Crypto Believers Look for “Utility” on NFT.NYC

With a fresh Ethereum wallet ready to get free stuff, I attended NFT.NYC 2022, the world’s largest conference dedicated to the controversial wart on Zeitgeist, the “non-fungible token.” Like other observers, I quickly discovered that despite dramatic price declines on many NFTs and cryptocurrencies, the tone of the conference remained jubilant, as participants and vendors seemed happy to help “build” what they see as disruptive. , new technology.

The current mantra in every corner of the many Midtown arenas was that in order to succeed and survive, NFT collections must develop additional “utility”.

What many external commentators do not understand is that NFTs have become much more than “overpriced JPGs”, but now function more as games, no doubt in the form of unlicensed securities, on the future success of new brands. They are mainly speculations about the durability and profitability of financially liquid holdings in monkeys, wizards and goblins.

And as with memes, digital images alone, with some exceptions, tend to have a short shelf life. In the contemporary art market, artists carefully manage their careers to give their work lasting, long-term value. In the NFT market, a world strongly influenced by professionals in the art world, the negotiability of tokens provides a number of new tricks to construct sustainable value and revenue streams to add to the classics.

Although conspicuous consumption of the hottest brand is probably another explanation, the main reason why a “Bored Ape” costs the price of a house is not because of the aesthetic value of an individual image, but because owners expect future values ​​from Bored Ape The brand will come back to them through financial, reputational and social means.

For example, holders of some of the 10,000 “profile pictures” may receive additional demand or revenue after the launch of a newly linked video game, movie, toy line, or metaverse project (which are the most promising forms of “utility”). They can also gain privileged access to a new currency linked to NFTs (bored Ape holders, for example, were given thousands of dollars by a new cryptocurrency token called $ APE or “Apecoin”).

Nevertheless, without the protection of traditional securities law, NFT holders and NFT project administrators are anchored in constant informal negotiations about the next step in the project’s “roadmap” to provide more benefit and value to holders. These discussions usually take place roughly on Twitter or, more intimately, in the moderated Discord channels of each individual NFT project. If the project managers, who funded the creation of the art and the marketing for the project launch (or “recovery”), ever get worn out and do not see the collection as sufficiently lucrative to maintain, they can sell the NFTs they own and relocate. on. This is called “pull the rug”And it sometimes comes quite early in a project’s life cycle.

A collector with the handle “Atlanta Coffee Shops” or Eugene, whom I met at a special “holders-owner” breakfast for the Meta Angels NFT collection, told me that he was fully prepared to see many of his NFT collections go in null. Still, he felt confident that some of the best brands would survive.

When I met the organizers of several major NFT projects in this rooftop lounge in Nomad, I asked them what was their real incentive to continue building new tools, especially if they had already “characterized” the collection and seen much of the revenue as they personally would get. (Entrepreneurs usually continue to receive royalty income from sales, and in theory they can extract value from the portion of NFTs they set aside for themselves). It can always be a temptation to bring some benefit to a newly created NFT project that will bring new capital.

Daniel Horvath from the “Republic of Hamsters” project told me that he feels a moral obligation to produce extra value for owners, and promised that he would never leave them and move on to another collection. His NFT brand pursues a range of offerings, including “works of art, games, comics and movies.” While I was taken by his seriousness and determination, after watching dozens of NFTs promise exactly the same things throughout the conference, I wondered if the market could really sustain so many (typically expensive-themed) video games, and asked where It would be easy for NFT entrepreneurs to switch to gaming, a notoriously challenging industry.

Allyson Downey from Meta Angels perhaps told me more about the challenges that she does not feel the need to promise a number of new tool offerings. Instead, she sees the value of keeping NFT more in the form of the online community it provides access to, and points to the intangible value of the coaching and life support that the brand had fostered.

The Meta Angels breakfast, with its mimosas, croissants and tasty pins, tailored for a prim and yuppie audience. More common throughout the conference week were dozens of hideous night parties held throughout Manhattan and Brooklyn. Given that many of the 1,500 lectures at the conference took place in little-visited conference rooms, it became apparent that the parties were the real attraction of New York.

I spotted a concert with Madonna sponsored by the World of Women NFT project, for which I had snatched a $ 600 World of Women Galaxy NFT pending. Still, with minimal guidance from the collection in advance, I found myself unlucky, having failed to complete a faulty form within two or three minutes of it being published at 9am. Soon I was looking at a Discord chat room with other frustrated proprietors who had spent thousands of dollars on flights, hotels and expensive conference tickets, but who nevertheless sank into the realization that their wildly expensive NFTs did not give them the “benefit” of participating . even one event related to their favorite NFT project, neither the «roof party ‘nor the Madonna concert.

My disappointment with the World of Women, and others, illustrated the dilemma that NFT collections face in their search for “utility.” No matter how much money an original NFT mint brings in, it will remain an endless challenge to please existing owners and move capital to new offerings. As long as popular NFTs function as unlicensed securities, with the rights of holders poorly defined, this tension will characterize the NFT area.