Journal

NFTs – Weird, Wonderful and worth a lot

Welcome to the weird and wonderful world of NFTs! If you’re reading this, you’ve probably heard something about Non Fungible Tokens as they’ve been the flavour of the month. This journal will explain what a NFT is, how to acquire one, and then go through 13 NFT projects that we believe are interesting!

For anyone not familiar with them, Non Fungible Tokens (NFTs) are tokens on a blockchain that are linked to some sort of data or asset. This ‘data’ or ‘asset’ can literally be anything, ranging from a picture to the papers or ownership of a property. Similarly to other cryptocurrencies, the supply of NFTs can be limited and is set by their creator. The NFT industry is still in its infancy and rapidly innovating.

Currently NFTs are mostly focused on generative or unique art. The most valuable projects combine these two features, and the best example of this is Cryptopunks. Each punk is created by an algorithm to be unique, however certain features are rarer than others. The Cryptopunk NFT tokens have a maximum supply of 10,000, and each token is linked to a unique Cryptopunk. As the token is on the Ethereum Blockchain, authenticity and ownership of the token can be verified by anyone with an internet connection. This also leaves a trail of ownership that can be traced back to the original artist who created the NFT (referred to as minting), ensuring the authenticity of the artwork. If someone is using a Cryptopunk as their online profile picture, they can prove that they are the owner of the artwork simply by ‘pinging’ the wallet that holds the Cryptopunk NFT. This ‘pinging’ can only be done by the owner of the wallet.

Even in its initial form the value of NFTs for artwork was clear. Its applications to physical art are interesting as well. We could see a future, where an extremely rare piece of art becomes tokenised. Let us imagine that the Mona Lisa was minted as an NFT by the Louvre. The Louvre Museum as the rightful owner of the Mona Lisa, would also own the NFT, and the artwork would only be worth its full sum, when combined with the NFT. If the painting itself was stolen, but the Louvre retained ownership of the NFT, how much would the painting itself be worth ? The value of NFTs become clearer for artwork or assets that are more liquid. They are especially useful for assets that are often counterfeited. An excellent example is Rolex watches. If each watch was to be accompanied by a unique NFT minted by Rolex, and transferred to the purchaser along with the watch, counterfeiting them would become impossible. NFTs allow for immutable and cryptographically proven, proof of authenticity and ownership, which is extremely valuable in any marketplace.

In the long run, NFTs are destined to become an integral part of both real life and the cryptocurrency space. This blurring between real and online identity, is referred to as the metaverse. Cryptocurrencies or tokens can be thought of as a digital representation of fiat currency, NFTs can similarly be seen as the digital parallel to real-life objects.

It’s not really a great leap of the imagination when digital interactions are now the norm to most people, especially for people born in the 90s. The above are extremely positive in terms of outlook on NFTs, and the current NFT landscape leaves a lot to be desired. Few projects have dared to innovate, with existing ideas for the most part being rehashed. We have seen multiple collections copying the ideas behind Cryptopunks, specifically the theme and tiered system of feature rarity. NFT projects with clear functionality and fundamentals however do exist, and below we go into some projects of interest, and also what buying an NFT entails.

The projects below have been included due to their momentum, volume and strength of community. They are relatively well established and their value proposition is relatively well understood. For this reason, we would expect these projects to be resilient to a potential downturn in the NFT market.

Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

Acquiring an NFT

The simplest and easiest way to go about doing so is accessing Opensea. The interface is intuitive and is just like most online shopping sites. The only difference is that all payments are carried out using Ethereum, and the items being sold are NFTs. It’s a very smooth and seamless experience. We recommend using the MetaMask wallet to interact with Opensea and you can read our guide to using MetaMask here.

Alternatively, you can look to acquire an NFT direct from its creator upon their release. This process is referred to as minting, and entails a bit more technical knowledge and is not recommended due to the high gas fees which are involved. The user is required to interact with the projects’ smart contract via a button. As there are a limited amount of NFTs available to be minted, the competition is intense, and leads to enormous gas fees. People attempting to mint will increase the fee they are willing to pay for their transaction (the minting process) to go through first, and for most in demand projects, the gas fees are higher than the mint cost for the NFT! Many people attempting to mint NFTs end up losing their ETH on unsuccessful gas fees and have no NFT to show for it as well. Be very cautious when minting NFTs on the Ethereum blockchain. This warning regarding gas fees does not apply to blockchains with negligible fees such as Solana.

