Are non-utility NFTs making a comeback

by James · October 4, 2022

A tool NFT is a symbol that provides some utility or function. For example, a digital art file stored on an NFT can be used as wallpaper or sold as part of a collection. In games, NFTs can be used to represent in-game items such as weapons, vehicles, or even player avatars. And in the financial world, NFTs can be used to represent things like bonds or shares in a company. The sky really is the limit when it comes to NFTs.

Ownership can also provide rights and benefits to holders – APY and rewards, discounts, access to events, etc. Some categories of utility NFTS include:

Social NFTs
Common NFTs
NFTs in the game
Fantasy sports NFTs

Bored Ape Yacht Club is the essential model for a new NFT project, providing owners with various utility benefits from the Yuga Labs universe. On the other hand, CryptoPunks is a classic example of a pure PFP project.

The team hasn’t added any tools since it was bought out by Yuga Labs in March as it has done for its other utility-based projects.

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Where does PFP NFTer stand?

One would think that the bear market would completely eradicate non-useful NFTs from the industry, as they are a completely speculative purchase with no function outside of status.

However, symbolizing status and in-group belonging is arguably the only proven utility of NFTs, creating a paradox.

Of the top 10 collections last month, 3 were PFP projects with a secondary focus on utility.

Source: Footprint Analytics-Top Collections(30D)

Furthermore, CryptoPunks, one of the largest collections by volume, has maintained 50-60% of its floor price since March, when the bear cycle appeared to stabilize.

Source: Footprint Analytics-Cryptopunk’s ETH Daily Floorprice

5 popular NFT collections with no use in the last month

CryptoPunks
Art blocks curated
Rare monkeys
Art blocks
DigiDaiGaku

Utility or buzzword?

Many projects that are successful primarily because of their rapid growth as interesting PFP images are now injecting some utility into their projects. At its most basic, creating a members-only Discord is a logical step to improve the project. Just having a Discord qualifies your project as tool-based.

On the other hand, some projects claim to be based on utility, but the majority of these tools are still a promise. An example is the Moonbirds NFT collection.

On its website, it proclaims itself as “A collection built with utility and community in the foundation.”

“Every Moonbird is also your key to our private PROOF Discord – where you get access to our gated parliament channels. Once inside, you’ll have exclusive access to Moonbird-related drops, Parliament Meetups and IRL events, and access to upcoming PROOF projects; including the PROOF metaverse, codenamed Highrise.”

And while some useless projects still appear, e.g. Art Blocks and Goblintown, the potential for utility in the future will still affect price action dramatically.

For example, DigiDaiGaku is an anime-themed PFP collection, which was relatively sleepy until mid-August. But on August 29, it was announced that Limit Break, the studio behind the collection, closed a $200 million round to build out its own game and metaverse. Presumably their flagship collection will be a key part of that. The floor price of the PFP NFTs skyrocketed from 4.3 ETH on August 27th to 16 ETH on the 29th..

Conclusion

NFT projects used to be a quick way to cash in on the bull market, with hundreds of collections amounting to nothing more than repetitive, code-generated JPGs.

Since then, the crypto and NFT community has demanded more from projects, and studios have responded by putting “utility” at the forefront of the industry.

While projects continue to emerge that offer nothing more than the visual artwork itself, VC investment and volume continues to shift to projects that promise to provide exclusive communities for their members, not just PFPs.

This piece is contributed by Footprint Analytics society.

Footprint Community is a place where data and crypto enthusiasts around the world help each other to understand and gain insights about Web3, the metaverse, DeFi, GameFi or any other area of the new world of blockchain. Here you will find active, diverse voices that support each other and drive society forward.

September 2022, [email protected]

Data source: Footprint Analytics – Non-Utility NFT Projects

Footprint website: https://www.footprint.network

Disagreement: https://discord.gg/3HYaR6USM7

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