The Wanna₿ees of NFT
How do we evaluate NFT's which will really matter ?
The movie 1983, recently dropped its NFT.
Salman Bhai did a few days ago and Amitabh Bachan also followed in tow. It is a clear emerging trend that anyone famous in web2 and Bollywood, in particular, wants to do an NFT play.
But the first reaction most of the folks IRL and I have is who the hell is going to buy them.
And that is a correct reaction, nobody and I mean nobody buys them. Don't go by reported numbers : some investigative research on the blockchain will tell the accurate picture.
This also raises a bigger question : Why, with Millions of Followers and the entire media arsenal behind these, do these NFTs NOT sell?
On the other hand, stones, pixel art, money images and digital etc. keep getting sold, sometimes for lifechanging amounts of money (or ETH or Solana, as you like it).
For someone deep into the space, we can confidently say that these "Wannabees of NFT's" find it incredibly hard to succeed. We argue that there are some key fundamental reasons why the success of these is hard to happen.
Web3 is its own culture
Tik-Tok and Instagram exploded the number of creators. While a lot of traditional media might have cringed at the quality of what was being created, it found its audience and arguably now has creators who are equally popular to some of the well-known artists.
Web3 is building on top of this new global creativity community. Apart from the creations themselves, it is suddenly allowing the creators to build a community which they control (unlike Tik-Tok and Instagram), which is decentralised and can be economically aligned to the same goals. This community of creators and fans is global and speaks a language of memes and acronyms unknown to most.
And in this culture, what is rare and more valuable will be determined by this community and not some external benchmarks, like say how Instagram’s opaque algorithm today ranks the popularity of an IG Reel.
With this lens, if you look at most celebrities who struggled in the Tik-Tok and Insta-fabulous world appear as dinosaurs in the web3 ecosystem.
NFT's are a new form of something.
In web3, it will be foolhardy to bucket NFT's into existing buckets like art, movies, videos etc.
That is because NFT's are the intersection point of art, music, video, economics, creators, business. They are the Schelling point for the above. The outcome of this complex Schelling point is something completely new that might have almost no previous references.
Side Note- This is one of the reasons why most of us will struggle to grasp the value of NFT's cause we want to bucket them into.
And in complex systems, outcomes are created bottom-up. You don't make magic by superimposing things.
The NFT's of 1983 are a good example. They are just trying to put some cute animation pictures as an NFT. That is just superimposing their existing creativity into web3.
Instead, they could have done a game mechanic in which they could have competed the present cricket teams with a team of 1983 and combined real cricket, fantasy cricket, games and art in one go.
But alas, the wannabees of NFT !!
It is tempting but lazy to see NFTs as copies rather than end-product innovations built on top of existing infra and enabling layers of the emerging Web3 stack, whose layout we had discussed in our previous article.
Community >>>> Your Ego
One of the most significant philosophical challenges, when you want to build a successful NFT project, is that your ego while it triggers the process of creation, the project's success has to be shared with all your community.
You start as an individual creator and eventually become part of a bigger whole than what you created.
Nobody has done it better than 3LAU ( royal.io). He was a leading DJ who has built a brilliant community over the past 1.5 years and has given NFT's exclusive to this community. Post building the community, he has then gone on to launch royal.io, which says that any artist associated with Royal, including 3LAU's music, will share the majority of its revenues with members of its community.
Another super example is Refik Anadol's Feral File Drop where you collected art and got one year's access MoMA museum. And then Refik Announced that they are building a metaverse in which his work holders will get exclusive access.
If there are these genuine drops, there are also big corporations trying to coat-tail on the Digital Artist Bandwagon and use the Communities for some savvy marketing.
However, in cases of these corporations, similar to the "Bollywood drops", almost nothing comes back to the community.
So these NFT's don't represent the culture, are not something new and don' give back anything to the community.
For sure, these are NGMI (Not going to make it)
NFT's are the core of the business and not ancillary stuff
With the above tenets being established, the great projects think of these NFT as core to the business and not something as ancillary to some other art or movie.
Most of the NFT projects are today picking one of the directions below.
Rarity Play: These are NFT drops by artists creating work that hasn't been seen before and is in sync with the new culture being created. Xcopy, Beeple, Pak etc. are great examples of this.
web3 Brands: These are plays where having that NFT is the ultimate status symbol. It's like driving the Ferrari of IRL ( In the real world). Getting that NFT opens doors to an exclusive community. BAYC and Crypto Punks are the best examples of these.
Game Play/Content: Projects whose clear goal is building a great game and content. Almost like becoming the marvel or a large gaming studio of web3. Again the journey starts with you holding an NFT of the project. Punks Comics, Wolf Game and Huxley are doing this brilliantly well.
Again from this lens, if you see the wannabee drops, most of them are an afterthought and not something on which they are building the business itself.
GreySwan Actionable Insights
To Identify a great NFT project, you can use the below checklist
Is it a breakthrough project representing the new culture being formed?
Is the project pushing the boundary of creation, gameplay, economics, art etc? It has to tick at least a few boxes
Is there something for the community? What happens when you own the NFT?
What is the project trying to be? Rare art for the culture or a web3 brand or a content house
Who is the team behind it? Do they have an understanding of web3?
Can the project be Memed? Does it have a high Meme quotient?
Reading List
The Wild West of Tokens
https://creatoreconomics.co/f2657837758d42f3a8a0bfc0d585d504
https://alexdanco.com/2021/02/27/nfts-and-cbgbs-hows-that-for-a-clickbait-title/
