NFTs Beyond Apes, Punks and Mutants: Crypto Tokens and Social Capital
Euphoria around NFTs is nowhere near its end; despite a major pullback of trading volume registered in Q1, 2022, enthusiasts are still ready to buy top-tier tokens for millions of dollars.
At the same time, this fascinating technology is still largely perceived as nothing but the way to speculate on tokenized images, songs, videos, i.e. entertainment content. Today we’re using this space to cover another aspect of NFT mania.
What are NFTs?
Ideologically, non-fungible tokens or NFTs are cryptocurrency tokens with unique properties; while every USDT can be exchanged for another Ether, this doesn’t work with NFTs.
Technically, it can be understood as a data unit stored on this or that blockchain. Majority of NFTs are actually tokenized certificates: ‘This is to certify that, starting from the block 123456, the account 0xabcd…, owns the token XYZ (associated with 1.jpg, 2.pdf, 3.mp3…) which is confirmed by Ethereum (Polygon, BSC…) blockchain consensus’.
NFTs can be created (minted) even without writing a single line of code: user just needs to upload the file he/she wants to tokenize to a specific service (OpenSea, Rarible, Mintable, and so on), pay the gas (commission), approve the mint, and that’s it.
NFTs are traded through marketplaces; OpenSea is the largest and most prestigious one. The interest in NFTs is catalyzed by the unmatched profitability of speculations in the digital tokens segment, and the hype around token mints associated with corporations and pop culture stars.
The concept of NFTs is interconnected with two other red-hot spheres of the global crypto ecosystem, Metaverses and Play-to-Earn. In metaverses, NFTs are used to represent the avatars of ‘real-world’ objects: from real estate and advertising to sneakers and watches. In Play-to-Earn (GameFi, on-chain games…), players can purchase in-game items and territories as NFTs.
NFTs and Social Capital 1.0: New Luxury
Besides speculative (‘buy low-hold-sell high’) and virtual (in-game, in-metaverse, in-app, and so on) utility, there’s one more type of value NFTs can bring to their owners. World’s most expensive NFTs collections: Bored Ape Yacht Club (floor price is sitting at 102 ETH or about $340K for one item), Mutant Ape Yacht Club (21 ETH), Azuki (18.5 ETH) turned into new-gen elite clubs.
Owning a BAYC, Azuki or RTFKT non-fungible token not only allows one to signal the status by luxury ‘goods’, but also to join the closed society of the super-rich and extra famous.
N.B. Each of these NFTs can be used as a profile picture in social networks; demonstrating a luxury lifestyle has never been easier.
For instance, a Bored Ape token is an entry ticket to the club led by The Tonight Show star Jimmy Fallon (holds BAYC #599), Gwyneth Paltrow (proudly owns BAYC NFT #6141) and the pioneer of celebrities crypto journey Paris Hilton (amassed 150 top-tier NFTs including BAYC #1294).
Even if you’re not ready to pay a six-digit sum for tokenized jpeg, you can get involved in the celebrity-driven NFT revolution by purchasing star-endorsed tokens. BTS star Shawn Mendes offers you to buy his guitar, piano or concert T-shirt starting from 0.3 ETH.
If it is still too expensive for you, big names come to the rescue: Adidas & Prada NFTs are offered for 0.12 ETH. Not too much for the economy class seat on this flight, isn’t it?
The phenomenon of tech systems as a context for social capital streams is brilliantly covered back in 2019 by Eugene Wei in his acerbic essay Status as a Service. Engineer with an Amazon and Hulu background, Mr. Wei outlined that people act as a group of status seeking monkeys interested in finding the most efficient path to maximizing social capital.
In 2021, when NFT mania became reality, Not Boring Jobs author Packy MacCormick injected new life into this concept and described top-tier NFTs collections as ‘Investment-as-a-Status’ opportunity.
NFTs and Social Capital 2.0: New Governance
At the same time, modern DeFi and DAO designs are ready to leverage the NFT-as-a-Social Capital concept for much more sophisticated use-cases. Namely, NFTs can make DAO governance more responsible, inclusive and balanced.
StableUnitDAO (SuDAO), a novel over-collateralized stablecoin protocol and payments system, introduces a dual governance module to merge the benefits of fungible (ERC-20) and non-fungible tokens. Ideologically, ERC-20 tokens here are a form of financial capital while NFTs represent the social capital of DAO members.
Currently It is planned to exchange 7 percent of SuDAO emission for special NFTs of three types (type A for $1000; type B for $10,000, and type C for $100,000). More NFTs can be redeemed for SuDAO over time.
There will be two types of referendums in StableUnitDAO (SuDAO): the first (‘Regular’) type of proposals will be approved by a simple majority, while the most crucial upgrades will require the consensus between SuDAO holders and NFT holders.
This design is set to prevent the entire system from being dominated by ‘oligarchs’ or rich freeriders: ‘social capital’ module will represent the enthusiasts with highest motivation in project’s success.
Bottom line
At the end of the day, we can see at least three ways NFTs can send a message about the one’s status in the Web3 era. Top-tier collections including the likes of BAYC and MAYC are the tickets to ‘premier league’; star-endorsed NFTs are ‘vanity souvenirs’ while tokens by luxury brands are a ‘starter-pack’ option.
In the topics of NFTs we also were fortunate to have Fraser Bell, an NFT expert and entrepreneur at Antler as a guest in our weekly Twitter space, you can watch the recording now !
Don’t forget to also join Stable Unit on Twitter, Discord and Telegram to stay updated about our latest news !
P.S. To understand the roots of this phenomenon from a broader perspective, please read Veblen T. The Theory of the Leisure Class: An Economic Study of Institutions (1899); Veblen’s conspicuous consumption looks just like what’s going on NFT markets right now.
