After one year of high light, the NFT that turned people on their backs: an in-depth analysis of the four major chaos in the NFT industry
Original author: 0x2333
The NFT field can be said to be the most lively place in the Crypto circle today. From various celebrities bringing goods to major brands listing NFT as a new battlefield for brand announcements, more and more people are beginning to understand the vigorous vitality of NFT and start Collect your first NFT. According to statistics, the current number of OpenSea users is as high as 1.24 million, which has soared 40 times in one year. In January 2022, OpenSea's single-month transaction volume will reach 4.9 billion US dollars.
This is a fertile soil, and countless Builders hope to make some achievements here; and the frequent wealth effect has become the biggest billboard of NFT, attracting countless profit seekers.
Pursuing profit is a very normal thing. Everyone likes the accumulation and growth of personal wealth, but excessive pursuit of profit will endanger the healthy development of this industry. Rhythm BlockBeats wrote this article to summarize the four major chaos in the NFT field recently, and deeply analyze the harm these behaviors will bring to the development of the industry. I hope investors and project parties can take warning.
Endless new projects, endless blankets
On February 10, Twitter user @NFTethics posted a Rug Pull warning about the popular project "Squiggles", and uploaded a 57-page PDF document to explain the risks in the Squiggles NFT project. It is mentioned in the document that the project team has previously operated more than 5 NFT fraud projects, all of which created false prosperity by purchasing fans, sweepstakes, purchasing advertising spaces, etc., and are strictly controlled At the same time as the release of the whitelist, the team members internally hyped the whitelist price, and immediately transferred all the income to run away after the public sale of the project.
Similarly, @NFTethics also exposed the recent high-profile NFT project "Cereal Club NFT (Oatmeal)". It is understood that the project was discovered because careful users found that it used the same code contract as another Rug Pull project HolyCowsNFT, and at the same time found co-founders of two NFT projects that should have nothing to do, and passed The outlier in the data intersection found that this team had launched multiple Rug Pull projects named MonaLisa, Baby Ape Club, Crypto Wolf Club, etc. Because of the exposure of @NFTethic, the Squiggles project side operated without authorization in order to cheat more income It was removed from OpenSea due to suspicion of fraud.
There are not a few NFT projects that are "mass-produced" in the same way as Squiggles and Cereal to defraud funds, but in this era of data emphasis, only data can fool most NFT players. With hundreds of thousands of Twitter fans, each tweet is reposted tens of thousands of times, it is difficult not to attract the attention of NFT players and other project parties, and the project party continues to reassure community members by "showing off their wealth". The community is in the dark about the white list.
The traffic attracted by this pipeline-style publicity model can also reach the level of top projects, or even exceed them. However, there are currently many projects in the NFT market, and the release of many projects has attracted funds that should have been circulated in the secondary market. Many project parties The income generated by investing a lot of energy in the secondary market is far less than the income generated by the primary market, which also makes these project parties choose Rug Pull.
There are currently three income channels for most NFT projects, namely primary market income, secondary market royalty income, and NFT derivative income.
The primary market income refers to the income obtained through pre-sale and public sale. For example, if the avatar project with a total of 10,000 NFTs is sold at a price of 0.05, the total income of the project party will be about 500ETH. This part of the income is also the largest proportion of income.
The royalty income in the secondary market is much less. When NFT projects are circulated in the secondary market, royalties will be generated, and the royalties generally range from 5% to 10%. Taking 5% as an example, if you want to achieve the revenue of 500ETH from the public sale, at least the total transaction volume needs to reach more than 10,000 ETH, which is difficult for most projects today.
Finally, there is NFT derivative income, which requires NFT projects to launch derivative NFT products and obtain income based on the already high popularity, such as BAYC airdrop potion (equivalent to airdropping a mutant monkey to the holder), to The remaining 10,000 mutant monkeys were sold in a Dutch auction.
Compared with the income of the primary market, the secondary market and derivatives are full of uncertainties. The project party must not only maintain the popularity of the community, but also keep the floor price rising steadily, and at the same time deliver the roadmap, but with the popularity of Cereal Club NFT , even if they are all sold out at the lowest price through the Dutch auction, the project party can get at least 11 million US dollars. Compared with the income from the secondary market through community building, it is only a drop in the bucket.
With @NFTethics taking the lead in speaking out, more and more NFT players have also participated in the queue to crack down on "pipeline" NFT projects. The well-known encryption community Youtuber The Bitcoin Express also summarized in the video "4 Major NFT Red Flags To Avoid" how to use the information released by the NFT project party to help investors effectively avoid being cheated in the NFT market.
Web2's national emoticons, Web3's chicken feathers
After the domestic emoji package Lengtu released its own NFT avatar, another domestic emoji IP Ali also announced its entry into the NFT field and released its own NFT avatar series. However, compared with Lengtu, Ali's operations fully prove that it is not yet ready to enter the Web3 era.
