NFT META (Most Effective Tactics Available) — The Established & Changing Trends for NFTs
In the last two years, we’ve seen an acceleration of interest, volume, and innovation in the NFT space. While there has been a decline in interest over the past year due to market conditions and a shift in NFT culture, general awareness around the NFT landscape is much higher than it was in 2019. The number of artists, brands, celebrities, and companies exploring usage of NFT’s continues to grow.
The fever pitch became so high that it became a topic of discussion at dinner tables, and celebrities started collecting them. However, NFTs are still far from mainstream. Even during a bear market, we are at a budding moment where a new modality for digital objects is being created. NFTs have a unique potential that cryptocurrencies and tokens lack. They can be imbued with culture, history, and ideas in a way that tokens have realized in memecoins while also reaching further to incorporate new elements like art and time. We can see this in the many META we’ll discuss here.
In 2020, we saw NFTs launch memecoins into the stratosphere. With NFTs, creators can create an entire ecosystem or economy filled with content and experiences. This is why there has been so much fervor amongst the early adopters who caught the bug or took the “red pill.” NFTs are easy to understand, and this is why hundreds of thousands of people interested in the space have on-boarded and started collecting valuable JPEGs to access the promising upsides of NFTs.
As 2022 rounds out, we are likely to see further evolutions of NFT applications beyond what has emerged in the last two years, especially with the launch of sudoswap and other AMM (automated market-maker) protocols for NFTs that make transacting and engaging with NFT platforms more seamless. Non-Fungible Tokens are becoming more fungible, and there is a case to be made that a more fungible NFT is better than a plain fungible token. We can dig into that another time.
It has been amazing to observe the constant evolution of the NFT META. META is a term borrowed from the gaming world, meaning “Most Effective Tactics Available,” which originates in “metagames.” They are most commonly used in games such as Starcraft 2, where gameplay and strategy change regularly as players adapt to each other and pioneer entirely new ways of playing the game that becomes the new standard. This is likewise true in NFTs — on blockchain steroids.
For many who follow (and invest in) this space closely, the feeling is that the META changes every week. What worked last week won’t work this week. And that hasn’t changed in the bear market. The NFT space continues to surprise and bewilder even the most informed and plugged-in whales. Let’s look at the few META that pierced through the noise of rug pulls, scams, hype, and memes to see which NFT META were resilient. And how each new META contributed to a change in the culture of NFTs at large.
Community
The invention of Bitcoin could not exist without the collaboration of the Bitcoin forum contributors and Satoshi Nakamoto (who may be a group of people rather than an individual). Crypto’s original founding in 2009 started with collaboration and community at the forefront. Community drive continued to be the hallmark of the rise of tokens in 2017–2018 as coins gained traction through building community, marketing, buzz, and partnerships. In NFTs, community became the buzzword of 2021. “NFT’s are about community” was the rallying cry of NFT bulls. But what did that mean?
Web3 communities inherit the collaborative culture of open-source coding communities and the Web 2.0 communities formed on social media. They also inherited the D2C (direct-to-consumer) sense of community where brands must interact intimately with their enthusiasts to co-build values and elevate customers’ needs. It is in this fabric that NFT projects have become NFT communities where people build connections, activities, and a culture together online.
NFT communities are essentially about the war for attention: Can you keep your audience’s attention? And therefore maintain a floor price and volume long enough to have sufficient revenue to keep your team going? The NFT projects that provide their communities with evolving utility (e.g. rewards, events, access to exclusive perks) and progress in business development (e.g. partnerships, influencer involvement, new releases) are the ones that have proven their ability to maintain and sustain attention in the growing web3 economy.
Art NFTs
The earliest and most important META to take off in NFTs revolved around art NFTs. The first NFT ever made was “Quantum,” a multi-color octagonal art piece created by Kevin McCoy and Anil Dash on May 3, 2014. It is a unique digital object that made sense first as art. In 2020, artists worldwide embraced NFTs as a model to sell their art to new digital collectors. Within a year, dozens of artists became crypto millionaires selling their art as NFTs.
