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In recent years, the NFT track has attracted great attention from investors. The selling prices of some NFTs are unimaginable and incomprehensible to many people. Among them, the popular NFT collectible series, especially the avatar collection, can be said to make everyone love and hate. Most users open their mouths to mention cypherpunk, BAYC and other NFT series whose prices have increased by tens or hundreds of times. Lengtu NFT, which doubled 70 times within a few hours of its launch, and PhantaBear, which has been popular for more than a week, ignited the enthusiasm of NFT investors in the Chinese circle in one fell swoop. The entry of a large number of giant institutions and celebrities has brought a steady stream of New money into the NFT market. The NFT market is so hot, so how should we treat it as ordinary users in the circle?

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1.1 Concept

Non-Fungible Token (Non-Fungible Token), abbreviated as NFT, is called the data unit on the blockchain digital ledger and also belongs to the category of cryptocurrency. Earlier, the term "NFT" was only popular in the ERC-721 standard, which was adopted by Ethereum in 2017.GitHubfirst proposed. Each NFT can represent a unique digital data as an electronic certification or certificate of virtual commodity ownership.

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1.2 Origin

When it comes to NFT, everyone knows that it is inseparable from the development of Ethereum, but in fact, the concept of NFT had already appeared before the launch of the Ethereum mainnet in July 2015.

In 1993, Hal Finney (the first person to obtain Bitcoin through a trading mechanism) said when he proposed Crypto trading cards: "The value of collection can be shown to others in the form of digital assets." Relying on cryptography and mathematics, Hal Finney randomly arranged a series of cards and defined them as encrypted cards.

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Figure 1-1 Promotional image of colored coins, image source: Google Image Search

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1.3 Development

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Figure 1-3 Line chart of Google search volume for NFT

According to Google Trends, the search volume of the word NFT was average before 2020, and it has been on the rise since 2021, which means that people are paying more and more attention to it, and the market capacity of NFT is also increasing. .

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Figure 1-4 NFT artwork series EtherRock

Most people still have great disputes about the influence of NFT. Some people think that NFT itself has no value, and the main reason for selling at a high price is "value recognition". Some people think that the potential value of NFT itself is huge. For example, in the cryptocurrency market, the use of NFT can ensure that users complete identity construction and social work in the virtual world, which is equivalent to copying the uniqueness and scarcity of items in the real world to meta within the universe. With the development of the encryption market, the development of NFT has gradually formed its unique market, standing out from many blockchain projects and becoming one of the current popular tracks.

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2.1 Chronicle of events in the year

• In 1993, Hal Finney proposed the first NFT concept and defined it as Crypto trading cards.

• In 2012, the first NFT-like token-colored coin was born.

• The period from 2014 to 2017 is the development period of NFT. The **"RarePepes"** activity in 2014 made NFT gradually enter the user's field of vision.

• In 2017, CryptoPunks and CryptoKitties sparked the first wave of NFT craze and raised public awareness of NFT.

• In 2018, with the gradual improvement of the ERC721, ERC1155, and ERC998 protocols, NFT has also become mature.

• In 2020, the phenomenon-level product NBATopshot was born and quickly captured the market. In addition, the NFT trading market is emerging in an endless stream.

• In 2021, NFT will be the first year of NFT with a series of major events, occupying the headlines of major news and refreshing users' understanding of the blockchain.

• In March 2021, Beeple sold NFT for $69.034 million,image description

Figure 3-1 Beeple auction works, source: Christie's auction

• In March of the same year, Sandbox launched the Beta NFT market, moving towards the creation of the Metaverse. Users earn $SAND by selling on the game platform.

• In April 2021, Christie's auctioned CryptoPunks, and 9 CryptoPunks NFTs were auctioned for a total of US$16,962,500.

• In June 2021, a piece of digital land in Decentraland was sold to the virtual real estate developer Republic Realm for USD 913,000. This land represented 259 pieces of digital land and was settled with 1.295 million MANA (MANA is Decentraland's native token).

• In July 2021, OpenSea, an NFT trading market, completed its Series B financing of US$100 million, led by a16z. According to statistics from DuneAnalytics, the turnover of OpenSea in June reached 149 million US dollars, and the transaction volume reached 210,000 pieces, both hitting record highs. In addition, the total number of OpenSea users exceeded 140,000, a month-on-month increase of 19%.