Lastly when looking to acquire an NFT either via mint or aftermarket purchase such as Opensea, unless it is being acquired based solely on preference, ‘I like the picture, I buy the picture’, there is some form of speculation involved. As it stands most NFTs are highly speculative projects with shaky fundamentals and no use cases and are a game of musical chairs with a limited number of players. Someone will be left sitting in the chairs at the end of the game. There are exceptions to the rule, but when minting a new project there is also the chance it won’t sell out and ultimately become worthless.  The projects could even be scams. This is due to the rapid interest in the market, and the oversaturation with many copycat or shoddy projects releasing. There is a reason the top rankings of projects on Opensea is so volatile. We refer here to Opensea, as it has an enormous marketshare approaching a monopoly, whilst also being the most liquid.

 

Projects

Pudgy Penguins

What is it – Pudgy penguins is a generative profile picture/avatar project, similar to Cryptopunks with 8,888 unique penguins created.

As you can see the project is themed around penguins, and the NFT cmmunity as a whole has appreciated their artwork which has universal appeal. Owning a pudgy penguin, allows you access to their community, and their plan is to create future partnerships, merchandise, and a Lofi Channel to benefit people who own one. What makes this project unique is the enormous hype that has been generated around them. This has led to them taking the number 1 ranking spot on Opensea after seeing sustained volumes and transactions. Many crypto influencers have changed their avatars to Penguins, a NYTimes article was written about them, and Penguin prices have gone vertical due to the memes and network effect. There is no utility or revenue implemented at the moment, so be careful when investing in them, because as it stands currently you are simply purchasing a picture.

 

Punkscomics

What is it – Punks Comics NFTs are, essentially, an NFT comic book series which is being developed around 16 Cryptopunks that the creators of the project own. The Punks Comics NFTs have multiple functionalities.

Punkscomics is a project with a long-term view aiming to have a powerful DAO. The goal of the DAO is to acquire as much valuable crypto art as possible ranging from well established projects such as Cryptopunks, Art Blocks Curated and also smaller projects such as the Lost Robbies pieces. Pixel Vault itself has significant capital as illustrated by their work with Metaheros and the high-level professional illustration talent involved in the comics development. The comics will undoubtedly hold historic significance in the crypto space. Issue #1 was released on May 10, 2021. You were able to stake/burn or hold this comic. For every comic burned, you would receive 1 Pixel Vault Founder’s Token ($FLVT).  By staking your comic you would receive another type of token, $PUNKS, which is an ERC-20 token representing a fraction of the 16 cryptopunks owned by the Punks Comics DAO.

 

FLUF World

What is it – Fluf World has created 10,000 unique 3D animated rabbits that are meant to be usable in the metaverse. It is a relatively new project, and is similar in its features and traits to Cryptopunks and Pudgy Penguins

The project is of interest as it has seen strong demand on the Opensea marketplace, surging in popularity. The rabbits are animated and accompanied by music as well, something which we have not seen in previous profile picture collections. According to Fluf World, purchasing one of their NFTs gives the owner access to their future plans, which include music events and metaverse utility for members of their community. The project also has support from Venture Studio Centrality, however due to the early nature of the project, the feasibility of these plans is hard to verify.

 

The Bored Ape Yacht Club

What is it – The Bored Ape Yacht Club is a collection of 10,000 unique Ape themed characters minted as NFTs. The apes are a ticket to a widely popular and “elite” community.

The Bored Ape Yacht Club marked the start of the generative 10k mint mania and has set the standard for almost every other project regarding how to build a community and bring benefits to their members aka NFT holders. For this reason the project has significant historic value, and has also been recognised by the mainstream art world, as indicated by its presence in Christies, which announced the auction of several bored apes in Hong Kong. Owning one is indicative of a certain ‘online’ status, along with accompanying perks from inclusion in their community. We covered this project in its early stages, and you can read that report here.

