The Non-Fungible Token phenomenon is no longer just a fad.
The increasing entry of corporate and institutional players into this sector of the decentralized economy, announcement made by Facebook CEO Mark Zuckerberg that the largest social network in the world is transforming into a metaverse called Meta solidify the status of Non-Fungible Tokens as a viable technology with practical application.
The two most common use cases for NFTs at the nascent stage – the artwork and Play-to-Earn mechanism in gaming – have proven to be viable as well and have not faded from view as a fleeting topic of hype. The growing number of NFT artwork platforms and their trading volumes is showcasing the migrating of artists into the digital medium, while the involvement of traditional art world heavyweights like the Russian State Hermitage is further endorsing and acknowledging the status of NFTs as a recognized form of art.
The development of the Play-to-Earn mechanism in decentralized gaming space is also being recorded in leaps and bounds, as such games as Axie Infinite, My Neighbor Alice, Warena and many others, are attracting not only massive user interest, but also significant investment injections from institutional funds. The stagnation of the traditional gaming industry and the lackluster performance of top-tier games in terms of sales and gamer engagement are ushering players into the innovative Play-to-Earn sector, which promises not only new experiences, but also financial rewards.
But apart from artwork and gaming, NFTs are also finding application in other sectors of the economy as the use cases for the technology are moving for new frontier discovery.
Proof of Patronage
The characteristics of Non-Fungible Tokens provided by underlying blockchain technologies are giving them the ability to act as proof of ownership for real-world or digital assets tethered to them. Entirely new horizons are opening for NFTs to be used as gateways for exclusive content and other opportunities that would be inaccessible to average users.
In large part as with memberships and subscriptions on various artwork or other content platforms, Non-Fungible Tokens act as access cards to such venues and give their holders unique experiences. The content creators operating on such venues can issue NFTs as fan base membership cards and thus allow their followers to invest or interact with the content. Such an approach can give rise to the development of digital, and even crypto-oriented analogues of Patreon, OnlyFans, DeviantArt, and many other platforms.
Such NFTs can also be used as rewards for loyal fans or for engaging users in a variety of events, shows, streams, and many other forms of interactive content that can be a treasure-trove for advertisers and businesses. Examples of projects already applying such a model of rewarding fans include 3LAU and Aku, both of which give access to exclusive content only via NFTs.
Co-Creation And Collaborative Ownership
One of the unique characteristics of Non-Fungible Tokens is that they allow average users to become content creators, rather than content consumers. This feature of NFTs is best leveraged through DAOs, which allow fan bases and individual users to transform from passive consumers of content into active participants of its creation. NFTs can give their holders the right to vote on types of content they want to see – an immense opportunity for idea-generation that can be used by bloggers, streamers, and other types of creators with the means for creating content their fans want to consume.
An example of such a collaborative approach can be found in Axie Infinite, which introduced collective characters that can be ported into games created by community members through such projects as Meebits. Another example is AsyncArt, which acts as an NFT minting platform for releasing virtually any kind of NFT-based content that can be changed to suit an individual collector’s tastes.
On-Chain Social Networks And Identity
Modern social networks are no longer coping with the demand users are expressing for innovative features of interaction and socialization through content with the incorporation of advanced visualization technologies like VR and AR, and elements of content monetization. This has led to the development of next-gen social networks that focus on the use of Non-Fungible Tokens as value carriers, giving both users and advertisers to monetize on content and actions, such as comments, likes, streams, posts, and much more.
An example of such next-gen social networks is Fragma – a decentralized platform that is making use of NFTs for empowering users and acting as a moderator of actions for filtering content and preventing fraud. The wealth of functions and features Fragma provides for content generation and digitization makes it a go-to platform for bloggers seeking to attract audiences and retain them with a host of engagement opportunities.
Non-Fungible Tokens can be used for maintaining records or as proof of past actions. The ‘footprint’ each NFT leaves on the blockchain creates a comprehensive and transparent record of all past actions and activities the user engaged in. Such reputation management can help projects identify users and use NFTs as access cards, preventing users with poor track records from participating in voting or any other activities.
For instance, the Orca Protocol uses NFT-based membership as credentials for unlocking on-chain activities and opportunities. The NFT maintains a track record of the user’s status, budget, and other information.
The underlying principle and purpose of NFTs is actuating and facilitating financial operations with greater verifiability and ownership solidification. It is therefore unsurprising that Non-Fungible Tokens can be used in financial transactions as much more than just tradable assets.
For instance, Non-Fungible Tokens can be used for charity as a vehicle of value being sold through auctions. On-chain funds can be organized around NFTs acting as pledges of earnings at auctions with the proceeds being immediately channeled to preselected charities upon sale of the asset. The NFTs also provide guarantees that the funds will be transferred to the charity and used for the intended purposes.
Curators are platforms that act as gateways for NFTs to be displayed, marketed, advertised, showcased, purchased and sold. Moments are a relatively new form of ‘art’ in the Non-Fungible Token medium, which focus on immortalizing various real-life events. Essentially acting as mementos, such Non-Fungible Tokens can digitize virtually anything from an epic photo of an NBA shot to a screenshot in an iconic game, or an animated 3D model for fans to admire. NBA Top Shots was among the first to start capitalizing on the given use case for NFTs, selling photos and cards of memorable events from NBA history in digital format for mind-numbing sums of money.
Though closely connected with the Play-to-Earn sector, NFT guilds are quasi-professional communities in NFT gaming space that specialize on the purchase of in-game assets for subsequent rent. These communities mainly engage in investment in popular in-game NFT assets that are later rented at affordable prices to new gamers to give them an upstart in the game. The highly competitive nature of Play-to-Earn games, and the oftentimes restrictive prices of in-game assets make it difficult for new players to onboard. This is why guilds like Yield Guild Games offer NFT renting at affordable prices as a profitable service that results in a win-win scenario for all involved.
NFTs are only just starting on the path of use case discovery and the potential applications for them extend well beyond bridging the gap between the digital and real worlds as value carriers and vehicles of ownership rights.