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Figure 3-2 NBA star Curry Twitter

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Figure 3-3 Plam NFT Studio example

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2.2 Summary of milestone projects

2.2.1 CryptoPunks-Cypher Punks

CryptoPunks is the earliest image (JEPG) NFT project built on Ethereum. These extremely "punk-style" pixelated avatars were created by Larva Lab, an American mobile game development company, using computer code in 2017. There are no two images are exactly the same. Therefore, CryptoPunks has issued a total of 10,000 24×24, 8bit irregular pixel NFT avatars, and no new NFTs will be generated. Each NFT vividly demonstrates the unique "punk style" that once swept the world through simplified small pixel blocks.

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Figure 3-4 Confidential Punk NFT price list, source: Larva Labs official website

In July 2021, an anonymous collector bought 102 CryptoPunks consecutively within one hour, spending a total of 2650 ETH, or about $6.57 million. When this giant whale player acted, other players also spent a lot of money. In August of the same year, "CryptoPunk 3100" listed an offer of 4,200 ETH, or about 7.58 million US dollars, becoming the NFT work with the highest unit price in the world. Since then, through continuous publicity and hype, CryptoPunks quickly gained popularity, refreshing the concept of blockchain users with its mosaic-like nostalgic style and high transaction prices. Users began to gradually accept NFT, an emerging hot track, and actively participated in it. Among them, become a "crazy" member of the NFT collection.

2.2.2 Crypto Kitties-Ether Kitties/Crypto Kitties

Sensing the strong development potential of the NFT market, and inspired by the "predecessors" CryptoPunks, the Dapper Labs team immediately launched an Ethercat game called CryptoKitties. Its developer Dieter uses NFT images to represent information such as the different colors, genes, and generations of each kitten.

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Figure 3-5 Some examples of EtherKitties, source: CryptoKitties official website

At that time, the most popular token issuance standard on Ethereum was ERC-20. Especially in the summer of 2017, ERC20 was particularly popular. Many users asked how CryptoKitties interacted with ERC20 (ERC20 is a homogeneous token, or FT)? For this reason, Dieter proposed NFT, that is, non-homogeneous tokens. The main feature of FT is that there is no difference between the various tokens, they can be exchanged at will, and can be split and integrated. For example: BTC, ETH and other cryptocurrencies belong to FT, and there is no difference between each BTC in essence, and can be interchanged and divided. The innovation made by Dieter is to introduce scarcity into the concept of cryptocurrency. The main features of NFT are uniqueness and indivisibility. Each non-homogeneous token is different, exists independently, is unique, and cannot be substituted for each other.

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3. Inventory of popular NFT projects

This chapter selects 15 currently popular NFT avatar collection projects for data analysis, and conducts background investigation and popularity ratings on 6 of them (full stars are ★★★★★).

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3.1 CryptoSkulls-★★★☆☆

Figure 4-4 Introduction to the basic information of CryptoSkulls, as of 2022-01-19

CryptoSkullsare 10,000 collectible ERC-721 tokens stored on the blockchain. Each CryptoSkull character is a unique pixel art image. An OG NFT project from 2019, each CryptoSkull character is a unique pixel art with a unique index property.

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Figure 4-5 Part of the CryptoSkulls NFT transaction interface display

CryptoSkulls has a lot in common with other successful projects like CryptoPunks and Bored Ape in terms of its large community and celebrity investors, and the project also gives holders full permission, which is one similarity it has to other successful NFT projects. place. Today, some NFT players sell their CryptoPunks for CryptoSkulls.

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3.2 Bored Ape Yacht Club-★★★★★

Figure 4-6 BAYC basic information introduction, as of 2022-01-19

Bored Ape Yacht ClubAlso dubbed "Boring Ape", it is a club that has collected 10,000 unique Bored Ape NFTs, not only based on the unique digital collectibles established on the Ethereum blockchain, but now the status of BAYC is second only to CryptoPunks popular items.

