5 NFT Trends to Watch in 2024: Hybrid NFTs, RWA Tokenisation, Gaming NFTs, Ordinals and Phygital NFTs
As the digital horizon expands, Non-Fungible Tokens (NFTs) continue to evolve beyond the art and collectible space, deeply integrating into various sectors of the economy and our daily lives. 2024 is poised to witness significant transformations within the NFT market, propelled by innovative applications and broader adoption. Here’s an exploration of the 5 key trends that are shaping the NFT landscape.
Trend #1: Hybrid NFTs
Hybrid NFTs aim to combine the best of both worlds: the uniqueness of non-fungible tokens (NFTs) and the liquidity and divisibility of fungible tokens (FTs). This innovative class of digital assets has been propelled into the spotlight by the ERC404 standard by Pandora, which is an experimental token standard blending the features of ERC20 and ERC721 tokens. ERC404 has been pivotal in fostering the Hybrid NFT trend by allowing for the fractional ownership of NFTs. This means that an NFT can be divided into smaller parts, which can be owned by multiple individuals, thereby solving one of the most significant challenges faced by the NFT market: liquidity. With ERC404, investors can own a piece of highly valuable digital artwork, for instance, without needing to purchase the entire piece, making high-value NFTs more accessible to a broader audience.
The use cases for Hybrid NFTs are vast and diverse. They range from art and collectibles, where pieces can be partially owned and traded, to real estate and virtual land, where ownership can be distributed among several investors. In gaming, Hybrid NFTs can represent shared ownership of in-game items or characters. Furthermore, they hold potential in the music industry, where fans could own a fraction of a song or album, and in intellectual property rights management.
The ongoing trend towards Hybrid NFTs, expected to become a significant movement in 2024, is fueled by evolving technology enabling fractional ownership, enhanced liquidity, and broader market access. As blockchain sophistication increases and mainstream cryptocurrency adoption grows, demand for more accessible NFTs is likely to surge. Hybrid NFTs attract both creators, who can monetise their work innovatively, and investors, gaining access to previously inaccessible assets. This trend is anticipated to spur ongoing innovation, with new projects and platforms emerging to capitalise on this momentum. As blockchain technology progresses and the community seeks integration between traditional finance and DeFi, Hybrid NFTs are poised to play a pivotal role in bridging these worlds.
Trend #2: Real-World Asset Tokenisation
Real World Asset (RWA) tokenisation transforms the investment landscape by turning tangible assets like real estate, art, and commodities into digital tokens on the blockchain. The impact of RWA tokenisation is profound and multifaceted. In real estate, tokenisation breaks down high-value properties into smaller, purchasable tokens, dramatically lowering the entry barrier for investors and democratising access to investment opportunities previously out of reach for the average person. For art and collectibles, it ensures transparent provenance, bolstering trust and liquidity. In commodities, tokenisation enables fractional ownership and smoother distribution, optimising supply chains and global trade. This innovation has made investments more accessible, increased market liquidity, and simplified transactions. In 2023, significant strides were made with projects tokenising buildings and art collections, paving the way for expansion into new asset classes and unprecedented opportunities for investors and creators in 2024.
Successful projects like tokenised commercial real estate and fine art in 2023 illustrate RWA tokenisation’s potential. For example, investors could acquire tokens representing stakes in real estate properties, earning rental income and capital appreciation with platforms like RealT and Fraxtor. Similarly, limited edition tokens for art ownership simplify investing in valuable artworks. Looking ahead, experts anticipate broader applications, spanning luxury goods, intellectual property, and even intangible assets like carbon credits. Tokenising energy credits, for instance, could transform the renewable energy market, while luxury goods tokenisation offers secure ownership transfers, opening new investment avenues.
Trend #3: NFT Gaming Expansion
The gaming industry’s adoption of NFTs marks a transformative shift in player engagement and game development. NFT integration grants players true ownership of in-game items, empowering them to trade, sell, or utilise assets across various gaming platforms. This trend promises to introduce innovative gameplay mechanics, heighten user interaction, and cultivate dynamic in-game economies. Several successful NFT games and anticipated releases in 2024 highlight the potential of this technology. Square Enix, a veteran in the gaming industry, has expressed interest in integrating NFTs into its future projects, recognising the potential for blockchain to create new gaming experiences and revenue models. Mythical Games is another notable player, with its title “Blankos Block Party” serving as an example of how NFTs can be seamlessly integrated into games to enhance player ownership and the overall gaming ecosystem.
