NFTY #22: Bundle My Bundles 🛄
It’s been two weeks since the last NFTY News and I’ve got a whole bundle of news for you — so let’s jump right in!
🔥 📰 Hot Topics 📰 🔥
1. Launch of 0x V2
0x V2 is finally here. The announcement includes links to getting started using the new tools from 0x. I’m particularly interested in seeing new non-fungible token relayers evolve over the next six months!
Gods Unchained also announced they’re using 0x v2 for their marketplace. No marketplaces will have custody of these assets. I’m curios to see how this affects marketplaces like OpenSea and RareBits and if more games end up going this route.
2. Compose-a-kitty Bundle
Mokens has recently implemented composability within ERC998! Now you can attach a ERC721 (and soon ERC20s) to existing NFTs. Here’s a picture of a CryptoKitty with 12 CryptoKitties attached.
OpenSea has also soft-launched their bundling feature which allows any user to combine their NFTs into a bundle of assets to sell to others on the marketplace.
Here’s the difference between composability (ERC998) and bundling:
- With ERC998 tokens, the token owns the tokens. Owners of the parent token can remove children out of the parent, but cannot interact with the child until the asset is moved out of the group by the owner of the parent. ERC998 is just an extension of the existing ERC721 standard, so the parent token has the same feature set as a regular NFT.
- With OpenSea’s bundles, you still own the token in the bundle. Items are not placed in escrow, and you can still sell tokens that are in a bundle individually.
Bundling solves the liquidity & pricing problem of NFTs. Since non-fungible tokens have no market price, often value is determined by the buyer. By being able to group assets, we can sell like-goods for a discounted price.
3. Solving for Distribution while sustaining a business model
In the last NFTY News, I went into detail on the distribution problem. Every project wants to cross the chasm and make crypto mainstream, and some people are convinced non-fungible tokens will be the way to do so. Tony Sheng had an excellent post of turning speculators into users using the Coin Price Flywheel. The same applies to non-fungible tokens — how can we get users earning non-fungible tokens through gameplay rather than purchasing digital assets for a free-to-play model?
MLBCrypto gave out 40,000 digital bobbleheads (NFTs) to fans at a LADodgers game on September 21st. Some details for those who don’t know on how they did this:
- They used paper wallets. They minted all 40,000 bobbleheads before the game and transferred them into the wallets. The paper wallets were physical cards with a QR code.
- Users downloaded the MLBCrypto App, scanned the QR Code on the card, and obtained the digital collectible. Users had a random chance of obtaining 1 of 3 different players.
Something also happened:
Ebay became a predominant marketplace for these digital bobbleheads.
Diablo III and CounterStrike: Global Offensive (non-blockchain games) saw similar things when they started allowing users sell virtual goods on their own marketplaces/auction houses. Third-party marketplaces popped up to cut-out a middleman fee. Diablo III’s auction house for USD ended up being a massive failure and CS:GO’s skins marketplace started limiting selling to combat third-party marketplaces.
The issue here is that these cards are physical and can’t be sold on non-fungible token marketplaces — but the arbitrage opportunity definitely exists for traders here. If the market were to shift entirely to centralized marketplaces, the secondary transaction fee business model would weaken entirely. Keeping an eye on this trend over the next few months.
Overall, hats off to the Lucid Sight team for an awesome experiment!
NFTY Twitter Thoughts 💭
But it’s important to note that these are secondary sales. Because they are secondary sales, they can easily be gamed. There’s been rumors of cryptocurrency exchanges already wash trading to increase volume, and it wouldn’t be surprising if non-fungible token projects start doing this in the future as a marketing tactic.
What if you could automatically sell your NFTs for cryptocurrency? Would users be more willing to purchase digital assets from games? Most non-fungible tokens never leave the first wallet address because users can’t find liquidity for their tokens. Maybe this can be solved with re-fungible tokens or having DAI-locked in a NFT (using ERC998) for guaranteed sell-back minimum liquidity.
Non-fungibles might end up in a weird legal situation…if cryptocurrencies are classified as commodities, what are non-fungible tokens? Non-fungible tokens can also contain cryptocurrencies, and be used like a currency. If regulation ends up regulating cryptocurrencies differently than non-fungibles, most projects might move to non-fungible projects and mask their cryptocurrency within.
🔔Non-Fungible Token Summit Oct 12th in SF 🔔
Non-Fungible Token Summit is coming to SF Blockchain Week thanks to the Ethereum Community Foundation, and I’ll be leading a workshop on composability use cases and discussion! Grab a ticket and join me here.
The Ethereum Community Foundation and some of the event speakers published a great article on non-game use cases for non-fungible tokens leading up to the event, and I highly recommend checking it out.
If you are working on creative use cases, or working on trying to get more people into crypto and reaching end users using non-fungible tokens, I would love to talk about how I can help. Reach out to me on twitter @flynnjamm, my DMs are always open.