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Figure 4-7 Part of BAYC image trading interface display

Celebrity has always been an integral part of NFT market sales, and the celebrity effect attached to BAYC has once again proved the madness and energy of the NFT market. With the acquisition of the well-known NFT collector Pranksy, the popularity of "Boring Ape" continues to ferment. Not only is it favored by a series of celebrities such as stars, rappers, football stars, and hosts, but various sales news follow. A large number of NFT users are pouring in continuously, and they are all lucky to have a "boring ape" avatar. When the demand is far greater than the supply, the price of BAYC has also risen. From the initial offering price of 0.08 ETH to the current lowest price of 82 ETH (about hundreds of thousands of dollars) on Opensea, it has gradually developed into a trendy IP.

The evolution and development of BAYC is undoubtedly shocking and embarrassing:

• Based on the original intention of an open community, the original promoters hope to promote a positive community.

• The Bored Ape NFT avatar serves as the basic threshold for users to enter their club, and they can enjoy the exclusive benefits of club members and unlock future areas and privileges.

• Celebrity has turned it into a high-priced VIP symbol that is in short supply and has become a show-off capital.

• And now it has no practical application and has been labeled as a "not worthy of the name" fashion brand product.

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3.3 PhantaBear-★★★☆☆

Figure 4-8 Basic information of PhantaBear, as of 2022-01-19

PhantaBearThe project is jointly initiated by Jay Chou's PHANTACi and Ezek. PhantaBear is a collection of 10,000 algorithmically generated digital collectibles that doubles as a membership card for the Ezek Club. The project will be released on the Ezek platform at 11:00 on January 1, 2022. The pre-sale price is 0.26ETH. Each PhantaBear has a unique set of traits and unlocks different, unique access and perks for its owner.

As the NFT avatar indirectly endorsed by Jay Chou, PhantaBear has its own fan-attracting effect during its development.

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Figure 4-9 Partial display of PhantaBear image trading interface

However, the turning point was that Jay Chou still supported the creation project of Liu Genghong, the founder of the PhantaBear distribution platform Ezek, and put on the NFT avatar to express his support, and then started to vigorously promote PhantaBear on overseas social media.

At the same time, many other celebrities such as Lin Junjie, Edison Chen, etc. have posted their own PhantaBear. This series of actions has detonated the pursuit of PhantaBear by domestic players, and it is still under the situation that Chinese users are in a weak position in the NFT field, making the price of PhantaBear The rapid rise has reached the situation of "one bear is hard to find". This is also one of the representatives of fan economy and celebrity effect.

Fan traffic and celebrity benefits are very important in the NFT circle. The development of any project is inseparable from the accumulation of popularity, and the market brought by stars highly meets this condition.

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3.4 Azuki-★★★★☆

Figure 4-10 Azuki basic information introduction, as of 2022-01-19

AzukiIt is a Metaverse brand created by the community, and it is a very emerging NFT project. Azuki provides community members with 10,000 avatars. In addition to NFT sales, it also plans to develop offline streetwear brand stores, hold meetups and live music festival events in the future.

Behind Azuki is a real-name team whose social accounts are disclosed on the official website. In addition, the team has a background in large technology companies such as Facebook, Google, YC, and Blizzard. In the future, it is planned to issue tokens $BEANS; it is planned to test the governance structure of DAO to create an eternal brand.

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Figure 4-11 Part of the Azuki image trading interface display

The PANews article stated that Azuki's popularity is related to its three NFT "new ways of playing".

• The new NFT minting standard. Azuki adopts the method of batch casting, allowing users to pay a Gas fee to cast multiple NFTs, reducing the cost of users casting NFTs.

• New foundry whitelist filtering mechanism. Azuki abandons the current method of randomly selecting the whitelist in the market, and combines social media interaction and other internal project criteria to complete the whitelist screening and reward real members who will build the community for a long time as much as possible, not wool parties.

• A new way to sell NFTs. Azuki uses three stages of Dutch auction, whitelist casting, and public sale to complete the NFT sale in order to provide real members of the community with an appropriate cost of obtaining NFT.

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3.5 Doodles-★★★★★

Figure 4-12 Doodles basic information introduction, as of 2022-01-19

Issued in January 2021Doodles NFT, is a work designed by Canadian illustrator Burnt Toast (Scott Martin). Combining bright colors and interesting little figures, the author's cute and chubby style is also unique in terms of recognition. Even in the highly competitive NFT track in 2021, it can be regarded as a unique series.

