How NFTs will drive mainstream Web3 adoption
Ken Timsit, is the head of blockchain startup accelerator Cronos Labs and Crono’s chain.
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Non-fungible tokens (NFTs) were perhaps the most publicly followed hype cycle, with celebrities from Justin Bieber to Madonna dropping NFT collections for their fans over the past couple of years.
Without an understanding of the potential benefits of NFTs powered by the underlying blockchain technology, the average person may risk writing them off as just “million-dollar JPEGs”.
This mischaracterization of NFTs acts as a major stumbling block for the mainstream adoption of Web3. Enter utility NFTs.
Designed to provide tangible utility to holders in the form of rewards and other benefits, NFTs may actually be the key to the widespread adoption of Web3. By offering real-world benefits, this may convince non-crypto natives to test the waters of Web3.
Below are six use cases of NFTs, all of which illustrate how utility NFTs can benefit holders while insulating the space against future hype cycles to create a stronger Web3 and drive greater mainstream use.
1. NFT membership
Imagine the exclusivity of Soho Housebut instead of membership in the form of referrals and direct debits, people gain access by purchasing a Soho House NFT.
Companies such as The Mandala Club has already begun to tap into the potential of NFT membership, selling at price tags as high as S$15,000. Benefits offered through NFT membership include access to exclusive newsletters, Discord channels, interviews and events.
Not only do NFT memberships provide a streamlined way to verify members, but they also allow for peer-to-peer sales and trading that allows the value of a given membership to appreciate with demand through secondary trading and sales.
Examples in the cryptosphere include Loaded lions and Bored Ape Yacht Club (BAYC) membership. The Loaded Lions offers members VIP experiences, giveaways and priority access to select members Crypto.com NFT falls.
The BAYC membership, on the other hand, gives owners access to members-only areas, real-world events and special merchandise. Just as event organizers would now turn to Eventbrite for ticket sales, NFTs can be used as a channel for membership sales, acting as a means of bringing more regular users to Web3.
2. Run phygital experiences
Alongside the ownership of virtual assets, the concept of “phygital” created linked physical goods and services to the digital world using NFT sales. This can happen when a buyer receives a physical item through the purchase of an NFT.
Beyond just digital art, NFTs are being used as a medium for real estate sales.
Another iteration of ‘phygital’ takes place when the purchase of a particular item offers buyers a digital version in the metaverse. Adidas‘ The Into the Metaverse collection demonstrates how this can be brought to life in real time.
With an 84% loyalty rate among US customers, companies like Adidas can leverage their influence to lure customers to Web3 through phygital NFT offers.
3. Metaverse branding
Hand in hand with the lure of phygital NFT offerings, NFTs in the metaverse enable companies to find a new addressable market at the border of branding and advertising.
With growing recognition and momentum, metaverse companies offer a world of new real estate to consider for marketing efforts.
Big brands such as e.g Nike and Gucci has dropped NFT collections for owners to claim digital editions of their products. As a result, users can carry their favorite brands into the metaverse through new forms of digital expression enabled by augmented and virtual reality.
In turn, loyal customers may be more likely to come onboard Web3, with a metaverse full of brands they already know and trust.
4. NFTs in play
NFTs enable players to purchase assets and features within blockchain games, effectively allowing them to buy into communities they are passionate about.
Unlike traditional in-game purchases, NFTs allow assets to be ported from one game to another and controlled by the owner rather than the game.
This extends the life and value of in-game assets, returning power to players. The autonomy afforded by NFT ownership provides an incentive for traditional players to transition to blockchain gaming, and provides a means to integrate an additional user pool into Web3.
5. NFTs to rewire DeFi
Similar to the unique benefits that NFTs can offer holders in a membership setting, the unique non-fungible nature of NFTs can provide holder-specific positions and benefits within the decentralized finance (DeFi) landscape.
Currently, DeFi users often face periods of illiquidity when staking cryptocurrency to earn rewards. However, NFTs offer an easily tradable alternative, removing problems of illiquidity when users would otherwise have to lock up protocol tokens for fixed periods of time.
In addition, DeFi protocols can also add gamification elements, offering users benefits such as NFT stake boosters, exclusive access to approval lists, and fee discounts to name a few. VVSGotchi does this by offering tangible utility to its VVS Miner Mole NFT collection through experience points that can be used to earn higher rewards on the stake NFT.
DeFi protocols can also define the scarcity of their NFTs so that the value can match the demand.
The given examples illustrate how NFTs can further enrich the DeFi ecosystem with additional functionality while reducing the risk of volatility. By doing so, NFTs will help build a more robust DeFi landscape, creating a greater appeal for both new and existing users.
6. Gamification of health and social media
Through the use of NFTs, gamification of traditional industries gives the power back to users through greater data ownership and monetization opportunities.
For example, one can put their health history into an NFT and sell it to third parties who are interested in the data. In addition, health-oriented feature-to-earn projects are already on their way in, such as e.g Stepwhich allows users to earn rewards for the steps they have taken.
With royalties automatically accruing to the creator, using NFTs in the context of the wellness industry provides users with innovative new revenue streams.
While social media giants such as Instagram is working on providing users with NFT offerings, launching features to allow users to create and sell on existing platforms, a new generation of decentralized social media has entered the mix.
New projects such as DeSo and Lens protocol is ready to offer users a fully Web3 native social media experience with features such as creator coins, micro tipping and gasless NFT minting.
The unique revenue streams offered by the gamification of both health and social media through NFTs allow users to monetize things they already do for free.
The result? Two huge addressable user bases that can champion the use of NFTs in the mainstream.
NFTs: Catalyzing the mainstream adoption of Web3 with Utility
Instead of having to rely on status value or quick trades, NFTs will be able to add a more meaningful, long-term value proposition for countless industries worldwide.
By thinking in terms of the features that the underlying technology offers, everyday users can reap the benefits offered by NFTs without worrying about market volatility or price swings of specific assets.
In doing so, NFTs will act as the catalyst to drive the mainstream adoption of Web3 by supporting, streamlining and strengthening existing verticals rather than dismantling and rewiring them entirely.
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Learn more:
– Luxury brand Gucci partners with Bored Ape Creator Yuga Labs for Metaverse Project – Crypto Adoption on the Rise?
– Exclusive Interview: Tether Co-Founder Says Crypto Industry Will Bounce Back Despite Past Failures – Here’s Why
– New crypto startup enables users to send NFTs using phone numbers – Is this the future of NFTs?
– Spotify’s latest experiment: Playlists unlocked by NFT holders – the future of music streaming?
– Indian Advertising Watchdog Launches New Guidelines for Crypto Ads
– UK ad regulator sends ‘enforcement notice’ to crypto promoters
– Gaming giant Sony grants patent to enable NFT transfer across games and consoles
– Amazon to enter crypto-NFT market with gaming initiative – here’s what you need to know
– A Beginner’s Guide to NFTs: What You Should Know
– Top 10 NFT Marketplaces
