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The correct way to unleash the power of NFTs + Blind boxes

Original article can be found here in Chinese form.

What is the most on trend way to sell NFTs? From the traditional sales listings to British and Dutch auctions, to the well-known open editions and silent auctions as Nifty Gateway entered the scene, every new and innovative sale method can spark off interests in the consumers.

On January 30th, 2021, Boss Logic adopted a new way of selling Nifty Gateway’s artworks — blind boxes.

These 8 pieces of encrypted artwork are based on well-known characters in Marvel, DC, Star Wars and other IPs. The probability of a painting appearing in a pack is 12.5%. Each card pack is priced at $300, with a total of 504 packs. Now Sold out, the total trading volume reached 151,200 US dollars.

In addition, NBA Top Shot, NFTBoxes, and Hashmasks, which have recently ignited the market’s FOMO sentiment, have also adopted mechanics of NFTs+ blind boxes, which all seem to have achieved good results.

In fact, in the early days, there were discussions about the use cases of NFT + blind boxes, and it’s similarities with Pop Mart, hoping to replicate the blind box trend led by Pop Mart into the NFT market.

However, the real question in focus is: what is the reason for the recent popularity spike in Pop Mart, what percentage of the success of the business can be attributed to the usage of “blind box[es]”? Is the common factor for success on all the projects above due to the usage of “blind box[es]”? What is the real reason for the hype?

Blind boxes is not the only factor.

First of all, let’s take a look at how Pop Mart has developed to its current scale.

In an exclusive interview with the founder and CEO of Pop Mart, Wang Ning, the founder of Hecheng Animation, Wang Ning mentioned that the success of Pop Mart can be attributed to four correct decisions.

The first was to help artists industrialize and commercialize Chaowan to make it more suitable for promotion to the public; secondly, it was clear that Pop Mart’s main audience were girls. Yet, it is important to note that their target audience at the time were mostly boys; The third was to establish channel advantages and bring the tide of play subculture into the mainstream culture. The fourth was to take hold of timing, thanks to the growth of a new generation of young people and the rapid development of the national economy, people had the ability to fill their inner world.

Pop Mart led a “new retail” trend. The so-called new retail was retail entertainment, turning the sales of goods into sales emotions, which coincided with the feelings brought by blind boxes. The moment you open a box, you don’t only receive the toys, but also joy or frustration depending on what you get.

When Wang Ning was asked whether the “blind boxes” played a pivotal role in creating “new retail,” Wang Ning replied, “I think blind boxes are just a tool.”

The flicker behind the “blind box”

If blind boxes were really just a used “tool” as Wang Ning mentioned, then what was the actual spark that ignited the brand’s hype? What is the correct way to open an NFT+ blind box? Let’s dig into two trains of thought through the analysis of CryptoPunk, NBA Top Shot, NFTBoxes, and Hashmasks that have stirred up various discussions.

CryptoPunk: The Enduring OG

This project was born in 2017, the OG of NFT projects. At the very beginning, CryptoPunks were distributed as gifts to the community for free, using the “blind box” theory as early as four years ago. Users did not know the specific attributes that they would be receiving, only after they receive it will they know what they looked like. There are so many types of CryptoPunks: male, female, ape, zombie, 0 attributes, aliens, etc. With different attributes having different rarities.

With the passage of time, more and more people began to pay attention to the NFT field, and this OG project slowly gained value recognition, with the price of each CryptoPunk beginning to rise. At present, the historical record of CryptoPunk’s highest transaction volume is 605 ETH, which is approximately US$747,000.

What are some of the reasons CryptoPunks can sell for such a ginormous price? One of the reasons is due to its historical status, otherwise known as intrinsic value. This epoch-making and pioneering project itself carries enormous value; because of its scarcity, the total number of CryptoPunks is limited to 10,000, and many CryptoPunks have not been moved since they were created, and many are possibly lost. This makes them much scarcer and the subsequently increases it’s value.

The spark behind CryptoPunk’s “blind box” is it’s historical status and scarcity.

NBA Top Shot: A new dark horse

NBA Top Shot is the hottest project in the NFT space today. Since its launch of the closed beta in the summer of 2020, in just over half a year, the turnover has reached 42.7 million U.S. dollars, surpassing the veteran NFT project “CryptoKitties”, ranking first.