In 2021, we saw the entry of art NFTs advocated by Sotheby’s and Christie’s — giving NFTs further legitimacy as an asset class or technology used for art. And with works such as “The Currency” by Damien Hirst, we saw a unique innovation applied to art NFTs; parts of the project treat the artwork as fungible. Physical pieces are slightly more illiquid, but the NFTs are liquid. With many of the NFTs being burnt, the supply was restricted while driving interesting price mechanics. And we have only scratched the surface.
Generative Art
Evolving out of the art NFT movement comes Generative Art from creators such as Tyler Hobbs and Snowfro. Their most famous collections, Fidenza’s and Chromie Squiggles, maintaining average floor prices above 10 ETH, are staples in the art NFT scene, and are paving the way for a new approach to digital art collections.
“Nobody, including the collector, the platform, or the artist, knows precisely what will be generated when the script is run,” said Tyler Hobbs about web3 generative art collections.
This underlines the true web3 potential of generative art. Rather than the artist having a high-touch curatorial impact on what is deemed the final work of art, the artist and collector play a symbiotic relationship in its creation.
Art NFTs and Generative Art NFTs, although they are not dominant like Gaming and PFP NFTs, continue to have a strong, loyal audience and artists dedicated to the medium. Like most NFT META, they will not disappear; they just recede as larger or newer META overtake the audience.
Gaming NFTs
Hailing from the earliest period in NFT history, CryptoKitties popularized the idea that NFTs can be used as dynamic gaming collectibles to play simplistic games. But CryptoKitties was just the tip of the iceberg. Although there were plenty of experimentations post-CryptoKitties, it came to widespread fruition with Axie Infinity, which combined the use of NFTs, tokens, and basic gameplay to create a sophisticated gaming economy to earn money on a daily and weekly basis. Axie combined DeFi principles, NFT mechanics, and excellent community marketing to bring in millions of gamers and eventually over $4 billion in transaction volume. Axie pioneered new collaboration models and NFT scholarships (allowing users to lend NFTs to each other) as they also created game modes encouraging users to return daily.
Although Axie’s spectacular run halted in July 2022 with a $620 million exploit by the North Korean Lazarus hacking group, it left an indelible mark on gaming and NFTs. For all the criticism that the web3 world receives from the gaming world, the sheer volume exhibited by Axie in such a short time demonstrates the underlying potential of web3 games. In its 12-year run, World of Warcraft generated nearly $10 billion in revenue; however, most of that revenue went to Blizzard. Web3 games have the potential to bring in users faster, deliver liquidity to those users in more diverse ways, and create new modalities of gameplay that leverage interoperable NFTs into a larger open marketplace beyond the confines of centralized corporations.
Investment in web3 gaming outpaces all other categories in web3, and investors recognize the potential for games to be the container for web3 technologies to reach the mainstream consumer. We’ve only seen the beginning of their potential to onboard the next generation of web3 users.
PFPs
PFPs (Profile Pictures) are the most dominant META in NFTs. They combine aspects of art, gaming, collectibles, and membership clubs into one. The trend started with CryptoPunks, created by Larvalabs in 2017, as an homage to the London punk scene. Initially created as a free mint, anyone with an Ethereum wallet could claim a CryptoPunk. CryptoPunks’ most significant contribution to NFTs was its introduction of rarity structures.
Larvalabs gave a unique set of traits to each of its NFTs and assigned rarity to each trait. As Christie’s auction house notes: “There are 6,039 male Punks and 3,840 female Punks. A total of 696 wear hot lipstick, while 303 have muttonchops. There are 286 Punks with 3-D glasses, 128 rosy-cheeked Punks, 94 Punks with pigtails, 78 Punks with buck teeth, and 44 beanie-wearing Punks.” These rarities create an architecture of collection for punks, driving value and interest in the rarer punks or punks that are representative of the people that collect them. This rarity structure has been resilient across the majority of PFPs.
By creating more rare versions of certain PFPs, wealthier crypto collectors want to buy the most unique ones, and the cheaper ones are collected at the “floor price” or lowest selling price of a collection. This creates a virtuous cycle of transaction volume for collections and an economic foundation for PFPs to support long-term investors who believe in a collections roadmap and short-term investors who want to earn a profit. The result is the liquidity needed for a collection to maintain enough revenue to pay for its team and continue the evolution of the project.
