Consumerism has evolved. From localized in-store purchasing with limited choices, to globalized digital marketplaces with a variety of options, consumers have had to adapt to the ever-changing tides of innovation. With services like smart devices, allowing instant access to information, and the ability to interact with brands in a multifaceted consumer landscape, consumers can connect with brands and interact with consumer goods like never before.

Smart chips integrated in physical products enable enhanced interaction, and seamless connectivity between the physical and digital realms. Near-Field Communication (NFC) enabled items with programmable functionality opens up a realm of possibilities for both consumers and brands, allowing for real-time information retrieval, authenticity verification, and even digital ownership of physical goods.

Over the next decade, we will see more garments with NFC smart chip technology and programmable functionality, providing creators and brands with the resources to establish engaging and community-driven environments.

The History of Fashion

For centuries, clothing was primarily functional, designed to be worn without much emphasis on fashion or style. In ancient civilizations, clothing primarily denoted status and cultural identity, evolving to the draped styles of Greece and Rome, and later to the modesty enforced by the medieval church.

The 18th and 19th centuries were periods of significant change. Influenced by innovative designers, fashion houses, and socio-political movements, these eras marked transformative periods throughout the history of fashion. The French Revolution brought about simpler, more egalitarian fashions while The Industrial Revolution introduced technological innovations like the sewing machine, making clothing more accessible and affordable.

20th Century

The Roaring Twenties popularized flapper dresses and liberated silhouettes, while World Wars introduced trousers for women and military-inspired attire. The post-war era saw haute couture's boom, with designers like Christian Dior’s "New Look."

The '60s and '70s embraced youth culture, leading to mini-skirts, bell-bottoms, and countercultural style, before becoming influenced by pop culture, music, and globalization in the 80’s and 90’s.

21st Century

In the early 21st Century, globalization significantly transformed the fashion landscape. Fast fashion brands like GAP, Zara and H&M expanded worldwide, offering trendy, affordable styles and rapidly adapting to runway designs. Social media and web apps, accelerated trend adoption worldwide; however, this accessibility brought up sustainability and moral concerns. Discussions arose prompting environmental, social, and ethical impacts of fashion production and consumption, which forced brands to become more aware of their supply chain conditions.

A timeline of significant movements that helped shape the way fashion is today:

The acceleration of technology propelled typical walk-in stores to e-commerce powered shopping experiences following the COVID-19 pandemic in March 2020. Augmented websites and in-store experiences like virtual try-ons or smart chipped garments began to rise, allowing customers to “connect” with their garments or personalize their experiences.

The Digital Age

Digital marketing has played a critical role in the success of many online businesses.

• Projected E-commerce revenue from 2023 - 2027 is around $490B, a 53% increase

• In 2020, e-commerce sales accounted for over 14% of all retail sales in the United States and is forecast to rise to nearly 22% by 2025 (Statista).

• Global AR ad revenue is expected to increase from $1.36B to 6.37B by 2026 (Emodo).

• 2.64B consumers will complete at least one purchase online in 2023 (Adobe).

Web3

As e-commerce thrived, a new movement began as creators and designers look to capitalize on community building and exclusivity through programmable products via smart contracts and blockchain technology. Web3 and blockchain became a hot topic as luxury brands and lifestyle companies looked to digitize their products through NFTs, NFCs or QR codes.

NFTs

NFTs, or non-fungible tokens, that represent a distinctive digital asset that is indivisible and cryptographically secured through the blockchain. Each NFT serves as a record, allowing creators and collectors to establish ownership within a secure, immutable environment. This feature empowers creators to monetize their virtual creations, and collectors to own and trade digital assets within an inherently unique ecosystem.

In 2020, the NFT boom sparked tremendous interest towards digital ownership, provenance, and online representation through pfps (profile pictures), membership passes, and digital collectibles. Luxury brands and corporations entered Web3 through various NFT collections and NFC-connected experiences for buyers. Some of the most notable brands being, Nike, Gucci, Adidas, Porsche, Pepsi.

