The need to reimagine the value proposition of digital art


With cryptocurrency prices fluctuating this year, Non-Foldable Tokens (NFTs) Other sub-ecosystem investors also found themselves in the grip of a bear market.

However, if we look beyond the trading value of Ether (ETH), NFTs were primarily created to represent assets and ownership in the real and virtual world. As a result, the bear market has reignited discussions about how NFTs can pull back and focus on attending use cases while the market recovers.

In a conversation with Cointelegraph, Tony Ling, co-founder of analytics platform NFTGo, shared insights into the NFT ecosystem, revealing the expected path of the ecosystem.

Cointelegraph: The rise of NFTs to mainstream popularity is often attributed to the various real-world use cases that can and have been resolved. What do you think of the NFT bear market? Do you think the market is ready for a recovery?

Tony Ling: Answering this question requires an explanation of the NFTs value rule first. Currently, the NFT market is primarily driven by four categories: Art, PFP (Profile Pictures), Land and Membership. At the moment, PFP is dominant. The value base of PFP NFTs mainly includes three segments: Financial Products, Collectibles/Luxury Goods, and Memberships, among which are financial products that are currently dominant, while the derivatives model for NFTs is still in a very early stage. Therefore, with the overall bubbles removed from the cryptocurrency market, NFTs, as a low-liquidity derivative of FT tokens, are bound to decline accordingly. This is what I was expecting.

However, I believe that with the recovery of the crypto market in 2023-2024, the value of the NFT has room to grow several times that of the larger crypto market. Its value growth will come from at least two aspects:

First, with the development of NFTs and the technology associated with the meta-universe, NFT usage scenarios will be more abundant, and the consumption property of NFTs will grow, and this consumer property is not only to solve real world problems but also to create new scenarios that do not exist in the real world.

For example, all assets in the Otherdeed’s metaverse are NFTs, and these same NFTs will generate different economic interaction scenarios, thus achieving new consumption to help people better meet their needs and even develop new productivity tools and business forms.

Second, the development of various NFT derivatives, including the NFT hash, NFTFI, NFT mortgage lending, and NFT fixed income products. These new financial products will enable investors to participate in NFT related investments in a more flexible form, thus attracting more capital, both institutional and individual investors, to this market.

CT: Despite the losses and low hype, many projects are still considered viable investments. What do you think about leading this trend? How important are NFTs to use cases, or are they just investors looking to make a quick buck?

TL: The driving force of any trend is the “speculator-created story” and “real value”. Especially in the early days of the industry, the bubble is a reaction to uncertainty, and I think builders like us are embracing the uncertainty driving this trend. Of course, in addition to the builders, big money, including money in the crypto space, huge funds and even money that used to focus on traditional areas are also very important drivers. Some of them actually want to make a quick buck, but from a capital efficiency perspective, I don’t think now is the right time to make a quick buck in the cryptocurrency market.

CT: What trends remain relevant since the early days of NFT, regardless of price swings? And what new trends do you think will be popular in the near future?

TL: First of all, more and more people are interested in NFTs and there are bound to be orders of magnitude greater in the future. Data from NFTGo shows that there are currently over 2.96 million Ethereum wallets that contain NFT, compared to just over 200,000 in August 2020. Despite the current cold market sentiment, there are still 20-30,000 NFT trading addresses every day. Of course, this number still has tremendous room for growth. Secondly, builders are continuing to build. You can see that many companies associated with NFT have recently received funding. Moreover, even though the market has been bearish lately, there are still successful new ventures like goblintown and Memeland emerging in the market.

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Although the various PFP projects of this past NFT summer had their own unique characteristics, many of them still follow the model set by the Bored Ape Yacht Club (BAYC). With the further development of the NFT industry, a huge new trend is bound to emerge. This new trend, I believe, will be the outbreak of the content environment from the metaverse. The definition of “content” here is broad, and games in the Metaverse can also be defined as “content”. As mentioned earlier, enhanced consumer attributes of NFTs will help the industry recover, and consumer attributes mean that NFTs will generate cash flow of non-investment income for their holders. One important way to do this is to build ‘content’ in the Metaverse and allow builders to own the content and generate revenue. Those who enjoy the content receive substantial rewards and seem happy to pay for it.

CT: What do you think of the current investor sentiment? How do you think it affects the NFT market in general? What can NFT projects and companies do to improve participation?

TL: The NFT market sentiment is cold for two main reasons: First, the price of Ether is going through a volatile period and a large number of investors are in a wait-and-see phase. Second, the PFP narrative and growth pattern is coming to an end, and the recent emergence of projects has not yet brought a new pattern, making it difficult to bring new expectations to the market.

The cryptocurrency industry is cyclical in nature. Personally, I would recommend you to continue exploring new trends in the industry while still holding enough capital to wait for the next cycle of the crypto industry and seize the opportunity.

CT: As you mentioned, the scope of the NFT market is limited only to the imagination of entrepreneurs. What are some use cases for which NFTs can and should operate as mainstream shores?

TL: In this regard, I would like to point out three main subsets of use cases where NFTs are well positioned to cause mainstream disruption.

new art form: Digitization allows for richer forms of artistic expression, and the advent of NFT and related environmental products solves the problem of digital art ownership and better helps art creators turn a profit. As the digital world merges with the real world, the penetration of digital art into human society will become more pervasive, thus becoming a huge new market for collectibles as well as luxury consumer goods.

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PFP, self-expression and new forms of organization: I think one of the main reasons for the popularity of PFP projects is that they better meet the human need for self-expression. The ability to tell others “who I am” is an important human spiritual need, and the PFP NFT and related Ecology projects create a good way to meet this need. PFP NFT Projects and its expanded community have not only provided users with a medium for self-expression, but have also made it easier for people to form communities with others who share similar expressions. Likewise, as society evolves, these similar people may create new forms of organizations, such as decentralized autonomous organizations (DAOs), to influence society outside of their own specialized community.

A new carrier “like a public blockchain”: Existing land-based projects such as Otherdeed, Sandbox and Decentraland may evolve into something similar to a public blockchain in the future. All new NFT projects, games and applications may operate within the ecosystems of these land-based projects.