Commercial Rights & Bored Apes
In April 2021, YugaLabs quietly launched the Bored Ape Yacht Club NFTs. Before its release, CryptoPunks had already risen to massive heights in price and inspired a new generation of PFP NFTs. Still, over the course of the following year, BAYC would come to eclipse CryptoPunks as it pioneered new modalities itself, one of which was granting commercial rights: “Yuga Labs LLC grants you an unlimited, worldwide license to use, copy, and display the purchased Art for the purpose of creating derivative works based upon the Art (“Commercial Use”),” according to The Bored Ape Yacht Club website. This approach to commercial usage rights has unlocked a new way of creating community, business, and brand not possible before web3. One of the most salient examples is Bored & Hungry, the hamburger restaurant business built using Bored Apes as branding.
By allowing NFT holders to monetize and build businesses on top of their NFTs, Bored Apes showed a new way for NFT collections to engage with their community.
Loot & Airdrops
The NFT community has normalized copying. Every day or week will bring a new NFT project that copies the latest trend or successful META from another project. In the wake of this fatigue, the appearance of Loot was energizing.
In August 2021, at the height of the PFP craze, Loot was released by Dom Hofmann, the co-founder of Vine. The idea of a text-based NFT that was not a PFP was refreshing to collectors who were starting to get tired of a META derided by onlookers and seemed repetitive. Loot presented a style of doing NFTs that wasn’t locked into the overused PFP META.
“Loot is randomized adventurer gear generated and stored on-chain. Stats, images, and other functionality are intentionally omitted for others to interpret,” said Hofmann, with emphasis on the “for others to interpret.” Loot asked holders and the wider community to play as if Hofmann created the chess pieces without the rules of chess, and it left those rules up to the community to create.
One of those rules was Adventure Gold. Will Paper, a community member, created AGLD, a new EC20 token pegged to the value of Loot and airdropped to all users who owned a Loot. With the fervor around Loot, AGLD’s value skyrocketed. AGLD is only the beginning of innovation within the Loot ecosystem, which saw community members building mini-games, other PFPs, currencies, and marketplaces on top of a simple assortment of text.
Although the craze for Loot only lasted a few months, with copycats also using text as a base for randomized rarity structures, it left an indelible mark on NFTs. Loot showed what was possible in making NFTs a sprawling scalable decentralized board game, and it showed the potential of linking an NFT project with a token.
Bored Ape Serum Mints Mutants
As if to bring PFPs back into view after the fervor for text-based NFTs, Yuga Labs dropped Serum ERC1155 NFTs to every Bored Ape holder. It introduced a mechanic where you combined the Serum NFT with your Bored APE NFT to create a new Mutant NFT, thereby burning your Serum NFT. This recent burn mechanic created a unique game theory scenario that added a whole new set of people to the Bored Ape ecosystem at a more favorable price point.
This move was the first of many the YugaLabs team made to show their impressive ability to create new value using NFTs. And for an entire year, we wouldn’t know who the team behind Yuga Labs was.
Roadmaps: Comic Books, TV Shows, Metaverses, and Brands
Amidst this assortment of tokens, commercial rights, decentralized board games, web3 community engagements, and other web3-native applications of NFTs, mainstream users came knocking on crypto’s door. And with that came their proclivities for NFT projects that were more palatable and understandable, as opposed to “weird” web3 promises and game theory that made no sense to them. People wanted something tangible. Cue the roadmaps replete with promises of what a project would do once they raised the money from their mint and secondary sales.
No doubt, roadmaps were a signature part of many web3-centric projects like Bored Apes, but it became increasingly trendy to declare that one had traditional tangible ambitions for a project. This included ambitions for comic books, TV shows, events, physical collectibles, partnerships with existing brands, and more. An NFT project with a coherent and achievable roadmap garnered the most interest, and when combined with a killer team, it was a recipe for a potentially successful mint.