• Gucci unveils new luxury NFT collection 10KTF Gucci Grail, inspired by Gucci’s Creative Director, Alessandro Michele. (Featuring Bored Ape Yacht Club, Cool Cats, World of Women and 8 other collections)

• Adidas Originals launches virtual fashion line in collaboration with PUNKS comic, gmoney and Bored Ape Yacht Club.

• Nike acquires RTFKT, a leader in creating cutting-edge augmented experiences, and in game engines. RTFKT uses the latest in game engines, blockchain authentication and augmented reality combined with manufacturing expertise to create one of a kind sneakers and digital artifacts.

• Tiffany & Co. partners with Cryptopunks to offer 500 custom “punk” engravings for punk holders as they make their entrance into NFTs.

• Hugo Boss partners with Imaginary Ones to launch an exclusive NFT collection called ‘Embrace Your Emotions’ (EYE), with plans on integrating a 360-degrees metaverse experience experience for holders.

A list of 28 brands that have entered the NFT market

According to a report by Moonblock, over 161 brands have been associated with an NFT launch.

There is strong belief that as Layer 2 solutions, such as rollups and side chains, continue to pursue scalable, environmentally friendly infrastructure for developers and creators, brands will launch their own digital collections and networked products.

The blockchain for digital consumer goods

Though there are certainly cheaper chains to use for transacting, Ethereum currently controls over 80% of NFT sales volume by blockchain. Generating 8x more users and volume than any other chain (According to CoinGecko). Since 2020, Opensea has done over $16B in sales volume since March 2021, having 15.5% of that coming from Yuga Labs, creators of the Bored Ape Yacht Club and buyers of LarvaLabs CryptoPunks.

Industries from Sports teams, A-list celebrities, lifestyle brands, leisure & travel have all ventured into this speculative mania. (See Steph Curry’s 2972 NFT collection and Etihad Airlines EY-ZERO1 collection).

According to Ycharts, the average amount spent for gas was around $120 during March - November 2021. Even with high gas fees, It’s quite clear that projects want to launch where there is demand, and the demand on Ethereum was through the roof.

Of the brands that launched on the Ethereum blockchain, Nike (RTFKT) had the most unique buyers with over 15,000+ combined across all releases, followed by Adidas at around 9000.

Crypto-native digiphysical products level up the interactive shopping experience by allowing consumers to actively engage with their purchases, rather than being passive recipients.

NFC integrated garments are part of the broader trend of blending physical and digital experiences. Engagements like, accessing exclusive content by tapping a garment’s NFC tag, or gamification through proof of participation. Sellers can leverage these features to offer distinctive shopping experiences and onboard customers.

When integrated with Ethereum’s native secp256k1, NFC or other smart chips, can securely store unique identifiers or private keys, allowing onchain programmability and authentication. We will discuss this more in the upcoming sections.

NFT Token Standards

Ethereum token standards provide a structured framework that ensures interoperability, security, and functionality for digital assets. Each standard has its own set of rules and specifications that dictate how the tokens behave and interact within the Ethereum ecosystem. These standards give power to brands and creators by allowing assets to evolve, adapt, and interact with other on-chain entities, promoting richer user experiences and more intricate digital ecosystems. Of course there are many more, but these are some of the token standards we found to be a progressive way for creators and brands embracing crypto-native consumer goods:

• ERC-721: This is the most common standard for NFTs. Each token is unique, making it ideal for representing one-of-a-kind assets like art, collectibles, or real estate. The uniqueness allows for specific utilization, such as accessing a particular virtual space or using a specific virtual item in a game.

• ERC-1155: A standard interface for contracts that manage multiple token types. This Multi-Token standard can represent both fungible and non-fungible tokens within a single contract.