Ahri's community is very lively, but lively does not mean prosperity. Due to the high public awareness of the original IP, the whitelist of Ahri's NFT was also very popular at the beginning, and the off-market transaction price was once as high as $1,000. However, due to the whitelist mechanism design and team decision-making issues, a large number of chatbots and studios tirelessly brushed the levels in the chat area. The names of community members were changed to ALI, and their profile pictures were changed to Ali. It was uniform, but there was nothing wrong with it. Cohesion can be said.
During the pre-sale, the community reported that Ahri had various loopholes, including even the most basic spelling mistakes. Some people even bluntly said that Ahri, who wants to sell goods on Web3, uses "Web1.5" technology.
Let’s talk about the copyright issue. Ahri’s NFT is an NFT authorized by Ahri’s original IP party, which means that this NFT is not actually an official product sold by Ahri, but is only authorized to a certain publisher to make and sell NFT, just like Marvel It is possible to authorize a number of trendy play companies to produce and sell figurines. Perhaps in the future, Ahri’s original IP party will authorize a new publisher to re-release a set of NFTs. However, in the era of Web3, there will still be fans for this kind of Web2 Do you pay for your behavior?
As of press time, Ali official has deleted the Weibo that has been published to promote this version of Ahri NFT. Ahri NFT also canceled the public sale and temporarily issued 1,000 whitelists.
The most scarce resource in the Web3 era is attention, so in the Web2 era, IPs with their own traffic enter the Web3 era and sell NFTs will have a natural advantage. This is why there are many outside stars, trendy brands and even emoji production teams who choose to sell their own NFTs.
Compared with the original IP, the only advantage of the out-of-circle IP is that it has its own traffic. As for how to convert traffic into the community, how to develop together with the community and many other issues, the outside IP and the original IP are actually on the same starting line. However, after entering the Web3 world, many IPs outside the circle are still looking at the big environment with a traditional perspective, trying to apply the Web2 methodology to Web3, which is obviously not feasible.
In the Web3 era, the brand is no longer just an IP, but also includes the community behind the brand. The community and the brand are no longer a vassal relationship, but truly integrated. It is extremely easy for IPs that already have a certain fan base to make a quick buck by selling NFTs, and whether they care about the community and their own community determines whether the quick money they earn is using their own traffic to cash it out or whether it is in the Lose your reputation.
One of the charms of Web3 is that the original brand and the community accompany each other. This accompanying growth may not allow the brand to grow rapidly in a short period of time. At present, there is no Web3 brand that can compare with the giant Web2 brand. However, "Skin In The Game" will make the bond between the brand and the community more indestructible.
Whichever field you come to, you must abide by the rules of that field. In the circle of Web2, selling goods to fans may be regarded as "giving benefits" and "selling small souvenirs", but in the world of Web3, this represents a Responsibility, the community is willing to spend money to support the brand, the brand must do things seriously to create value for the entire community. From accumulating value first and then consuming it slowly, to continuously creating value together with the community, Web3 has brought about unprecedented changes in the life cycle of brands. Every big brand trying to enter Web3 should face up to this and put away the arrogance from Web2 .
Emerging "level 1.5 market", over-hyped "white list"
"Tasty Bones (Bones)" is undoubtedly the NFT project that has attracted the most attention in the past two months. Both the overall painting style and promotional materials can be called exquisite. The white list of Tasty Bones is "hard to get a ticket." .
The project party’s whitelist adopts the Mint Pass mechanism, and players who have obtained the whitelist can trade at will in the secondary market. As players’ enthusiasm for Tasty Bones continues to rise, the price of Mint Pass has also risen to 4ETH at one point. Just when everyone was expecting Tasty Bones to become the next "blue chip" project in one fell swoop, the price of blind box opening was surprising. As of press time, the floor price was only less than 1ETH, although it was dozens of times higher than the launch price. However, for most people who bought Mint Pass in the secondary market, it has already "broken".
Facing the high price of the whitelist, it is difficult for ordinary community members to withstand the temptation. Players who were originally the main purchasing power in the secondary market chose to purchase MintPass in advance for safety reasons. This excessive overdraft made the existence of the whitelist completely a The bargaining chip for the project party's hype, and the whitelist mechanism has become worthless.
The whitelist mechanism was originally established to screen out "family members" who are willing to contribute to the community and grow up with the community, but now it has become a stable low-cost arbitrage tool. With a large number of NFT projects being released today , People don’t have time to participate in the construction of every community, and the whitelist acquisition method of most projects is almost zero cost. You only need to “work hard” to win a whitelist, you can choose to sell it off-site, or you can Choose to buy NFT in the primary market at a very low cost and arbitrage in the secondary market.
For the project party and the community, this is a severe test they face.
