Short Video Company Coub launches the world’s first NFTs with security

What is the value of an NFT? It’s a question that has crypto-heads speculating and outsiders quietly watching the eye-watering sums occasionally fetched for “jpegs,” as their collectors jokingly refer to them. Of course, non-fungible tokens are much more than tradable digital images, given that they can represent anything from diamonds to royalties and event tickets to metaverse characters. It still does not answer the question of what an NFT is worth.

“As much as the next buyer is willing to pay for it,” is the glib answer, but it’s one that fails to get to the heart of the matter. Bitcoin isn’t technically backed by anything, but that hasn’t stopped it from becoming a $400 billion asset class that has proven its worth over more than a decade. NFTs are much newer and the market is still trying to figure out their value proposition. One company believes it has solved the problem of vaguely valued NFTs, and oddly enough, it’s one with no prior crypto experience. Coub.com, best known for its micro-videos, enters the web3 and has a new idea to assign value to the NFTs that will carry the brand.

NFTs Get Collateralization Treatment

Security is a familiar concept in the crypto industry. Every day, thousands of people use their crypto assets as collateral to get stablecoin loans. Some platforms even allow holders of blue chip NFTs (Apes, Punks) to use them as collateral for this purpose. But collateralized NFTs that are actually backed by something tangible and measurable? It is new for the industry.

Until now, the value of NFT collections has been measured based on the “floor price” aka the cheapest price that can be bought for on the open market. This is a rough calculation since it only takes one person out of thousands of owners to adjust the sell price of their NFT to crash the floor price and make the metric redundant. Factor in movement in the price of ETH, in which NFTs are typically priced, and you have a valuation technique that requires constant revaluation. Coub.com claims to have found a fairer way to value NFTs using their inherent programmability.

Evidence of social activity

The solution that Coub.com has decided on for its NFT collection, due to launch later this year, can be considered “proof of social activity.” According to the company’s press release, each of the micro-videos represented as an NFT on Coub.com will be valued according to their social metrics. Views; stock; comments: if there is evidence of engagement, it will be used to increase the value of the clip in question. Not only does this provide an incentive for users to create compelling content, but it ensures that revenue is distributed fairly in proportion to the efforts of creators.

Many projects rely on randomness to assign value to their NFTs, with a “reveal” occurring after the minting process is complete. While exciting for buyers, a handful of whom will be lucky enough to acquire a rate property NFT that can be worth a significant amount of money, the process is completely arbitrary. When NFTs become available on the secondary market, the floor price empirically dictates the value of the entire collection.

Despite being new to the web3, Coub.com has a very good grasp of what makes for great content, having operated his video sharing platform for a decade. In that time, it has outlived Vine, outlived TikTok and shrugged off YouTube to become a tight-knit community whose “coubers” know exactly what they want: entertainment in small, repeated doses.

Recognizing the prevalence of NFT speculators and the low barriers to entry that can result in equally low quality art, Coub.com is keen to avoid the mistakes made by its forerunners. Its pay-per-view model will reward viewers for consuming content, but it will also reward creators for the impressions that popular “coubs” receive. Each short video clip will be available for purchase via auction, and the winning bidder also earns the platform’s native token for each subsequent viewing.

Will security for NFTs through social proof gain traction, or will it be destined to be filed under new ideas that never caught on? It is too early to say. But with Coub’s web3-enabled app scheduled to launch in Q4, we won’t have to wait long to find out if “floor price” is destined for the dustbin of NFT history.