The irony, of course, with the Roadmap META is its equal but opposite reaction: No Roadmaps. This is evident in Goblin-town, Cryptoadz, Loot, and others. These projects open themselves to the complete unknown, open to what the community will build for them. Both paths are valid and have successful examples.
Doxxed Teams
Less than a year after the YugaLabs team launched Bored Apes, an exposé from Buzzfeed revealed the identity of two of the co-founders, and this was at the height of a new trend in NFT projects: doxxed teams.
On Jan 17, 2022, the popular NFTEthics Twitter account revealed the identity of Beanie, one of the most prominent influencers and NFT founders in the space, responsible for significant projects like Pixel Vault. The reveal underlined an anxiety felt by many in the space: a lot of money was being made for a budding new digital asset class created and run by loud yet anonymous figures.
As more and more people were either doxxed and/or NFT projects ending in rug pulls, losing thousands of people’s money, having a team reveal their identity became a type of assurance. “And the team is doxxed” became a common way to say that this was a project that would not lose value.
The Diversity NFT
Alongside doxxed teams came the inevitable emphasis on who composed these teams. Did these teams have female founders? Were they all white? Did they actually work in web3, or was this just a celebrity money grab? And conversations about who owned or operated web3 were a real opportunity to diversify its foundations.
As a result of these trends, we saw the advent of a wave of woman-centered or woman-founded projects, as well as projects that were explicitly Asian. Since World of Women and 0N1 Force were the first of these types before the trend, in the earlier period of the NFT craze, these communities became instant passports and templates for what was to come with a wave of newer Asian-led and female-led projects. This trend would continue well into the bear market when general NFT project activity would come to a screeching halt.
The Bear Market
From April into June 2022, the crypto market cap fell by half from being $2+ trillion to $1 trillion. According to available statistics, the number of trades using NFTs has dropped by 97% since the beginning of the year. The highest monthly trade volume was $17 billion in January, which then declined to a low of $470 million.
Despite this, NFTs aren’t entirely dead, despite what the media and naysayers like to say. Although the volume numbers are down, and much of the enthusiasm and hype for NFTs has faded, projects continue to launch into a bear market. The result has been creative people and projects that manage to survive and thrive.
Bear Market Free Mints
Although CryptoPunks, the first PFP NFT project, started with a free mint, most NFT projects in its wake did not opt for this option. Many NFT projects wanted to raise money from primary and secondary sales. But when the bear market hit, with everyone’s crypto bags running low, paying even .05ETH for a mint was a turn-off.
This was evident with Goblin-town — a simply perplexing and purposefully gross project with an undoxxed team that seemed to defy all the NFT conventions. The project creators, The Truth Illuminati group, didn’t reveal themselves until almost two months after launch. During that time, they hosted Twitter Spaces and offered unique on-chain reveals that can only be described as digital theater. Some described this as a “high context” meta.
Membership Clubs
Throughout this period, from bull to bear, membership clubs became a consistent throughline for NFTs. With NFTs being an easy way to token gate digital experiences, websites, events, and physical spaces, membership clubs are a natural progression. This has ranged from private restaurants to full-fledged luxury clubs. In fact, most NFT projects have taken on the traits of membership clubs, giving exclusive access or luxury-like perks to NFT holders. Poolsuite, in particular, offers members access to a manor or network of manors worldwide.
Where do NFTs go from here?
Some venture capitalists believe that the NFT market will stay around, grow, and become a more critical component of the growing web3 ecosystem. “What is coming to light is some important dynamics that will make NFTs a more permanent fixture,” said Jordan Nof, a general partner at Tusk Ventures, which has backed NFT company Dibbs.
Last week, the first NFT home was sold in Columbia, South Carolina, for $175,000. We might soon be able to buy NFTs of real estate at scale, taking a step beyond just digital photos and game assets. NFT tickets are being experimented with across the board, and NFTs as metaverse objects are already widespread.
When it comes to NFT META, there is a lot more to be said as we have only shared a few observations. We’ve isolated some of these META or strategies, but nothing remains singular. Most of the time, META merge. In many cases, projects are doing all of the above and more, tapping into the expanding potential of NFTs as flexible digital objects with high upside.