The integration of NFTs into the gaming industry represents a significant shift in how games are developed, played, and monetised. By facilitating the tokenisation of in-game assets, such as characters, items, and even segments of game worlds, NFTs confer genuine ownership upon players, enabling them to own, buy, sell, or trade their digital assets on the blockchain. This innovation not only renders gaming more engaging by adding tangible value to players’ efforts, but also decentralises game economies, allowing players to profit by trading assets across various platforms, a marked shift from the traditional gaming model bound to single platforms. Developers are leveraging NFTs to stretch the creative envelope in storytelling, character customisation, and providing players with ownership stakes within the game world. Looking forward, NFTs are poised to further transform the gaming industry by melding virtual and real-world economies, thus boosting player earnings and offering more immersive experiences that empower players to shape game development and storylines. The continual advancement of blockchain technology is set to increase the presence of NFT-based games, solidifying their significance in the future of gaming. As a key player in the Web3 gaming sector, our alevate Gaming Grant aims to further support the blockchain gaming landscape in the upcoming year, offering dedicated grants of up to US$150k per gaming studio to foster growth and innovation.
Trend #4: Ordinals (Bitcoin-based NFTs)
Ordinals offer a fresh take on NFTs by using the Bitcoin blockchain instead of the Ethereum-dominated market. They provide an alternative for creators and collectors who prefer Bitcoin’s security and widespread adoption. The surge in popularity of Ordinals in 2023 indicates a growing interest in innovative solutions. Unlike Ethereum’s ERC-721 and ERC-1155 standards, Ordinals embed digital artefacts within individual satoshis, Bitcoin’s smallest unit. This approach showcases Bitcoin’s capability for complex applications like NFTs without requiring protocol modifications. The growing experimentation and adoption of Ordinals underscore Bitcoin’s potential for broader applications, with predictions for 2024 indicating a rise in projects and platforms leveraging this capability, pointing to a market keen to expand Bitcoin’s use beyond traditional transactions. One forerunner of this concept was Taproot Wizards with their tagline to “Make Bitcoin Magical Again” through Bitcoin inscriptions and allowing for active creation by their community.
However, the integration of NFTs into the Bitcoin network through Ordinals is not without challenges. One potential issue is the increase in transaction load, which could impact transaction times and fees on the Bitcoin network, traditionally not optimised for the high-volume, low-value transactions common to NFT marketplaces. There’s also the cultural challenge within the Bitcoin community, which has historically focused on Bitcoin as a pure currency rather than a platform for decentralised applications.
Trend #5: Phygital NFTs (Physical + Digital)
Phygital NFTs marry the physical and digital worlds, offering a tangible aspect to the traditional virtual nature of NFTs. This innovative concept leverages blockchain technology to authenticate, verify, and link digital tokens with physical objects or experiences, from artwork to concert tickets, enabling a richer interaction with digital assets.
A prime example of Phygital NFTs is the collaboration between luxury watchmaker Jacob & Co. and the NFT platform ArtGrails, which resulted in the tokenisation of a luxury watch, combining a tangible timepiece with a digital asset. Another example is Nike’s acquisition of RTFKT, a digital studio, to merge physical footwear with digital assets, allowing buyers of certain sneaker models to receive a digital twin in the form of an NFT, which can be used in virtual environments or as proof of authenticity and ownership. These cases illustrate how brands are blending the physical and digital worlds, enhancing the value of traditional luxury goods and memorabilia with the innovation of NFT technology.
Successful deployments of Phygital NFTs have shown how they can boost customer engagement, verify ownership, and offer distinctive collectible experiences. With technological advancements, the use of Phygital NFTs is poised to broaden, further merging the physical and digital realms. Essentially, Phygital NFTs are leading the charge towards a new hybrid reality, pioneering ways to integrate our online and offline lives. As technology progresses and becomes more widely adopted, we can look forward to a future where Phygital NFTs transform our concepts of ownership, value, and interaction, spanning both our tangible and virtual environments.
Riding on NFT Trends in 2024
The NFT trends of 2024 — Hybrid NFTs, RWA tokenisation, Gaming NFTs, Ordinals, and Phygital NFTs — underscore the continuous evolution and maturation of the NFT space. These trends not only highlight the innovative applications of blockchain technology but also signal a shift towards a more integrated, dynamic digital economy. aelf sees a plethora of opportunities within the NFT space and hence, we’ll be making our mark at NFT Paris 2024 to jump in on the NFT trends for this year! As we charge ahead, the electrifying potential of NFTs to revolutionise countless industries becomes crystal clear, heralding an exhilarating future of a tokenisable world.
About aelf
aelf, a high-performance Layer 1 featuring multi-sidechain technology for unlimited scalability. aelf blockchain is designed to power the development of Web3 and support its continuous advancement into the future. Founded in 2017 with its global hub based in Singapore, aelf is one of the pioneers of the mainchain-sidechain architecture concept. Incorporating key foundational components, including AEDPoS, aelf’s variation of a Delegated Proof-of-Stake (DPoS) consensus protocol; parallel processing; peer-to-peer (P2P) network communication; cross-chain bridges, and a dynamic side chain indexing mechanism, aelf delivers a highly efficient, safe, and modular ecosystem with high throughput, scalability, and interoperability.
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