. Today, users flip properties and potentially benefit from significant markups. In the future, Uplanders will be able to import, display and trade NFTs from other blockchains. Starting in 2021, they will also be able to develop their properties with structures and earn money by operating their own virtual businesses.
Upland already has over 20,000 monthly active users and is well-positioned for further growth. The game can be played from any location, allowing it to build a large global audience. Unlike many other blockchain games, funds can be withdrawn without blockchain knowledge and played on both iOS and Android, making it that much more appealing to mainstream users.
Zora: Increasing Liquidity for Limited Edition Goods
Zora is a marketplace to buy, sell, and trade limited-edition goods. Backed by VTF Capital and Variant Fund, Zora is building tools for creators to issue tokens around their creative practices. By tokenizing these goods, prices can be dynamic (changing based on demand), and fractionally traded (a fraction of the item can be bought or sold).
Zora believes that corporations and platforms have had a monopoly on creative ownership for too long. From the recording industry to fashion, typically creators are only rewarded for their work once, even if the secondary economy continues to generate value. If an artist sells a piece of work for a certain price, and it later has 10x its original value, the original creator will never see that money. Following a philosophy of “sustainable economics for creators,” Zora allows creators to launch products and continue to be rewarded for their value in a secondary market. One success story on the Zora marketplace is the Coca-Cola x Staple Pigeon Nike SB Dunk by Reverseland. After launching in August with only 30 sneakers available, the value rose significantly before selling out.
What’s Next for NFTs
The powerful use cases for NFTs have garnered a lot of attention, with trading volume hitting an incredible $13 million in October. While they have applications across a myriad of industries, they’ve recently seen the most hype within the art and gaming sectors.
Of course, with any new technology, there are challenges. With NFTs primarily built on Ethereum, scalability challenges will undoubtedly roll over to the NFT space. However, the outlook looks promising. December 1 marked a huge milestone with the long-awaited ETH 2.0 Beacon Chain launch, a major network upgrade aimed at improving ETH scalability and known as Phase 0 on the Ethereum roadmap. Phase 1 and the transition of mainnet Ethereum to a proof-of-stake shard is expected by 2021, with Phase 2 following shortly after. In the meantime, numerous Layer 2 solutions have emerged to improve the handling of off-chain transactions, improving scalability until the ETH 2.0 mainnet becomes fully operational.
Despite the challenges, it is clear that NFTs are more than a trend. New use cases are emerging all the time, unlocking new revenue streams and continuing to drive growth in the blockchain space. From DeFi collectibles to digital real estate, these projects are changing the way we think about digital ownership. Quantstamp is proud to secure these innovative projects that are unlocking a new digital economy.