NFTs And Metaverses In 2022: Comprehensive Guide – U.Today
As cryptocurrencies are still trapped in a bearish recession, the right moment has come to look at the most overhyped segments in order to evaluate their actual utility and prospects.
Non-fungible tokens (NFTs) and Metaverse platforms were making waves in 2020-2021. Both spheres witnessed enormous inflows of capital from VC teams and retail investors. However, amid Crypto Winter, many of them are having a tough time.
NFTs and Metaverses in 2022: Is hype over?
The spheres of NFTs and Metaverses were among the hottest in Crypto Twitter in 2021. With record-breaking sales of Beeple’s artwork and rocketing releases of Bored Apes, Mutant Apes, Crypto Punks and Azukis, it looked like all VC/IDO capital in crypto is injected in NFTs and Metaverses.
In 2022, the dust settled, and it looks like interest in NFTs and Metaverses is not as strong any longer. But is that true?
- Non-fungible tokens, or NFTs, should be considered a subclass of cryptocurrencies (blockchain-based tokens) with unique features; typically, they are associated with unique digital content;
- Metaverse is a digital space (virtual world) with elements of AR/VR and an immersive experience; crypto tokens are often used as key elements of Metaverse economics: payment instruments, tokenized entry tickets and so on;
- Major economic metrics (net volume of sales, weekly NFT sales, trading revenue of major marketplaces, number of NFT-associated transactions) dropped by 40-60% from average 2021 levels;
- Ethereum (ETH) remains the dominant blockchain for the NFT and Metaverse segments; OpenSea, Magic Eden and X2Y2 are key marketplaces;
- Decentraland (MANA), Axie Infinity (AXS) and The Sandbox (SAND) are still the most popular Metaverse-centric cryptocurrencies; numerous big names in Web2 tech and other industries also launched their Metaverse ventures.
As such, NFTs and Metaverses will likely remain hot topics in 2022; however, they are set to find new (“serious”) use cases beyond tokenized “Mutants” and “Apes.”
What are NFTs?
Technically, NFTs, or non-fungible tokens, are blockchain-based assets with a set of unique features. While fungible cryptocurrencies – Bitcoin (BTC), Ethereum (ETH), U.S. Dollar Tether (USDT), etc. – can be exchanged for each other (1 USDT is always equal to 1 USDT, even if they are issued on different blockchains), this does not work for non-fungible tokens (NFTs).
A non-fungible token is the most primitive form of tokenized ownership. It can be better understood as a certificate designed to confirm that this or that crypto user is a legitimate owner of a piece of content – image, video, song or even article. Once a crypto user obtains an NFT, it might be interpreted as: “Hereby it is declared that the account 0xa1b2c3… owns RareBird.jpeg starting from block 123456, which is verified by the Ethereum (ETH) blockchain.”
As such, this technology introduces an intuitive, inclusive and tamper-proof instrument of ownership verification. However, it is not entirely decentralized: typically, the file associated with this or that NFT is stored on a centralized server.
Why are NFTs popular?
First, due to enormous hype and capital inflows, the segment of NFTs has become very attractive to retail and institutional investors. After the first multi-million sales, many started treating them as slot machines, just trying to buy the next series of “Apes” low and sell high. That is why many Web3 teams switched to the production of endless copycats of the most popular collections.
Then, the NFT-centric model is very democratic and inclusive: it allows every crypto user to express himself/herself as a digital artist, trader or commissioner. With NFTs, every Internet user can buy and sell digital art, and create his/her own token collection. Largely, these opportunities were unavailable for participants in Web2 systems.
Last but not least, the most expensive NFTs – as well as the tokens issued by big names in the luxury industry – can be used to demonstrate one’s status, well-being and living the “high life.”
How to create an NFT?
Largely, non-fungible tokens (NFT) are being issued on the top of Ethereum (ETH), the largest smart contracts platform. Technically, they are ERC-721 tokens, Ethereum-based tokens that use a standard different from the ERC-20 design of fungible tokens. Tech-savvy users familiar with programming can build a new ERC-721 token using Metamask wallet, a Remix-integrated developer environment (IDE) and OpenZeppelin’s collection of ready-made contracts. Developers can integrate code from OpenZeppelin, customize and deploy it through Remix and see it in Etherscan.
As non-fungible tokens gained traction in 2021, a number of platforms started offering a no-code NFTs creating service. For instance, on Mintable, users can create and offer NFT collections using only Metamask. Mintable clients can just upload their content, and the system checks its authenticity and uniqueness, turning this content into NFTs. Users are charged with minting fees, however, gasless options are also available.
Top NFT collections in 2022
The NFT segment made headlines due to its flagship collections. In 2021, its “floor prices” (basic prices for auctions) added thousands of percent in a matter of weeks. Here is what happened to them in 2022.
Bored Ape Yacht Club
Bored Ape Yacht Club (BAYC), also called Bored Apes or Bored Ape, is the most popular NFT collection on Ethereum (ETH). The project was launched by seasoned software developers from Yuga Labs in April 2021. Greg Solano, Wylie Aronow, Nicole Muniz and two anonymous developers were the earliest key figureheads of BAYC.
The collection itself displays various apes with fancy looks; all tokenized pictures in BAYC are AI-generated. Owning a BAYC token unlocks the opportunity to join closed elite clubs with online and in-person events; all IP rights for the content are possessed by token holders.
As of 2022, BAYC sales have totaled over $1 billion. Jimmy Fallon, Snoop Dogg, Eminem and Madonna proudly own Bored Apes. In March 2022, BAYC contributors and supporters introduced ApeCoin DAO and its native coin, APE.
Crypto Punks is the earliest mainstream NFT collection, introduced in June 2017 by Canadian software developers Matt Hall and John Watkinson (Larva Labs studio). The project was inspired by cyberpunk aesthetics, the London punk scene and electronic music.
In all, there are 10,000 unique CryptoPunks NFTs (6,039 male and 3,840 female). Just like BAYC, the images are AI-generated; the collection features Humans, Zombies, Apes and Alien characters. Every token has 87 different characteristics besides character type: there are no two similar Crypto Punks in the collection.
In March 2022, it was announced that BAYC developers Yuga Labs quietly acquired all IP rights for Crypto Punks NFTs. Both parties avoided disclosing the sum of the largest M&A in Web3. At the same time, the entirety of commercial rights to the Punks belongs to their owners.
Otherdeed for Otherside
Otherdeed for Otherside represents a different subclass of NFTs, i.e., tokenized cards necessary to enjoy the Metaverse experience in Otherside virtual world. There have been 100, 000 items minted, each representing a card with a surrealistic image. Seven of them are offered for 1,000+ Ethers.
Initially, Othersides were launched in April 2022 as tokenized representations of parcels of in-game land. Otherside is a “side project” of Bored Apes creator Yuga Labs.
Top NFT marketplaces in 2022
Non-fungible tokens are typically sold via marketplaces that allow traders to buy/sell their holdings in an Amazon-like manner. Also, some NFT marketplaces (e.g., Mintable) have built-in token minting modules.
Launched in early 2017 by Alex Atallah and Devin Finzer, OpenSea is among the first mainstream NFT marketplaces in Web3. OpenSea remains the core marketplace for the global NFT ecosystem: it is the tech basis for all major collections and producers.
OpenSea is very popular thanks to its intuitive interface