Open social media and search for the keywords of the blockchain in June, and the search results are filled with words such as "roller coaster" and "big diving". Indeed, the market shocks in June had a considerable impact on the entire cryptocurrency market, especially the NFT field. Although we can see that the major market platforms have tried their best to prove the prosperity of the NFT market from the data released in the first half of the year. For example, DappRadar data shows that in the first half of this year, NFT sales reached $2.5 billion, a sharp increase from the $13.7 million in sales during the same period in 2020. However, its negative performance in the last two months of Q2 cannot be ignored.

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*BTC and ETH price data on June 22 comes from Messari

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*Data of NFT transaction volume from May 24th to June 24th comes from nonfungible.com

Why is it that NFT is the most affected by the market correction caused by the price drop of Bitcoin?

Perhaps we should start with the value of NFT, a non-homogeneous asset, to think systematically about this issue. Previously, the reason why NFT was sought after by many people was more because of the marketing hype of various high-priced auctions. People's curiosity about it is far greater than their awareness of it. It is not difficult to find that the prices of most NFTs actually depend on the official pricing strategy and the popularity of market operations, lacking the support of stable intrinsic value that can participate in market games. Therefore, when the cryptocurrency market is in a downturn, NFT will bear the brunt.

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With the help of DeFi, improve the NFT value discovery system

Mary Ma believes that the value system of NFT can be divided into three levels: intrinsic value, use value, and worldview premium. By distinguishing these triple values, DeFi can better play a role in the NFT field. Mary Ma uses LeCube, an NFT application incubated by MixMarvel, to introduce in simple terms how DeFi tools improve NFT value discovery.

1. Intrinsic value: refers to the various costs required to create NFT assets, including time, funds, and casting. Taking LeCube as an example, it is called LEGO on the blockchain. All community players can obtain Cubes, the assets in LeCube, by staking Fungible Token with market value, which means that Cubes are also valuable FT. At the same time, Cubes has its own mining pool on the decentralized trading platform and can provide liquidity for rewards. After players have obtained Cubes, they can build Cubes into visible NFT works in the LeCube editor (refer to LEGO building) and upload them to the chain. The process of building is to transfer the value of Fungible Token into the NFT, and the intrinsic value of NFT is the number of Cubes used.

2. Use value: refers to the value obtained by using NFT in different scenarios in different applications. In LeCube, the copyright use of NFT works is the embodiment of use value. Community players can pay copyright fees to quote other people's works, add them to their own builds, and generate new works. These various historical data of being quoted, browsed and collected will serve as a reference for the pricing of "copyright". The use value of NFT is also generated from these historical data.

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Promote the construction of underlying infrastructure to make NFT value accumulation more scientific

The value discovery of NFT is closely related to its historical data, and the continuation and inheritance of this value actually comes from traditional industries. The use of historical data to price non-standardized assets has been practiced in traditional industries for hundreds of years. Taking art as an example, what price did a certain artist's work sell at which auction in which auction house, which collector commented on it, and when did the work appear in What kind of historical data such as the exhibition is an important basis for the industry and the market to price the artwork.

It is a tradition in Chinese art to inscribe postscripts on calligraphy works or paintings. The number of inscriptions and postscripts obtained by the work, the identity of the person who wrote the inscriptions, and their artistic attainments will directly affect the value of the work. There are two emperors in China, Huizong of the Northern Song Dynasty and Emperor Qianlong of the Qing Dynasty, who were very keen on inscriptions and postscripts on various famous works. Emperor Huizong of Song Dynasty was recognized by later generations because of his superb calligraphy, painting and poetry. Because of his habit, he was criticized by later generations, and the artistic value of his inscriptions and postscripts was greatly reduced.

This tradition continues to this day. Nowadays, when people evaluate a work of art, most of them refer to its past use scenarios and the degree of recognition by the world. The development of blockchain technology can bring greater advantages to this tradition: the data storage on the chain is more comprehensive and trustworthy, and it can provide scientific pricing reference for digital artworks through historical data storage.

Rangers Protocol is the blockchain infrastructure that serves various NFT applications. Since its birth and development in 2019, it has taken a very big step in this regard.

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Stable value and occupy a high ground in the market game

With the support of the underlying technology, what NFT application developers and enthusiasts need to do is to abstract the essence of NFT's intrinsic value and use value based on these historical data, code it, and write it into the underlying logic. for product design. NFT works or assets generated through such a concept can better form community consensus and increase community participation. Taking LeCube as an example, due to its unique design of front-end display and NFT data integration - in the future, a castle built with Cubes may be a cannon with a firing function in scene A; in scene B, It is used as a venue for parties, and the owner of the castle can obtain rental income from the venue, etc. In conclusion, the more a castle is used in different community applications, the more valuable it becomes.

When the value discovery mechanism of NFT is mature and widely used in the community, NFT can generate more financial transaction scenarios such as mortgage, loan, lease and so on. Taking "staking" as an example, when NFT is widely used as collateral, the value generated after the pledge should be equal to the sum of intrinsic value and use value. This NFT+DeFi model makes the value of NFT more scientific and stable, increasing its chances of winning in the market game.

Just like cryptocurrencies, despite constant market fluctuations, the advantages brought about by its decentralized currency and financial attributes have been highlighted. In order to occupy a high ground in the market game, participants in the NFT field should practice the value discovery and application of NFT, instead of indulging in the "prosperity" brought about by various new concept hypes.