Rhythm BlockBeats previously published"In order to buy an NFT, I learned English and drawing"Describes the current status of the whitelist acquisition mechanism that has long deviated from the original intention. In fact, whether it is chat level, number of invitees, secondary creation, etc., various forms can instinctively screen out the members who love the community the most, but where there is a wealth effect, there will be speculators, not to mention that participation is zero cost.
At present, although some project parties choose to use decryption, singing and other methods to select active members while building the community, there are people who can find countermeasures in every form. Some people sell answers for decryption, and some people find substitute singers for singing. Gaining a potentially hugely lucrative whitelist while the community can only continue to face thorny issues.
Conscientious project parties will try their best to send the white list to members who are really willing to participate in community construction, while some project parties completely use the incentive mechanism such as the white list as a tool for hype. It is the official whitelist for sale, in order to increase the cost of the floor price before the release, maybe it can create anxiety about the whitelist before the project is released, and attract attention. As everyone knows, this is the project party overdrafting its own "value" in advance.
As mentioned above, through various marketing methods such as hunger marketing and the whitelist acquisition mechanism, you can make your Twitter data look good and make your Discord look extremely lively, and this false prosperity will make many people mistakenly think that the project has Huge potential, but in reality it might just be a feather in the coffin.
Perhaps we should all reflect on it. Although the starting point of the whitelist model is good, judging from the current situation, the whitelist cannot fulfill their mission well. So how should we treat our loyal community members? Incentives are a topic that all practitioners need to rethink.
Twitter Space that lasted all night: Where did the whitelist go?
Last week, the biggest hot spot in the NFT circle was the dispute of Club721.
On February 12, the largest Chinese NFT community, Club721, caused disputes among various communities due to internal administrator corruption of the whitelist and loose management of team leaders. That night, the two parties held their own opinions and broke the news on Twitter Space, which lasted for 7 hours. At the same time, the number of online listeners exceeded 1,000, which once caused the Twitter Space server to crash. One accused the other of embezzling the whitelist, and the other accused the other Not given the incentives they deserved. After that night, more inside stories about the founders of Club721 and Open Dao continued to ferment.
This is another dispute caused by the whitelist, and it just reflects the problems faced by both the distributed corporate structure and the DAO organization: the governance model and the incentive model.
Since the COVID-19 pandemic spread around the world, more and more enterprises and companies have begun to adopt looser distributed offices in terms of governance; and DAO has always been considered by Web3 residents as a new organizational structure that can replace the traditional corporate system, which has also attracted a16z and other top investment institutions. But both of them also face problems.
The first challenge is management and governance.
At present, the most commonly used governance method of DAO organizations is voting, and most voting weights are given according to the holdings of tokens or NFTs. This simple and crude method does not take into account the experiences and areas of expertise of each DAO member, and this The result of the vote is likely to be the wrong direction or the direction with extremely low efficiency. There was once a case where an investment DAO lost all its principal because all speculative decisions were voted by community members.
The reason why DAO organizations like FWB can be successful is because they do not have a clear and concrete purpose, they are more like a society, and most of the activities held are not about efficiency, so they can lay a solid foundation and gradually grow bigger. It is not for nothing that people have adopted a centralized corporate system for many years, but it is due to the consideration of improving efficiency. In the Web2 world, many companies also adopt a management method that is as flat as possible to achieve "semi-decentralization"; in the Web3 era, DAO also needs to find a more suitable governance model to achieve better decentralization and efficiency. balance.
Although distributed companies can formulate a set of strict rules and regulations, the relatively loose management model will still have room to exploit. The vacancy of internal control links will lead to frequent corruption, corruption and other problems, and no one can find out.
Another focus of this turmoil is the issue of incentives.
The company system should be handled in a company way, and the salary should be determined and paid as promised; if it is a DAO, it is necessary to formulate an incentive plan that everyone can be satisfied with. The formulation of the incentive mechanism will first encounter the obstacles of the above-mentioned governance mechanism. It is difficult to efficiently formulate a plan that satisfies all parties, and it will also encounter efficiency problems during implementation.
Regardless of the company or the DAO, incentives are fuel and a guarantee for employees and DAO members to continue to contribute. Distributed and DAO management structures are inherently loose. If you don’t get the incentives you deserve for long-term contributions, you may be reluctant to continue to make contributions, or you may dig deeper loopholes in internal control. It is not difficult to know what money can be earned, but what is difficult is to know what money cannot be earned. In the face of huge profit temptation and loose internal review mechanism, who can guarantee to stick to the original intention?
NFT is a brand-new fertile soil. As practitioners, we are all obliged to maintain its environment and make it sustainable. We should face up to the problems encountered on the road of development and solve all kinds of chaos one by one, so as to jointly protect the industry in the right direction. The direction is striding forward.