 

Meebits

What is it – Meebits are a collection of 20,000 unique 3D voxel characters designed to be used in “the metaverse” and created by Larva Labs, the creators of Cryptopunks.

If you believe in the concept of a metaverse and mass adoption of it, as Meebits could become the metaverses’ equivalent of Cryptopunks if a more concrete version of a metaverse is created. Larva Labs has enough capital to realise this, but as it stands, a universally accepted metaverse platform does not exist. Due to this development and updates on Meebits has been lacking, and has led to the project receiving a lot of criticism. Despite this based on their potential they have performed well and are being auctioned off by Christies in the same showing as the Bored Apes.

 

Parallel Alpha

What is it – Parallel Alpha is a sci-fi card game on Ethereum, with each card being an NFT as well. At the moment, physical copies of cards are in beta testing. The physical cards also have Augmented Reality features, and when scanned with a phone camera, the artwork comes alive, similarly to Pokemon Go.

Parallel Alpha has pioneered a unique business model and is one of the few truly innovative NFT projects, with a top tier development team. This was illustrated by the release of their NFTs with their own innovative systems. The project sold various NFTs in packs via an off-chain reservation system, which was available to every member in their community. The off chain packs were reserved and paid for, prior to the mint. When minting started, owners could open their pack and see they cards which were contained inside the pack. Subsequently the NFTs of the cards in the pack were sent to the owners slowly. This allowed their customers to avoid the use of bots and gas wars that usually happen with most NFT projects, leading to a smooth and streamlined user experience. This already sets them apart from most projects, but their innovations did not stop there!

The NFTs themselves are 3D cards that can be used in the future to create a deck and play in an online game. Just like most strategy card games there are different types of cards with different levels of rarity. Leveraging smart contract functionality enabled by using NFTs as opposed to just physical cards, they created a type of card called a “Masterpiece”. These cards are 1/1 (truly unique) and give the owner 1% royalties on all secondary sales of the less rare versions of the card. This means that owning a masterpiece card entitles the holder to a revenue stream! In our opinion, this one of the most truly innovative NFT projects at the moment, and with its popularity and value of the cards rising, the market seems to agree so as well.

 

Zed Run

What is it – Each NFT represents a racehorse, and allows the owner of the NFT to race their horse against other ones, and to also breed them creating a new racehorse and accompanying NFT.

Zed Run is very similar to traditional horse racing. In real life, the owners of the horses that win races receive rewards, and this also happens in Zed Run, with the owner of the winning horse receiving winnings from the race. The breeding function in Zed Run is similar to real life, and requires both a male and female racehorse owned by different people, represented here by their respective NFTs. The owner of the female horse keeps the new racehorse, and pays a fee to the owner of the male racehorse. The NFTs are not simply NFTs but also playable assets that can generate income for their owner, making this NFT collection one of the few innovative ones in the space.

 

Gutter Cat Gang

What is it – The Gutter Cat Gang is a collection of 3000 unique Gutter Cat NFTs, with varying traits and rarities. The project is working on forming a DAO and works closely with TheSandBox.

There is a lack of innovation in the space of NFTs with a lot of projects not deviating from what has worked to date, and simply choosing another theme for their artwork, but keeping the same fundamentals as other more successful projects. Gutter cat gang plans on creating a DAO to hold assets on behalf of their community, and to also allow members to suggest proposals. They are also building a city in TheSandbox which will allow owners of the cats to play there, bringing a tangible metaverse closer to fruition. Lastly they are also developing a comic based on their artwork and cats in collaboration with MythDivision, a company that worked on intellectual properties such as Resident Evil, Call of Duty, The Walking Dead and The Marvel Universe.

 

Cool Cats

What is it – Cool Cats are a collection of 9,999 unique, randomly generated cat themed NFTs on the Ethereum blockchain.  Similar to both the Bored Ape Yacht Club and Gutter Cat Gang NFT projects, but with cuter pictures.

