What to expect in 2022 for NFTs
This is my attempt at documenting my thoughts on what we will see (hopefully) by the end of the year within the space. This is by no means a prediction, but more of extrapolating current trends and seeing where we will be by the end of 2022.
This would be pretty bold as we all know by now that a month in NFTs feels like a whole year! This is such a rapidly changing industry that things can get obsolete/repetitive even after a month in! (Looking at you, pfp projects with no utility)
To first look at where we will be in 2022, we need to first introspect on how far we’ve come in 2021.
A Brief Recap of 2021
Brands. Game studios. Metaverse. Meta. Profile pictures. Artists. Axie Infinity.
2021 saw the largest volume of people and crypto being traded, ever. Just look at how we started 2021! The total number of unique users onboarded in the first 6 months could fit into one of the weeks at the tail end of this year!
*this data covers only Ethereum marketplaces and does not cover P2E marketplaces/adoption like Axie
The first half of the year saw the sales of Beeples ‘First 5000 Days’ and the Nyan Cat meme which helped (positively and negatively) out the marketing department of NFTs. At this point, however, most of the NFTs traded were mainly 1/1 art by artists on SuperRare, Foundation, etc. We haven’t seen the mass market enter NFTs yet.
The growth explosion happened in the second half of the year and many might have attributed it to the likes of Jimmy Fallon, Snoop Dogg, Adidas, Nike, Pepsi, and Facebook renaming themselves as Meta as a catalyst for more to jump into the bandwagon. However, all these did not come until the last quarter of 2021.
The sustained NFT adoption in the second half of the year started in the third quarter of 2021 through the proliferation of pfp projects such as Cool Cats, BAYC, and many more. It was also this time that the NFT markets on other chains such as Solana, Polygon, taking off.
In a nutshell, we’ve come a long way in terms of adoption. 2021 was crazy. There are many other innovations & details which I did not cover and I won’t be able to in this newsletter. If you’d like to know more about what went down in 2021, @PuffYatty has got you covered.
Moving on… If NFTs did not have utility or any use case, no one would stay in the space and the NFT hype would eventually die down.
As it currently stands, NFTs do not offer much utility. So what gives? Why are so many still in it? For many, it offers a sense of identity, community, and a shared interest in new technology. Unity is rare in this polarised, fragmented world we live in. It doesn’t matter if you’re on Solana or Ethereum, hold a Bored Ape or a Doodles - you love NFTs and stand for what it is.
So what will I be expecting in 2022 (excitedly)?
Entering the space in 2022
1. Gaming
Play to earn is the hot topic of the current season. However, it feels like 1 in every 4 NFT projects right now are looking to create their own game just because it’s the in-thing that gives holders supposed utility. However for P2E games to sustain, there needs to be an effective economy around it, and not just people focused on the earning bit as it will not be sustainable. Money needs to be flowing into the system somehow.
For 2022, I believe we will see a lot of these P2E projects come to realise that and the market will adjust itself to mirror that complexity. Also, creating a game is not an easy feat. Think about all the games you played and then stopped playing. It’s an uphill challenge creating meaningful game economies and also keeping players engaged for the long term.
However! I do believe more and more that big-name, triple-A game studios and companies will soon start to seek out opportunities in combining NFTs to their existing and future game releases. Games have a way of helping push the frontiers of what works and what doesn’t (think Among Us, Axie Infinity, Wolf Game), and there certainly seems to be a growing interest in gaming companies taking interest in pushing NFTs.
Just earlier this week, Square Enix’s (the creators of Final Fantasy) CEO revealed their plans on the metaverse and NFTs and how they intend to incorporate this technology into their games. Atari had bought plots of land on Sandbox and Ubisoft, Zynga, and Sega has expressed interest in exploring NFTs.
It would be a matter of time (fingers crossed, in 2022) to see the first dominos fall where NFTs are incorporated into triple-A games. Just imagine the possibilities that may be for already popular MMORPGs (Maple Story, Runescape) that already have a robust marketplace!
2. Utility
2022 will see a move from pure pfp projects into higher quality projects.