• ERC-6551: Token bound accounts allow NFTs to own assets and interact with applications, without requiring changes to existing smart contracts or infrastructure. This includes the ability to self-custody assets, execute arbitrary operations, control multiple independent accounts, and use accounts across multiple chains.

• ERC-5791: The ERC-5791 standard, also known as Physically Backed Token (PBT) binds together a physical asset with an onchain NFT or digital asset via cryptographic chip. The chip generates an asymmetric key pair for the NFT, which can be publicly validated. This ensures a valid signature must follow the schemes established in EIP-191 and EIP-2 (s-value restrictions), where the data consists of the target recipient and the recent block hash.

• ERC-2981: Known as the royalty standard, ERC-2981 presents fresh rules for how royalty payments are distributed to creators every time their NFT is resold on a marketplace. This standard ensures creators and core contributors are compensated regardless of how many times the item is sold.

Network Product Features:

As described by Gmoney, networked products are garments with programmable utility that focus on retaining connection, value and control to holders. Features like digital wallets with classic email login authentication for boosted connectivity, gamified reward systems, on chain loyalty programs through proof-of-attendance protocols are all examples of utilities for physical interactions within an NFC-enabled item.

Creators and brands offering, immersive experiences or dynamic products with personalized accessibility and programmatic functionality will continue to thrive and attract a newer generation of consumers.

Tokenized products can incentivize owners to engage with their products through NFC interaction or QR code. Brands with physical locations or pop up shops can reward customers through Proof-of-Proximity or Proof-of-Location consensus protocols, ensuring two or more devices are physically close to each other at a given time. Unlike Proof-of-Location, Proof-of-Proximity doesn't necessarily provide the exact location but confirms the proximity. For instance, a real-life exhibit could use Proof-of-Proximity for interactive displays and Proof-of-Location for validation that garment production and supply chain tracing are authentic.

Tokenized garments with onchain programmability give owners the power to become more engaged customers and contributors. Each garment fulfills the same duty as any other digital asset, ensuring authentication, exclusivity, and accessibility within a robust ecosystem.

Accounts

The profile page was a monumental moment for social media, as platforms provided tools for users to curate online images and personas to build connections and network with friends and strangers.

Since the beginning of the early social media era, profile accounts have aimed to enhance community engagement and provide a place for individual expression and personalization. Thanks to ERC-6551, NFTs have the capability of holding other NFT items, or even interact with dapps as if it were any other digital wallet. Holders can personalize their NFTs with digital garments like hats and tees, while showcasing their activity within the community on a profile or subdomain.

9dcc launches the new accounts feature for 9dcc garments.

• Account subdomains for digital assets allows owners to personalize their journey with their associated garment through ERC-6551 functionality.

• Digital garments could unlock specific features and content, due to the owner’s on chain history or POAPs. whitelist, IRL exhibits, VIP access are some other potential utilities.

• Personalization and account management ensure that these interactions are tailored to the user's preferences and history. For instance, a digital garment might unlock specific features or content due to the owner’s on chain history or attendance. One example of this is 9dcc’s network points system which rewards users who interact with other products and consumers via account verification.

Redeemables

For redeemable assets, owners can burn/lock the NFT in order to claim the physical product or NFT. Like bundles, early “digital twin” products treat each counterpart as a secondary offering as opposed to product components that are deeply integral to one another. Digital twins are goods that exist in physical form, but also contain a cryptographic link to its digital record via NFC chip technology. This record can take various forms, such as onchain account IDs, NFTs, registry entries, digital passports or signatures.

In game assets like wearables with un-lockable characteristics and attributes will entice owners to hold their items for longer periods while increasing value for speculators.

Physically-backed-Tokens (PBT), however, are physical assets that are brought on-chain in the form of an NFT that acts as a digital certificate of the original asset. Protocols like 4K, Americana, and Courtyard are working on solutions for vaulting and escrow involving higher valuable, physically backed assets. Some brands have leveled up the way consumers interact with their products, allowing users to scan or connect with other users or products via NFC. As mentioned above, the ERC-6551 standard has become a popular choice for crypto-native brands wanting to engage in community building and interactive experiences.