In NBA Top Shot, players can receive Moments through card pack openings, each and every moment with a different value. This “blind box” form of gameplay has also been loved by many players. Every time a new card pack is released, it is sold out almost instantly, ever so often leading to the sever shutting down. However, it should be noted that NBA Top Shot is currently only in beta, so the server will continue to be upgraded to improve the issue of frequent downtime.

But has anyone thought about why people actually create so much urgency for themselves to be the first to purchase card packs? Because there is a huge wealth effect.

A Zion Williamson and a LeBron James Moment both sold for a high price of up to $100,000. What does this mean? This means that you only need to spend a minimum of 9 US dollars and a maximum of 230 US dollars to get hundreds of thousands of dollars in returns.

The existence of the wealth effect is due to the infamous IP of the NBA. By receiving official licensing by the NBA, moments have the same intrinsic value as traditional celebrity trading. Stars like Lebron James, Zion Williamson, and Luka Dončić already have a large fan base, hence naturally many fans will be willing to help their favorite stars pay their bills.

The spark behind the NBA Top Shot “Blind Box” is the inclusion of wealth effects and a strong IP.

NFT Boxes: Artworks endorsed by Pranksy

It may be unfamiliar to some when mentioning the name — NFT Boxes, but you must be familiar with its founder: Pranksy.

This “crazy” collector earned $9 million from trading NFTs with a principal of $600, and his OpenSea account has a large number of NFTs from different NFT projects, otherwise known as the “NFT Encyclopedia”. As it stands, Pranksy may be the largest NFT trader up to date.

NFTBox is an NFT blind box project initiated by Pranksy and Carlini8N. It will be issued in limited quantities every month. The NFTs in the blind boxes are carefully curated by Pranksy, and collectors buy them with confidence due to their trust in Pranksy’s experience. As of today, the average price of an NFT box on OpenSea is about 3 ETH, while the price of an NFT Box in the primary market only costed 0.5 ETH, meaning that there was a 500% increase in value.

To sum up, NFTBox relies on Pranksy’s personal reputation and experience. People are convinced that the pieces inside the NFTBox’s works are valuable, as they are familiar and recognise Pranksy. On the other hand, Pranksy is also giving value to the pieces inside the NFTBoxes through his own influence, creating a complimentary loop.

The spark behind the “blind box” of NFTBoxes is due to celebrity effects and quality control.

Hashmasks: CryptoPunk+ENS

Hashmasks is a newly born NFT project, similar to CryptoPunks, one of the differences being that it requires to be purchased and you will not know what the NFT you get looks like before purchasing . Each Hashmasks is composed of multiple elements, such as characters, mask types, eye colors, skin colors, etc. Different elements also have different rarities.

In addition, Hashmasks is sold in a unique way, using the form of a bonding curve. As the number of remaining NFTs decreases, the number of unsold NFTs will also become more expensive, starting from an initial price of 0.1 ETH to the highest price of 100 ETH, this price increase drives the FOMO sentiment in the market.

What is even more interesting is that the holders of Hashmasks can personally name the NFTs. This time the creation of a piece of art will not only be done by the artist alone, but also by collectors. The naming mechanism requires the use of $NCT — ERC20 token, which can be accumulated by the owner just by holding the NFT. The total amount of $NCTs are limited, and the final form of the artwork will only be determined after the $NCTs are completely destroyed. This allows collectors and artists to form a closer bond, and the non-repeatable naming mechanism means that these NFTs has once again reached a higher level of scarcity. As the final name of the NFT is determined, these non-duplicated names can also be very useful and have some use cases in the future. It can be said that this project is a bold attempt to combine the CryptoPunks idea with ENS.

Maybe in the future there will be more projects to let collectors participate in the creation of artworks in a better way, but every first attempt is memorable.

The hype behind the “blind boxes” of Hashmasks is driven by bold innovation and scarcity.

Summary

Looking at the more popular NFT+ blind box projects in the market, we can see that the “blind box” mechanic is really only the icing on the cake. What collectors are really concerned about is the historical status, scarcity, and Intrinsic value, IP blessing, wealth effect, innovation and other characteristics of a project, it is these characteristics that make these NFT projects come into people’s peripheral.

Rather than creating an NFT project structured around the blind box mechanic, create a high-quality NFT project, then use the blind box mechanic as icing on the cake. This is the correct way to unleash the full potential of an “NFT + blind box” gameplay.

— Written by Holiday Hu, translated by Annissa

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