I still believe that pfps have a place in the metaverse and many will continue wanting to choose to use their pfps in place of their faces. We’ve become accustomed to creating and using our avatars for a long time coming anyway, so I don’t foresee pfps to be something that will go away!
Nonetheless, if your project is just another 10k pfp launch, with a token launching, DAO being formed, with a game being dropped on a horizon - you’ll need to start upping the ante! As it currently stands, the market is being saturated with quality pfp projects that have solidified their place, communities and developed their own culture around what they stand for.
This year, I believe these NFT projects will continue to expand and build upon what they’ve already started. We will start to see more applications, endeavors, and meaning on what it means to be in certain projects. Perhaps we will start to see more irl clubhouses being started, cartoons, or pfps being incorporated as metaverse avatars!
For newer projects, copying the success of previous projects just won’t cut it anymore and I am certain human creativity will spur some pretty interesting outcomes when it comes to standing out from the crowd.
Some of the crazy utility seen in 2021:
Cool Cats & Doodles - Private gallery access & irl meetups during Art Basel
BAYC - Token-gated drop and collaboration with Adidas, irl yacht / BAYC party. BAYC vs MAYC game competition exclusive to BAYC/MAYC holders to win limited edition merch.
Adam Bomb Squad (NFT by streetwear brand The Hundreds) - Token-gated drops in collaboration with brands such as Sanrio, Harry Potter, and more.
Famous Fox Federation (on Solana) - $FOXY tokens provides access to new drops, auctions, domain naming, and more
3. Follow the artists
Musicians, poets, generative/digital/any kind of artists.
The beauty of blockchain and NFTs allow for artists to now self-advertise on Twitter and build their community on Discord instead of having to rely on expensive advertisement mediums. Gone are the days of needing to completely rely on auction houses, commercial art galleries or studios to help your name ‘make it big’.
It is no surprise why artists are one of the early adopters of NFTs.
NFTs allow for the artists to retain some kind of control over the art they produce - intellectual property rights, who can buy their art, where it is being sold, etc. The main draw, however, is that NFTs also allows for artists to make a profit every time it is resold. This often does not happen in the physical art world where artists often feel as if they have been rugged when their work is resold on the secondary market.
These all sound good but it must be recognised that the current accessibility to selling art has somewhat become a bit of a circus when it comes to who can do so, regardless of quality, ownership (theft!), and cost.
Unlike the traditional art industry, many of the rules are still being written - who can sell what, and what kind of art is classified as art, whilst trying to juggle decentralisation all at the same time.
We need to figure all these out to make NFTs viable for artists and everyone else that is participating in the industry.
4. Brands! But mainly them listening to their community.
We’ve seen the backlash from the community when the new CFO of OpenSea decided to announce that they might consider an IPO in a Bloomberg interview. The backlash was not about how they “sold out”, or how web3 companies should be decentralised. The furor that was incited spawned from conversations on how OpenSea decided to not include its users first and reward those that have helped OpenSea get to where they were.
More recently, the news on Nike acquiring RTFKT drew a lot of negative attention and hate mainly due to how Web 3 companies can just be ‘bought’ without having first understood working their way into the community. Many discussions and Twitter spaces discussed the value by which Nike can bring into this space versus what value are they trying to extract from its users/consumers.
I believe as 2022 progresses and having the Web 3 narrative become more pronounced, the ‘listen to your community’ approach will start to echo louder amongst those that are looking to get into this space.
However you like to call it - Web 3, crypto, NFTs - one thing is for certain. There always is a strong community behind a successful project. It is not because it is the best, fastest, cheapest blockchain ever, but because of the number of people that believe in it and defend it like its army. With that, their participants are typically rewarded in one way or another employing some kind of utility (it’s not always about token drops)!
Fin.
2022 looks to be a really exciting year for NFTs. At this point, it feels like anything can happen considering all the wild things that happened in 2021!
2021 has been kind to us and it is in my (our) interest to see this space grow even further with innovation and togetherness. At the end of the day, we’re all in this together and I hope that whatever paths we take will converge us to greater heights.
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WGMI.