Old Fashion Research Partner: Chaotic NFT NYC--Re-Talking About NFT Value and Future Trends
July 11th, 2022

Author: JX,Partner of Old Fashion Research

1/ Don’t buy tickets to the main venue

The main venue was extremely disorganized:

There was no conference agenda on the site or on the official website, so it’s unknown that what the order of the speeches would be and what the background of the speakers was. No one checked the tickets at the main venue and buying $1,000+ tickets was a waste. There were so many speakers that a lot of speeches were of low-quality and inefficient, the Panel guests were not familiar with each other, and there was no rehearsal for the script beforehand. In short, don't go to the main venue.

2/ There are many activities outside the meeting whose effect is not good, and they’re very tiring.

There are many after parties and side events organized by various project parties and funds. The NFT circle does not seem to be affected by the cold winter of the plummeting cryptocurrency circle. On the contrary, each venue is basically full. Therefore, plan which activities to go to in advance. It’s not necessary to participate all, and there is no need to run 3-4 activities in one night (that’s what I did). Otherwise, it’s easily to be exhausted. Without purposes, random social is of low quality and efficiency, while most of them who go to venues are the same people.

It's better to register for tickets or invitations in advance, and arrive at the venue about 10 minutes in advance, otherwise you may be rejected by the security guards if you line up in the crowd or find acquaintances to bring in. (This does not apply to girls. Girls are born with access cards, ykiyk) Of course, if the market become more bearish next year, there may be no need to queue.

3/ NFT holders events are must-see

Blue-chip projects such as BAYC, Doodles, Coolcats, Azuki, etc. have held holders events. NFT and registration are required, then a lottery will be held to qualify for the events. These activities are generally of very high quality, not only for their various forms, such as conference held by Doodle, enter the alley of Azuki, and even Snoop Dogg and Eminem invited by Bayc (missing Eminem made me cry for several days), but also for the participating guests who are original players in the NFT circle, contributing to higher quality than other general after parties.

It is recommended to pay close attention to the Twitter and Discord of various blue-chip projects or your favorite projects 2 weeks before the start of NFT NYC, so as to ensure that you register as soon as possible after the event registration information appears, and the chances of winning the lottery will be greatly increased. If you don't win some of the events, you can also use the add one spot you won to trade with someone else.

In a comprehensive view, Doodles’ activities are the most well-prepared, BAYC’s are the most rustic, Azuki’s are of oriental colors, and Goblintown’s are most cult. As a big blue-chip project, CloneX did not hold a decent event, which is arguably the most disappointing. In addition, the collective absence of Solana's NFTs reflects, to some extent, that Solana's NFT projects still lack long-term investment planning and the ability to move towards the mainstream.

The mentioned above is about my first time participating in NFT NYC. Compared with the original players, I have stepped on a lot of pits, and I am also ripping exhausted. I hope it will be useful to you.

Part.2 Re-talking about the value of NFT and future trends

Reviewing the history of the development of NFT, the initial appearance of NFT was defined as in-game assets, consisting of CryptKitties and a series of early crypto on-chain games with NFT elements. So far, it’s passed down into two branches: one is all kinds of P2E games led by Axie, while NFT serves as a tool to earn money via game; the other is like Decentraland and Sandbox, selling land to make money, but the land bought is currently unable to generate returns directly.

Later, crypto arts platform represented by Superare emerged, which began to expand NFT from gaming assets to collectibles. Art is essentially a luxury niche consumer product, and its high participation threshold allows art NFT to circulate only in small areas. But the art NFT has proven, through auction events such as Beeple, that NFT can be a high unit price product. In this way, despite low liquidity characteristics of NFT has not dissipated, the volume of the entire NFT market can rise due to the emergence of high unit price NFT.

The NFT application scenario that really exploded was PFP (social application avatar), which was not expected by most people. The reason is that the value of PFP is rooted in web2 applications. The applications we use avatars are all web2 applications, such as WeChat, Twitter, Telegram, Instagram, etc.

The discovered value of PFP is the unmonetized Web2 value. Before the advent of PFP NFT, there was no method for the social network avatars of Web2 applications to generate payment scenarios. It is a new uncultivated land for monetizing social relationships on social apps.

Previous analysis articles attributed the value of NFT PFP to a sense of show off or social identity. The latter is inaccurate. Social identity and cultural circle identity are just the result of PFP-type NFTs having value, not the reason for it. The real reason is that NFTs have unearthed the undiscovered residual value of Web2 social relationships.

So, the question is, what will be the next popular NFT application scenario?

Let's take a step back and think about another question. Why did CryptoPunks, the originator of avatar NFTs, appearing in 2017, cost no more than $1,000 per unit until January 2021?

Historical Price Chart of CryptoPunks

The reason is very simple. Initially, CryptoPunks was auctioned as NFT artworks, which has no differences among Beeple and Pak. There is even no such category as NFT avatars. The following paragraph is excerpted from the New York Times 3/11/21 report:

After the rare models of CryptoPunks were hyped as encrypted works of art, the price of non-rare models rose spontaneously. But more importantly, because Punks themselves were avatars, they were naturally used by buyers as the avatars of social apps. After the buyer updated the avatar, a secondary effect was created in his social network, which led to an increase in the number of followers of Punks as well as an increase in the number of purchases. Therefore, in my view, the application of the PFP avatars-- this new category opportunity, was created by a series of "mistakes and missteps".

In terms of attribution, we can only say that the necessary condition is to find the foothold of the explosion in volume and price: Volume – the web2 value of social networks; price – the auction and hype of artwork NFTs. But it is not a sufficient condition in converse, so it is hard to find an opportunity for disruptive innovation, and sometimes it is really luck.

Of course, you can't wait for luck to hit the project. We may miss the opportunity of CryptoPunks, but the success of Bayc and Azuki is traceable - clear image positioning, high-quality art production, and finely operated community culture and so on. Such kind of analysis is too much, here not to repeat.

Back to the original question, what are the new opportunities for NFTs other than PFP?

Here are my opinions and I hope they may draw forth by abler people:

Iteration of categories

The unit price of the head NFT is not low. Previously, it was technically hoped to simulate the transaction of ordinary tokens through fragmentation, but the problem is that the fragmented token is not the NFT itself, and the trader buys and sells not the NFT, but the fragmented NFT.

I think it can be solved in another way, that is, to cut the NFT as fine as possible. For example, the number of releases in a series is 10 to the 8th power, then the unit price of each NFT will be very low. Using a bulk aggregation trading tool like the next generation Gem/Genie, you can achieve the experience similar to trading fungible token.

This only needs to solve one problem: what should such a large number of NFTs be?

It cannot be an avatar. Not so many people on earth use so many avatars. It must be a category of an extremely large number of objects. Perhaps a musical note? A code? Pixels? An address?

And what does each NFT stand for? Does the combination make sense, or does it not make sense? I don't have answers to these questions yet.

Expansion of the scene

Through the traceability of the previous context, we found that the NFT's scenario discovery is to explore the social value that has not been monetized.

Further, are there other scenarios we use every day that are never monetized?

For example, the short videos we watch every day, the newsletters we read every day, the Twitter we use, the map we use? Which scenarios NFT can be naturally added to?

The issue here is too complicated, so I won't expand it for now.

But it can also explain why I am not optimistic about most of the music NFT products. The simple sales model is repeating the products that have been monetized, which doesn’t make a lot of sense.

To sum up, these are the thoughts and notes from the NFT NYC conference, and I would like to discuss with all the knowledgeable people and entrepreneurs.

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