Mntg.io showcasing their Fruits & Veggies collection featuring a mix of Levi’s denim styles.

Digital Experiences

The more time we spend consuming digital media, the more we start to use digital amenities and benefits like online shopping platforms, Interactive User Interfaces, digital payment solutions and delivery services. Luxury brands have leveled up their shopping experience by creating interactive virtual storefronts and exclusive benefits for certain holders of their released NFTs. Projects like IYK, and ARX provide solutions to bridging physical and virtual worlds through connective interactions via NFC.

Unlike traditional digital marketing where advertising mediums are videos, hyperlinks, or radio, virtual and augmented worlds allow brands and creators to personalize the experience for their customers. Open source tooling and user on-boarding will give sellers a chance to create their own advertising avenues while maintaining revenue share.

For example an Artist or designer can showcase their collections in a virtual fashion house or gallery, allowing virtual guests to interact in an engaging environment. OnCyber and Mona provide tooling for creators to build custom worlds, in high quality interactive 3D environments.

• RTFKT launches Augmented Reality (AR) NFC-enabled Hoodie in collaboration with Nike. The RTFKT x NIKE AR Hoodie acts as an NFT, allowing holders to scan the the QR unleashing Augemented effects.

• Lacoste sets sights on virtual shopping experiences with the UNDW3 collection, presenting a virtual shop where users can browse virtual products and purchase the digital twin or physical version. (Powered by Emperia)

  Lacoste immersive virtual shopping experience, including a scavenger hunt, exclusive perks and much more for UNDW3 holders.

• Shopify partners with Doodles by launching an immersive tokengated experience for holders. Powered by easy-to-use POS technology, hodlers could partake in DoodlePutt, an exclusive mini-golf course with merch and NFT prizes.

Into the Metaverse

• About 25% of American adults under 40 own a virtual reality headset.

• Almost one in three (28%) have more than $1,000 in the metaverse.

• Nearly 40% of respondents have spent $100 or more on online artwork and online education. And 55% have spent $100 or more on metaverse purchases such as skins and NFTs. (Paypal Newsroom)

Value Chains

The current garment production process takes value from key contributors and creators, while rewarding those that are not on the front lines. Global supply chains face a variety challenges, from vendor overspend, lack of transparency, inventory mismanagement, ethics concerns to compliance regulations. The real benefit of using blockchain for fashion is that it enables the beginning of a transparent and verifiable design and production landscape.

• Permet Labs, formerly known as Hibiscus, has introduced the first transparent, community-owned toolkit for the fashion creator economy. The project - which is as a public good - seeks to on-board current industry players onto the blockchain (designers & makers) and support the creation of new revenue streams for these players. The goal is to create a regenerative ecosystem where fabricants and the environmental impact of garment creation come before fashion conglomerate profits.

• 0xSplits, a set of composable, open source smart contracts for safe and efficient on-chain payments, allowing sellers to split revenues from NFTs, diversify future income streams, or handle repayments.

• Crowdmuse is a protocol for creators to collaborate on multiplayer products with brands, makers, and communities while maintaining ownership over their creative assets. Developing on-chain collaboration frameworks that simplify the process for creators to build digital consumer products across fashion, consumer goods, multi-media, and more.

The 0xTote by FWB X DSPTCH x Tropical Futures Institute uses the ERC-2981 royalty standard for distributing revenue to creators and contributors. When you collect, revenue on sales is split amongst each collaborator, and as a holder of the digital collectible, you can access gated creator artifacts post purchase.

Generative Art & Fashion

Technology continues to be an influence for artists and creators, reshaping how they conceptualize, produce, and distribute their work. Artists use technology to explore new realms of creativity by establishing techniques or design processes that could not be done by hand. Generative design is one example.

