NFTs Done Right: Flash Beasts
NFTs are pretty unpopular right now, even among crypto OGs. Blue chip NFTs on Ethereum and Solana have been in a significant decline in native asset pricing. And many more collections failed to survive the bear market over the last two years. There’s a popular NFT collection, Radiants, that is making waves for helping burn old NFTs, which gives you a sense of where things are right now.
And don’t even get me started on how “normies” feel about NFTs. It’s a pretty tough sell to explain to someone why an online picture of a cartoon animal should be worth thousands of dollars. And the “normies” have it right, for the most part. Most NFTs lack a clear value proposition, are not anchored by any product, experience, or community that can be considered unique or valuable, and derive most of their value from speculation.
But there are some projects that are leveraging NFTs to do some very interesting things. I want to spend more time focusing on such collections and hopefully helping more people better understand how NFTs can uniquely add value for digital products, experiences, and communities.
The first collection I want to focus on is Flash Beasts, the NFT collection created by Flash Trade, a derivates platform on Solana. Let’s dive into why this collection is so interesting.
Note: Nothing in this article should be considered financial advice. I’m sharing this content for informational purposes only. I hold 2 Flash Beasts and have liquidity staked on the Flash Trade platform.
Crowdfunding
The primary purpose of the Flash Beast collection was to help Flash Trade raise sufficient liquidity to bootstrap their pool-to-peer perpetuals trading product. From the Flash Trade docs:
The Flash Beasts are an evolutionary NFT that are a key part of Flash.Trade. When they were minted the Beasts seeded the protocol with its initial liquidity and as such every single Beast will have a 100% fee share on that initial liquidity in perpetuity.
Leveraging NFTs to raise money is hardly a new concept. What I find interesting in this case, however, is that mint funds were exclusively used to help Flash Trade overcome a very specific issue of raising liquidity for a trading platform. Too often, NFTs are used to raise money for very broad buckets like team, taxes, marketing, advisors, with very little concrete details known/shared (at a valuation for the project that usually makes no sense).
This raise also enabled Flash Trade to bootstrap the product without raising funding from angel investors or venture capital. Nothing against investors/VCs, but I think we should celebrate projects that leverage NFTs as alternative fundraising tools, since that expands avenues for start ups to raise funding needed to launch cool products in web3 (and may also offer more flexibility moving forward for teams who raise in this way).
Passive Rewards Done Right
I think the team made a very smart decision in allowing Beasts to receive 100% of fees on the initial liquidity from mint. This is smart for two reasons:
- It is a concrete, passive benefit for supporting the platform and clear acknowledgement that Flash Beasts were instrumental in helping to launch a market viable product
- It is a limited benefit in the sense that holders aren’t entitled to ALL trading fees on the platform.
I see a lot of projects get this wrong, in my opinion. Many NFT projects are overly generous with passive revenue sharing, which often has the double negative effect of depriving the project of critical revenue to achieve rapid growth AND disappointing holders who often have unrealistic expectations for the passive earning potential on NFTs.
Aligned Incentives
Flash Beasts feature several rewards that ensure strongly aligned incentives, the holy grail of quality NFT design in my opinion. Flash Beast holders get discounts on the perpetuals trading platform that can be upgraded with activity (more on this later), ability to share referral links that offer new users a 5% discount on fees, and ability to earn additional rewards if referred users end up using the platform.
Here’s my referral link if you want to explore the product: https://beast.flash.trade?referral=Beast_1662
With this setup, NFT holders have a financial incentive to help grow the platform, which is good for the holder and for Flash Trade. NFTs at their best are tools to help products not just bootstrap liquidity, but bootstrap users through an army of holders who are incentivized to market and grow the product for nothing up front. That’s powerful and sustainable marketing.
Upgradeability
One of my favorite aspects of Flash Beasts is their ability to “level up” and accrue more significant benefits. Flash Beasts can accrue “voltage points” for engaging in specific activities on Flash Trade, specifically trading, providing additional liquidity, and quality referrals (more aligned incentives). This scheme supercharges the aligned incentives for the most hardcore holders by beefing up discounts and rebate rewards (notice that they don’t increase passive revenue share).
I love this approach because it helps Flash Trade reward dedicated holders who believe most strongly in the aligned incentives aspects of the project and, in-so-doing, helps Flash Trade cultivate the strongest community of supporters for their product.
Flash Beast levels also transfer to the new owner if the NFT is sold, which allows people to benefit from the work they put into the level the NFT when selling on secondary market. Leveled Beasts do appear to be selling for a decent premium on secondary markets.
They’ve also create a slick NFT interface that leverages gamification to make it fun and rewarding to level up your Beasts, and probably also helps to create some attachment with the NFTs that you’ve spent time, effort, and resources leveling up.
Quality Product
None of the above matters if the NFT isn’t anchored to a quality product, and Flash Trade delivers on that front. Their perpetuals trading platform has been able to stand out in a competitive and crowded field by offering up to 100x leverage for the true degens, highly competitive fees, a slick mobile experience, and NFT integration we have covered above.
Their liquidity pool offers great APY opportunities for more passive holders as well. They currently offer three liquidity pools call Flash Liquidity Pools (FLP), which are very similar to the Jupiter Liquidity Pool in that users can provide liquidity in exchange for a token that represents the basket of assets in the pool that traders borrow to create perpetual positions. FLP is arguably better than JLP because a) it offers a higher APY at the moment at 233% and b) it pays out rewards (from fees and liquidations) daily, enabling auto-compounding. They also offer a pool for trading popular Solana altcoins like JUP and PYTH (FLP 3).
Flash Trade does still trail other derivatives markets by a pretty wide margin, at least in terms of TVL, but it has grown significantly over the last month across a wide range of important metrics, which is impressive considering they have not announced an airdrop, which often contributes to total value locked metrics.
Wait, Airdrop?
Airdrops are a big deal. We can debate the long-term value of DeFi governance tokens, but there’s no question that governance token airdrops are a key feature of the DeFi space. We don’t know much about a possible Flash Trade airdrop, except that:
Flash Beasts will receive a token allocation when a Flash token is released, and level of your beasts matters
I don’t want to delve into the realm of dubious speculation, but I think it’s very possible that the airdrop could skew heavily toward NFT holders:
- Flash leveraged NFTs to raise initial liquidity rather than VCs (hence no large VC token allocation)
- Flash created aligned incentives to build a strong community of power user NFT holders (hence less need to reward external communities in the hunt for users/token holders)
- Flash is literally stating, point blank, that Flash Beasts will receive a token allocation and that levels matter (doubling down on aligned incentives)
We don’t know if/when there will be a token, and token value will only matter if the platform continues to grow and attract users, but I love that the NFT is right in the center of this scheme.
Conclusion
NFTs are struggling. But projects like Flash Beast give me hope for the future of the asset class. Flash Trade has proven that NFTs can be used to raise funds, bootstrap a quality product, build an army of dedicated holders/ product marketers who share in the rewards if the platform grows, add gamification components to make products more fun and sticky, and potentially help decentralize the platform through token allocation.
I hope we see more existing and new NFT collections take a page out of the Flash Trade book during this bull market.
