Key Projections for the NFT and DeFi Scene

With the 2021 NFT hype cycle firmly in the rearview mirror, experts believe NFTs will drive the next generation of consumer brand engagement in 2023, driving new audiences to the metaverse.

Despite the non-fungible token (NFT) market being deep in bear territory, several key industry players believe that 2023 will be an opportunity to build new infrastructure to prepare for the next crypto bull market.

NFTs will drive metaverse migration for brands

Business growth consultancy Forrester suggests that non-fungible tokens (NFTs) will be a critical touchpoint for brands in the metaverse in 2023. NFTs are unique digital tokens that immutably record the origin and ownership history of a physical or digital asset on a blockchain.

While the vision of a metaverse is not fully defined, let alone built, venture capitalist Matthew Ball offers this definition of the metaverse in his 2022 book, The Metaverse:

“A massively scaled and interoperable network of real-time rendered 3D virtual worlds that can be experienced asynchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, rights, objects, communications and payments .”

Corporate metaverse ambitions are likely to develop steadily in 2023, with companies such as Samsung, Nickelodeon, Gucci and Nike building on 2022 efforts to refresh their brands and attract new revenue streams.

Brands to continue to offer exclusive NFT privileges

At the 2022 NFT.NYC conference in New York City, Jeff MacDonald, a director at advertising agency Mekanism, said brands offer exclusive privileges to their web3 customers, guaranteeing financial incentives or bragging rights. Coffee chain Starbucks has already pioneered an NFT-based brand loyalty program that provides holders of coffee-based NFTs with unique real-world rewards. Entertainment behemoth Nickelodeon is betting that nostalgic Rugrats profile pictures will attract old fans to its Recur Forever Inc. NFT platform.

Sportswear brand Nike is embracing a futuristic hybrid model that allows physical sneaker owners to team up their avatars with the same gear. This model is likely to gain traction in 2023, with layer two solution Polygon proving attractive for enterprise applications.

At the NFT.NYC conference, the Wall Street Journal reported that many brands have web3 plans that stretch far into the future.

NFTs also offer marketers new channels to monetize and promote products. Crisps maker Pringles released an MP4 video NFT as part of its CryptoCrisp collection in 2022. International fast food chain McDonald’s launched an NFT collection in the US to celebrate the reintroduction of its McRib product in December 2021.

Art will explode with unprecedented autonomy

Venture capitalist and Patreon backer Valentina Zakirova believes that non-fungible token art creators will have unprecedented autonomy by 2023. Accordingly, artists will be able to monetize their work without paying a middleman.

Tokenized music platform Band Royalty will add more artists to its 3,000 or so NFT-based song catalog in 2023. On Band Royalty, artists get paid every time their song is played on a playlist.

The 2022 bear market has tested the endurance of tokenized art. Beeple, the author of a seminal non-functional symbolic work, “Everydays: The First 5000 Days,” which sold for close to $70 million in 2021, had to settle for a new bid of $252,000 at a Christie’s auction in mid-2022 .To combat flagging interest, artists could also exploit the concept of fractional NFT art. Buyers can purchase an NFT that represents part of the ownership of the artwork at a lower price.

Christie’s $5.9 million in tokenized art sales for 2022 was 96% lower than 2021’s $150 million. Despite lower sales, the British auction house company is clearly interested in the intersection of art and blockchain technology. Christie’s launched its web3-focused venture capital arm earlier this year. So far, it has invested in Layer Zero, a blockchain interoperability startup.

Decentralized financial applications are emerging for NFTs

With more widespread corporate investment in 2023, non-fungible tokens are likely to gain traction in the decentralized finance (DeFi) space.

Steven Boykey Sidley and Simon Dingle, authors of the forward-thinking DeFi book “Beyond Bitcoin: Decentralized Finance and the End of Banks,” claim that users could one day contribute one-asset NFT as liquidity to a decentralized exchange liquidity pool. They could borrow cryptocurrency against that NFT to invest in other yield-bearing products.

Platforms such as NFTfi already offer loans against NFT-based collateral. The venue pays the loan in ETH, and the NFT goes to the lender if the borrower defaults.

According to Dr. Jane Thomason, NFTs will also be used to symbolize licenses and academic credentials. Thomason is chairman of UK digital asset firm Kasei Holdings.

NFT-based credit scores could also be an important innovation in 2023. Earlier this year, Charles Hoskinson emphasized the importance of creating a decentralized financial identity. Such an identity will help to realize the economic potential of those who are excluded from traditional financial services.

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