Cool Cats is one of those projects where it’s really easy to understand why people like the art.  At the moment the project does not offer anything additional past the artwork which has a broad appeal to all demographics. Even Mike Tyson bought one! Additionally the artwork and style can easily be used for merchandise or for a childrens’ book, differentiating the project and its artwork from more niche projects. For anyone who was intrigued by the concept of a childrens’ book linked with NFTs, it might be worthwhile looking at the very recent Alphabetty NFT collection as well.

 

NBA Top Shot

What is it – NBA Top Shot is a blockchain-based platform that allows fans to buy, sell, and trade numbered versions of specific, officially licensed video highlights of Basketball matches, referred to as “moments”.

What makes this project particularly interesting is the fact that it is looking to take advantage of the collaboration between the crypto and sports markets. Being officially licenced by the NBA is also a huge advantage, as the project can bring to bear support which is simply unavailable to other projects. On the other hand, although purported to be a blockchain project, it is not based on the Ethereum chain, and thus a degree of centralisation exists. This means that You can only sell your collected Moments on the centralized marketplace of NBA Top Shot’s itself and not on NFT marketplaces like OpenSea or Makersplace. Users can purchase moments through pack drops, which occur a few times per month and range from $9 to $999, depending on the possible contents of a pack. As expected each ‘moment’ has its own rarity, and limited supply. Rare moments from the superstars of the sport are the most sought after, with similar market dynamics to collectible sports cards markets. You can really think that each ‘moment’ is a sports card, except its authenticity can be proven due to it being an NFT, and the project also signals how major sports leagues are becoming ever more aware of the cryptocurrency industry and preparing for the metaverse.

 

Solarians

What is it – Solarians claims to be the first generative NFT project on Solana, creating 10,000 unique pixelated robots.

Solarians will most likely have historical significance as it is the first NFT project of its kind to be based on the Solana blockchain. The team opted to implement minting via bonding curve, with the first Solarian being sold for 4.8SOL and the price of each new Solarian being minted increasing slightly as per their custom bonding curve. Currently minting a new Solarian costs 16.30 SOL and there are 2,008 from the 10,000 remaining to be minted. The project has implemented a beta marketplace to allow owners of Solarians to list them for sale, and they are working on developing a marketplace for all Solana based NFTs in collaboration with Solana Monkey Business. Holders of their NFTs will be entitled to revenue from the marketplace, leveraging the use of smart contracts in an innovative manner. This feature is what makes both Solarians and Solana Monkey Business NFTs into potentially revenue generating assets.

 

Solana Monkey Business

What is it – Solana Monkey Business (SMB) is one of the few NFT projects on Solana at the moment. It consists of 5000 unique pixelated monkeys wiht varying rarities and attributes.

With an initial mint cost of 2 SOL it picked up a lot of traction in the Solana community, but it did take a couple of days for all 5,000 monkeys to be minted. Recognising that artwork alone would not be enough to develop the project they are working with Solarians to develop a marketplace for all Solana based NFTs, with the goal of providing revenue from this marketplace to owners of monkeys. Additionally they are aiming to create a browser game using the pixelated monkeys as characters. If successful this will be an important advancement in bringing the metaverse to Solana.

 

Star Atlas NFT Posters

What is it – StarAtlas is a space themed MMORPG built on Unreal Engine 5 with a real in-game economy enabled by the tokenisation of game items and assets.

Their NFT collection took the form of posters with background music that offered an interactive Augmented Reality experience when someone scans the poster with their camera. The project and game they are building are huge, and they are the most ambitious and innovative project in this list! Their NFT collection is simply a tiny part of what they are planning to do. The posters were available to anyone and had an unlimited cap during the time period they were available. The poster collection is made up of a series of 14 posters, with the first poster in the series being minted for $64 and being available for 7 days. The second poster cost $128, the third poster $256 and so on, with the 14th and final poster costing $262,144 and only being available for purchase in a 3 hour window. Recently they leveraged the Serum On-Chain Order book to allow for posters to sold and bought by anyone, and the supply of poster past the second one in the series is extremely limited. Holders of the posters will also have an advantage in the upcoming Galactic Asset Offering, effectively the games ICO. The NFT poster collection only brushes the surface of what StarAtlas hopes to become, and we will be revisiting this project in full closer to the Galactic Asset Offering date!

 

Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

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