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Figure 4-13 Some Doodles image transaction interface display

Why can Doodles still allow users to call it "exciting" during the period when NFT is rampant?

Design by illustrators, professional marketing and support from some collectors and fans. The team behind Doodles is also committed to building a decentralized and open community.

Different from the depletion of fan loyalty in other NFT communities (making supporters spend more expensive purchases), the Doodles community released the whitelist application activity early, inviting contributing users, and making it a part of the Discord community. A member of NFT not only greatly strengthens the sense of identity of the participants, but also screens out "sweeping" users and maintains the value of NFT.

Because Evan Keast and Poopie in the Doodles operation team participated in the early NFT game project CryptoKitties (Ether Cat), and are now mainly responsible for the marketing and development of Doodles. Their own understanding of NFT and market sentiment have also attracted quite a lot of attention. Some users participate.

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3.6 Worlds of Women-★★★★☆

Figure 4-14 Introduction to the basic information of World of Women, as of 2022-01-19

The current technology-centric market is usually dominated by men, and the NFT market is also dominated by men. Shenyu, the co-founder of F2Pool, released his investment logic for the NFT market: "Buy men and not women, buy white and not black, Buy monsters but not people.” Many players in the circle also believe that this type of NFT is not only more valuable, but also easier to sell.

According to research organization Art Tactic, in the past 21 months, at least 77% of the funds generated by NFT art sales have gone to male artists, and only 5% have flowed to female artists. This also shows the male-dominated market in the current NFT market. andWorlds of Womenimage description

Figure 4-15 Display of part of World of Women image trading interface

World of Women (hereinafter referred to as WOW) was born in July 2021. This project only has female avatars. It is one of the first batch of NFT artworks that are truly oriented towards women. The total number of sets is 10,000. Presented by Yam Karkai, a female artist that aims to empower women through the arts and promote diversity.

WOW was released on the night of July 27, 2021, and it was sold out within 10 hours, and then won successiveCoinDesk、Le Monde、Yahoo FinanceYam has also been interviewed by Randy Zuckerberg and a decentralized media METACITZN. Well-known buyers of WOW include Internet entrepreneur Gary Vaynerchuk, American actress Reese Witherspoon, and famous NFT collectors. Pransky and YouTuber Logan Paul.

In the transaction data displayed on the official website, there are two collectors who have purchased a large number of WoW works. The first one has as many as 474 sets of WoW. It is a collector named Jaft. In addition to WOW, Jaft also bought There are many boring apes and Doodles, with more than 900 sets of collections; the second list has 200 sets of WoW.

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Figure 4-16 World of Women #6025 display

Why can WOW stand out from many NFTs?

First of all, its focus on the theme of women has attracted many buyers from the beginning. Yam also considered the inclusiveness of art when designing, and women are equal regardless of race and color. Secondly, she also considered religious sensitivity and Geographical differences remove controversial elements such as African braids and Muslim veils.

The WOW team has also made great efforts in marketing: attracting fans by purchasing other well-known or highly hyped NFTs as gifts, so that the attention of its social media platforms has rapidly increased. WOW's social media has maintained a high degree of activity so far. Twitter has 90,000 fans, and the members of the community are also relatively active.

Since its launch, WoW has been continuously taking practical actions for its brand value and ideological transmission. Judging from its development trajectory and planning, its ambition is far beyond the NFT field, and it is not only about empowering women, but also hopes to make the brand Expand to the global domain. In addition to WoW projects, similar female-oriented and female-themed projects include Boss Beauties, Sad Girls Bar, Fatales, ENCRYPTAS, Women and Weapons, etc.

The rise of WoW and other female-oriented NFTs has to a certain extent broken the public's usual impression of male-dominated NFTs; WoW is not just a female NFT project, it has established foundations, charitable activities, and various female-oriented Other activities on the theme have allowed more people to see the value of NFT in addition to digital assets, which is of great significance to gender equality, world inclusiveness, and new women's empowerment.

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Figure 4-17 Basic information introduction of some popular NFT projects, as of 2022-01-194. NFT value discussion

4.1 Value characteristics of NFT

Different from traditional industries in the real world, blockchain technology based on the development of the Internet has clear and efficient changes in information transmission and dissemination methods. NFT is not only a major development sector in the blockchain, but also one of the non-essential categories in economics. Its source of value depends on the public's additional attributes of the item.

