Overheard at NFT.NYC2023: Five Key Takeaways | Perspectives and events
Despite the market challenges of the past year, there was no shortage of enthusiasm among the more than 6,000 attendees at NFT.NYC2023 in April. The presentations from over 1,300 speakers provided many perspectives and predictions. In this article, we highlight five key themes we took away from the event for those who missed it.
1. Regulation: Navigate current events as legal issues develop
Unsurprisingly, “regulation” was a major theme of the event, with a continued focus on how enforcement actions and litigation shaped the regulatory landscape. Creators and advisors discussed legally sound ways to launch new projects and highlighted the open questions artists and brands face today. Speakers addressed the implications of several recent court decisions, including the recent (separate) trademark infringement rulings in favor of Yuga Labs1 and Hermès.2 Also at the center of attention for many participants was the legal theory asserted in an action against the creators of the NBA Top Shot compilation3 that NFTs may constitute unregistered securities. In general, speakers highlighted their focus on compliant construction of NFTs and the challenges this creates in the current US regulatory environment.
2.“Phygital”: bringing designer products into the digital world
From Jordans to Birkins and streetwear to couture, the fashion industry is built on the curation of exclusive experiences designed to develop brand loyalty. NFTs now enable these brands to create limited edition digital goods that can be displayed, traded and otherwise used online, all tied to their existing or future products. Several high-profile collaborations have emerged recently, demonstrating the potential of NFTs to play a role in brand development and loyalty in the luxury market. For example, the collaboration between Gucci and Yuga Labs gave owners of existing exclusive Yuga NFTs the opportunity to mint a new NFT, linked to a metaverse game, to receive exclusive Gucci pendants. Tiffany & Co. launched a new NFT collection, titled “NFT TFTiff”, which gave buyers the right to have their Cryptopunk NFTs made into custom pendants and raised the equivalent of $12.5 million before selling out in 22 minutes. Nike’s latest collection takes a different approach – the “Our Force 1” (OF1) collection, launched on the .Swoosh Web3 community platform, consists of an unlimited number of Air Force 1 digital sneaker NFTs available for embossing, with token holders gaining access to exclusive physical products and experiences. Collaborations like these have enabled designer brands to extend their existing market share to online communities that may not have otherwise engaged with them, while also expanding the brands’ reach into the burgeoning digital realm.
3. Entertainment: Strengthens interactivity
While NFTs have often been used as collectibles, they can also allow the holder to participate in voting via blockchains. The entertainment industry is increasingly embracing this technology to revolutionize content consumption and user experiences. One example highlighted at the event was FOX Entertainment’s Blockchain Creative Labs, which is launching a blockchain and accompanying on-chain NFT store for FOX’s upcoming show “Krapopolis” that will use NFTs to offer fans exclusive content and experiences. Along with major media brands, individual artists were also well represented; their focus was largely centered on the community-driven aspects of NFTs, which are used to promote exclusive events for token holders, enable voting on future content or the direction of ongoing animated shows, and allow fans to chat directly with the artists. By using NFTs as a medium to generate and enable fan interaction, both artists and entertainment brands are able to leverage their intellectual property in new ways while developing more active and invested fan communities.
4. Gaming: Driving User Adoption
Gaming has been seen by many as a key to onboarding the next generation of Web3 users. While titles like Axie Infinity have achieved some success, blockchain games have yet to gain widespread acceptance in gaming communities. Despite that, companies like Immutable and Vulcan Forged are creating entire ecosystems of games on the chain, while triple-A developers like CCP Games are creating Web3 sequels to story games like EVE Online. This year’s conference made it clear that developers are more engaged than ever and are seeking to use NFTs to enable digital ownership, asset portability and player-driven economies.
5. Tokenization: Streamlining the investment process
According to some commentators, tokenization – the process of recording ownership of real-world assets via tokens on blockchains – is expected to represent trillions of dollars in securities and other financial instruments before the end of this decade.4 As a result, a number of speakers at this year’s conference described efforts to bring a wide variety of assets on-chain, including everything from small business loans to emerging market debt and private equity secondaries. While transaction speed, transparency and lack of intermediaries were all touted benefits, speakers working with developing markets in South America and Asia highlighted how Web3 enables businesses in regions with less access to sophisticated markets to connect with investors from around the world. Creators also focused on methods to build out the infrastructure that will enable these transactions to work securely, such as using non-negotiable (i.e. “soul-bound”) NFTs to automate know-your-customer (KYC) procedures or identifying accredited investors, and fractionalization of otherwise uniform positions through NFT minting and trading.
1Hermès Int’l v. RothschildNo. 22-cv-384 (SDNY Feb. 10, 2022).
2Yuga Labs, Inc. v. RippsNo. 22-cv-4355-JFW (CD Cal. Dec. 16, 2022).
3Friel v. Dapper Labs, Inc. et al., 1:21-cv-05837 (SDNY)
4See e.gMoney, Tokens and Games: Blockchain’s Next Billion Users and Billions in Value, Citi GPS: Global Perspectives & Solutions, at 4 (March 2023).
