How Freeverse enables the next generation of NFTs: Living Assets
We are stoked to announce our investment in Freeverse, a “living assets” or enhanced NFTs marketplace and creation platform, co-leading a €10m Series A round. It’s a first for us in Spain and an exciting one in the web 3 and gaming space.
Through backing Freeverse, we are: a) encouraging development of a unique product offering at the intersection of gaming, web3 & creation economy — all sectors that we at Earlybird Digital West are actively looking into, and b) increasing our Spanish footprint via our first investment there.
📈 NFTs as a macro trend
First let’s start with some facts and figures. A Non-Fungible Token (NFT) is a unit of data stored on a digital ledger, called a blockchain, which can be sold and traded. NFTs can be associated with a particular digital or physical asset (such as a file or a physical object) and a license to use the asset for a specified purpose, and are therefore unique. The functions of an NFT are based on underlying smart contracts, which are primarily pieces of software code that allow the network to store the information in a transparent and immutable (non-changeable) manner, ensuring that the digital assets are one-of-a-kind and non-replicable.
If NFTs’ existence stem back to the Ethereum Virtual machine creation in 2015, which allows the creation of smart contracts, the market tremendously accelerated in 2021: sales rose to $11.6bn in Q4 2021, 8x compared to Q2 (Reuters), and then slightly started slowing down. We believe that NFTs with some kind of utility or other types of digital assets standards are the ones who will stay promising in the long run. If certain types of enhanced NFTs start to emerge, so-called improvements are either linked to better scalability or to some oracles that allow off-chain data in smart contracts, hence precisely implying scalability issues.
Moreover, the nature of NFTs is currently static — once created, they are immutable: they can not be changed anymore. Their valuation then generally depends on three factors, all linked to market demand:
- scarcity (guaranteed by the blockchain),
- love for the brand / associated project (be it the NBA, or a favorite artist),
- and speculation (since assets are immutable, one can only hope that a buyer will still want to pay for the exact same thing in the future.)
🛠️ How does Freeverse enable the next generation of NFTs?
Freeverse introduces Living Assets, the next generation of NFT that evolves & changes during their lifetime, in relation to user actions, real world events, or measurable data, without having to rely on oracles. So the value is not only dependent on sole demand, but also on other factors such as customer usage.
A Living Asset may change in response to its age, certain events, usage, seasons, number of social interactions, or any other activity imaginable. The change of the NFT is also visible in its appearance. For example, the layout of an in-game item will visibly be adapted over time, turning from red to gold, for instance.
As a result, instead of remaining a passive, immutable collectible, an NFT becomes an active, mutable asset. The asset owner has a motivation to interact with it on a regular basis, whether it’s viewing, sharing, or trading with it, and creators have unprecedented ways to boost user engagement, retention, and monetization.
We see the main use cases in the gaming sector, passion economy, and decentralized reputation establishment, but there are many other ones imaginable. Gamers are already accustomed to being able to ‘upgrade’ their digital content — NFT 1.0 allows this content to be traded for real money (as opposed to in-game ‘soft’ currency,) but does not permit upgrading of asset properties.
Living Assets could also enable the ‘passion economy’ by gifting NFTs to users for free, and then getting upgraded by how users engage with them (e.g. sharing on social media, attending online or real events, watching adverts etc). Then upgraded NFTs would be associated with rewards for the user, such as a meet-and-greet with a celebrity. Living Assets also natively permit “online reputation” to be permanently validated — for instance, allowing a diploma that increases or decreases in value related to the new training you get over time.
Freeverse’s long term vision is also to offer financialization of these assets, through rental services as well as financial derivatives or ‘futures’, allowing bet mechanisms on someone else’s asset evolution. We strongly believe in Freeverse’s value-added to NFT market user engagement, and also see them in a strong position as enabler of incentivizing systems like play-to-earn, learn-to-earn, move-to-earn, XX-to-earn; these models that are still nascent & stammering but which we are convinced will have a great impact on the future.
This innovation is enabled by fraud-proof multichain Layer-2-based technology bringing on-chain certification, based on scaling & green underlying tech. Concretely, Freeverse offers an API to a NFT creation platform and marketplace that can be white labeled if needed. These assets could also be tradable on other marketplaces like Opensea.
🏋️♂️ An exceptional team for an exceptional mission
We are convinced by Freeverse’s driven and humble team. With strong academic and professional achievements, solid delivery skills, and 15+ years in the tech industry for entertainment, we trust they are best positioned to scale and succeed in this thrilling market.
As our Partner and Co-founder Christian Nagel comments, “While 2021 may have been ‘the year of the NFT’, NFTs that can be changed by their owners, such as Freeverse’s Living Assets provide a more sustainable business model for the sector, as their market value is not decided by artificial concepts of scarcity, hence stemming back to the core of what NFTs are: a technology.”
Welcome, team Freeverse, to the #EBVCgang. Super glad to have you aboard!