For non-essential goods, ways to change their total value include expanding the demand market for goods by increasing the group base, and indirectly strengthening their original identity and power certification by enhancing the scarcity (reducing quantity) and added value of goods. NFT just has such characteristics:

In addition, apart from the most basic characteristics of NFT, some additional factor dimensions can usually enable a series of unique NFT collections

1) Basic value

NFT collectibles have a certain collection value and appreciation value, and bring a sense of satisfaction to users who collect the work, as well as a manifestation of external vanity. The unique NFT sequence carefully designed by the team through its own characteristics is the basis of its development, but for NFTs with practical applications, such as certificates of use rights, property certificates, etc., their aesthetic value is not so important.

2) Practical value

Some NFT collectibles are not only used for collection. For the sustainable development of the project, the project team will inevitably continue to empower these NFTs so that they have unique functions in special scenarios. In essence, the project party hopes to cast a certain IP image through its NFT project, and produce a radiation effect from the center to the periphery.

• Participate in the game. Some NFT collections of cards and metaverse assets can be used as "tickets" to participate in the game, and the other part is relatively complex, used to expand the extra functions and experience in the game, and increase the user's playability, such as SANDBOX Middle ground can be used for official or private events, etc.

• member's privilege. For example, the CryptoPunks project, people who love the project naturally form a community, anyone can participate, but users who own NFT can get some benefits from time to time (such as lottery, airdrop, etc.)

• Digital identity symbol. With the development of the digital society and the increase of network communication time, identity symbols and images have more applicable scenarios, and gradually become a real and expanding demand. The best embodiment of this feature is the collection of NFT avatars. At present, CryptoPunks have become a symbol of identity and status. It's like a "ticket" to join the "high society". With this "ticket", you can enter the circle and get the opportunity to communicate and discuss with other users who also own the NFT.

• derivative activities. At present, the Bored Ape Yacht Club community has derived animation production, games and other content. Although the project party did not plan the area at the beginning, with the development of community autonomy, it began to gradually broaden the road in a new direction, and at the same time promote the next series of product activities of the brand.

3) Historical value

The historical background of the creation of NFT collections reflects the corresponding era and its historical significance. Its development is usually accompanied by the establishment of the community and then the precipitation of cognition. Finally, the perfection of consensus can become a unique community culture, and it will also become one of the historical values ​​reflected by the NFT.

4.2 The value dilemma of NFT

Since the NFT field began to explode in 2021, in the first half of 2021, its overall market value reached 12.7 billion US dollars, an increase of nearly 310 times compared to 2018. At the same time, at that time, major NFT platforms completed A-round financing of more than 10 million US dollars, including OpenSea, SuperRare, Bitski, Rarible and other NFT trading markets focusing on different fields. In addition, based on the NFT economic system, major Internet companies at home and abroad have also begun to deploy NFT. For example, the Ant Chain and Tencent Zhixin Chain built by Tencent and Ali began to seek popularity and functionality under the premise of the system. On the surface, the NFT market at home and abroad is fully prosperous, but the potential crisis behind it has never left.

1) There is a lot of speculation in the development of today's NFT track, excessive speculation, blind pursuit and crazy creation of short-term hotspots, which makes the NFT market contain a lot of bubbles. Once the market is in a downturn, most of the NFT liquidity contracts will be found. equals nothing.

The buyer of the NFT auction "Everydays: The First 5000 Days", which was initially popular in the entire currency circle, was not an orthodox collector, but a senior player in the currency circle and Metakovan, the founder of the NFT fund Metapurse. He released 10 million tokens under the slogan “Democratic Art Collection.” The price of these tokens then shot up from $0.36 to $28. Then he not only made a gimmick in this auction, but also made a lot of money after deducting the auction payment fee.

Judging from the current speculative atmosphere and Fomo sentiment in the market, the vast majority of NFTs on the market have "gimmicks to drive up prices", or participate in project promotion and hype through big Vs, celebrities, etc., or knock transactions (left-handed and right-handed), the market price It is far greater than the market value, and once the market bubble bursts, the total value of NFT assets will shrink significantly, and more than 90% of NFT collections will become air due to lack of liquidity.