Generative design is the process of writing an algorithm that produces different outputs depending on the values of a set of variables. These variables could range from shape, size, position, color, etc. One of the most recognized generative projects to date is the Chromie Squiggle by Snowfro (Art Blocks), which uses a predefined algorithm to produce a squiggle, based on a variety of different variables (Shape, color, size, position, length, etc). While the algorithm provides the base, randomness ensures that each Squiggle is unique. When a Squiggle is minted, the Ethereum transaction hash, or other attributes, introduces randomness into the algorithm, leading to the creation of a one-of-a-kind piece.

Over 90% of the top 100 collections of all time on Opensea use generative minting, and consist of profile picture collections with unique traits and attributes. Art Blocks had generated a series of 8 curated collections of artworks representing contemporary generative art, further igniting the generative art movement.

Generative minting engines and creator tools have kickstarted the creator economy allowing designers and brands to power up their communities through interactive personalized experiences. On August, 29th 2022, Art Blocks launched Art Blocks Engine and Art Blocks Engine Flex, with a purpose to allow teams and brands to launch their own generative assets. Some other projects building in this sector include RTFKT, Tribute Labs, Draup, 9dcc, and many more.

ODDS are a generative sweaters collection by Tribute Brand x Chromie Squiggle

Tribute Brand is an innovative company that makes digital clothing which consumers can buy and "paste" onto themselves.

The source code or script behind ODD assets takes generative Chromie Squiggle code and uses a seed input to control a variety of different variables in each Squiggle, creating an on-chain token that contains instructions for producing physical sweaters and virtual experience in the form of digital skins. The main variable determining the sweater's appearance is the Squiggle type, along with color spread, steps between, and segments, which control color distribution across knitted panels. 9dcc also partnered with Snowfro’s Chromie Squiggle through its Iteration-02 NFT T-shirt Collection.

Gucci has embraced generative garment design and manufacturing by launching the Future Features Collection, comprising of 21 NFT artworks featuring a variety of generative artists and designers. These artists explored intersectional aspects of technology, fashion and art by using inspirations from generative textile design and garment production. Other projects or artists utilizing generative textile or garment design are Draup, The Fabricant, and WOVEN-CODES.

These products are just the surface of what could be possible with generative minting engines integrated with garment production.

Takeaways

We are only getting started on building the railways for the digital garment economy. The network effect of community-building creators and incentivized contributors will initiate a flywheel of consumer powered products while generating value to both creators and consumers. Tap-To-Garment interaction through NFC-enabled tags or labels show a promising path for creators looking to capitalize on building an active and engaged community through networked products. Some key takeaways and predictions from above:

• Generative minting engines will allow brands and creators with their own parameters and data points to create randomized outputs. For example, using geographical coordinates instead of hexcodes to create a generative NFT.

• Programmability within NFCs and other physical chips will continue to advance allowing brands to personalize the experience for their customers with simple interactions and proximity-based incentives.

• Brands and manufacturers will have more transparent supply chains verifying ethical means of production, quality of materials, royalty distribution and much more. An example would be: a brand selling garments with smart chip functionality allows customers to tap garments while in store to verify products were ethically manufactured and contributors are being fairly compensated.

• Crypto-native NFC chips, or other smart chip technology, will allow consumers to learn about the origins of the garments, while verifying authenticity and scarcity. This makes us believe that the value of properly executed limited edition campaigns will increase over time, with the help of backing protocols like 4K and Courtyard.

References:

Huge thanks to gmoney, 9dcc, Crowdmuse, Nichanan Kesonpat, Peter (@pet3rpan_) and the 1kx team, for the inspiration on Networked Products. Other mentions, Vogue, Fashion-Era, Permet Labs, Economist, Tribute Brand, Lacoste. Brands and projects mentioned are tagged in the article.