2) So far, no legal norms on NFT have been issued in global regulation, so NFT, which is not subject to any regulation, has become the hardest hit area for trampling the law

At present, on a global scale, the attributes of NFT physical commodities are still difficult to define, and the NFT virtual commodities that will truly play a role in supporting the economic system in the Metaverse in the future are also difficult to characterize. There is still no conclusion as to what kind of property rights various digital assets, including NFT, belong to. It is precisely because of the lack of official concept guidance that there must be various "Ponzi scheme" criminal activities in this field. At the same time, some self-media Internet celebrities did not assume the responsibility to lead the public correctly. Instead, through exaggerated value and misleading ideas, they packaged a series of NFT "value" with no artistic value, falsely claiming art investment, collectible crowdfunding, etc. , Using the new blockchain technology to create a scam.

3) The security of NFT. As a digital product, NFT is produced as a piece of standardized software code executed on the blockchain, which is highly dependent on the attributes of the underlying blockchain protocol

The casting of NFT is based on the Ethereum network, but the Ethereum network is currently facing scalability problems, which will inevitably affect the development of its derivative NFT. In addition, the way and process of NFT creation is not smooth sailing. The current blockchain technology is in a period of rapid development, but its security and privacy are not perfect, so there is no absolute security guarantee. This will inevitably lead to some NFT assets being attacked and stolen by criminals such as hackers.

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5. NFT Track Summary and Tips

At a micro level, research on individual NFT sales reveals enormous similarities between the cryptocurrency art market and the traditional art market, despite fundamental differences between the two (e.g., transaction transparency, no middleman involved, etc.).

A recent study by Canadian conceptual artist Kimberly Parker, which analyzed data from OpenSea as well as sales information from other marketplaces, found that nearly 80% of NFTs sold for less than $500, while only 1.8% were primary sales (i.e., first-time sales of NFTs). The selling price exceeded 0.5 ETH (about 894 US dollars according to the exchange rate at the time of research). There is never a shortage of top-tier scarce assets, while a large number of long-tail assets have been slow to sell. This is very similar to the current state of the traditional art market, which is notorious for being "top-heavy" and "winner takes all". Decentralization does not mean equal opportunity.

From a macro perspective, there is no doubt that the entire NFT track is on the rise.

But its long-term value is still unclear. In the long run, the value assigned to these NFTs depends critically on their connection to the offline world. That connection could be as simple as a community that supports its creation and exchange. If this community lacks participation, most of the value associated with NFTs is lost. So NFT may become a form of value storage, but before that, we will go through a stage, that is, the social relationship and community value in the real world are transferred or reflected on the chain.

We are currently in the initial stage of NFT development, and it is impossible to predict how NFT will change economic behavior and models on the blockchain in the future.

With the ability to cast digital asset ownership, as well as the characteristics of easy storage and protection, NFT has changed the way many artists and creators make a living, and brought wealth and opportunities. However, in the development process of the NFT track, it will also face more uncertainties and greater risks than encrypted assets. The life cycle of most NFT projects is very short. After the hot period, the liquidity becomes not optimistic, and it is very likely that it will become a JPG picture in the wallet.

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NFT track FAQ

Q1: How to determine the scarcity and value of NFT?

The value of an NFT depends on what it represents. In the case of digital currency art, the measure of value is very similar to any other type of art. We need to consider the creator, the artistic value of the work and the needs of various collectors. NFTs with a specific number are usually more collectible if they are released in limited quantities or are part of a series of collectibles.

Q2: Where can I get NFT?

The ways to obtain NFT generally include market purchase, gift from the project party, and self-casting. The NFT market sells numerous non-homogeneous tokens, created by both famous artists and amateurs. Among the many products, the largest is the Ethereum-based NFT platformOpenSea. New marketplaces are coming online all the time, so be sure to verify the authenticity of the marketplace if you're interested in purchasing works by famous artists.

Q3: How to verify the authenticity of NFT?

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Figure: Recent sales data from digital artist Beeple

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This article is copyrighted by D-Tiger Research Institute. Without permission, any organization or individual shall not reprint, copy or redistribute others, etc.