[Coinlive Talk] NFTs: A Gateway To the Future

• NFTs have begun hiking up popularity charts ever since 2021
• Projects have also started to adopt creative and innovative ways to stay resilient besides bearish conditions
• NFTs serve as a starting step for many to onboard into the crypto space

The bear market has certainly not been kind to the majority of entities in the crypto space. Non-Fungible Tokens (NFTs) have also fallen prey to the wintery chill of the market slump, with sales volumes dropping to $535 million in July down from a staggering $3.7 billion in Q1-2022, according to CryptoSlam.

Yet this dip conceals the historical upward trend of NFTs when compared to the numbers from the first half of 2021, which ascertains that total trading volume has increased by an incredible 4,700% since then.

For the uninitiated, NFTs are nothing more than colourful JPEG images that often come at an exorbitant price and hidden behind veils of cyber-obscurity. However, NFTs play a crucial role in the crypto space, serving as access passes to events and even support smart contracts. To find out more about the future of NFTs, Coinlive spoke to Edmund Kua, the Research Chapter Lead of Nansen. As a crypto analytics platform, Nansen has built up reliable statistics and dashboards to provide crypto investors with actionable knowledge pools to discover new opportunities and defend their positions.

“I think it’s the easiest way to encourage someone to get on board the crypto space,” Edmund tells us. “It’s a pretty good way for newbies to understand the basics, like what private and public keys are or how a wallet works.”

Indeed, many NFT collections feature creative and original art, from adorable penguins and unicorns to edgy cyberpunk-flavoured anime characters. With Opensea, the current largest marketplace for NFT trading hosting an astounding 80 million NFTs, you would be hard-pressed to find an NFT collection that fails to appeal to you.

Compared to the last bull cycle that started somewhere in the middle of 2021, NFT sales and valuations have spiked up, Edmund says. “There was an outperformance in the NFT sector compared to, say, DeFi (Decentralised Finance).”

Even then, it is still undeniable that current market conditions, coupled with hawkish federal hikes, have certainly taken a toll on the NFT market and average retail investor. It is no doubt that especially in the wake of recent vulnerability exploits and institutional collapses, many have begun to adopt a more wary and cautious approach in the crypto space.

Coinlive’s Interview with Edmund Kua, Research Chapter Lead at Nansen

To this, Edmund shares a few points of advice for NFT creators in curating successful NFT projects based on certain trends he has noticed as a battle-hardened researcher.

“I think a lot of projects have been trying to figure out ways on how to build a workable and active community base, such as going down the path of having free-mints,” Edmund opines. “These projects, they’re sort of providing opportunities for the wider community to participate in their vision.”

Just as Edmund says, there seems to have been a notable increase in the number of free-mint projects, with founders satisfied in observing their collectors just cover the costs to deploy the project. This is of course with the knowledge and understanding that casting a wider net during the adoption phase helps to galvanise support for the project and build a sustainable venture. Especially under current market conditions where investors are often more cautious in capital outflows, requiring a relatively low initial investment might be a viable strategy for NFT creators to pursue.

“They’re trying to focus on just getting enough traction more than anything else.”

In addition, fostering a community and crafting a compelling story around NFTs are also important elements in building during this period.

“If you think of it from a marketing perspective at least, there’s just more things to sell if you can effectively package it into a compelling story,” Edmund suggests.

While of course requiring additional work to build, weaving an interesting lore around an NFT collection has also been a relatively effective method for creators to push through the wintery blizzard. Take Chubbicorns for example, an NFT project that prides itself on writing unique and tongue-in-cheek narratives on each unique unicorn it offers up.

Stories, memes, and free-mints combined definitely can help to build hype and excitement around a project, and its relatively low barriers of entry could very well onboard more into the crypto space. Especially in the light of Ethereum’s recent merge, where the networks transition to a Proof-of-Stake consensus protocol has done away with the foundation’s need for heavy-duty mining, purchasing NFTs with ETH have now also become very much more environmentally friendly.

Yet there still exist undeniable dangers in the NFT ecosystem, I argue. Rug-pull projects have become increasingly proliferate, wherein developers attract early buyers to invest in the project, only to quickly abandon it and making off with the proceeds of the project.

Edmund is fairly quick to respond to this, suggesting that there are signs available if you keep a keen eye out to protect yourself and your precious funds.

“It can be quite obvious really, like if you see that the quality of the project isn’t really something that you would personally put your own money in, I think that’s a tell-tale sign of a quick-fix job,” Edmund tells us. “If the developers are also promising you unrealistic benefits that seem too good to be true, while having an obscure roadmap, that’s also another sign that things can go wrong very quickly.”

However, some of these signs may not be that obvious to the uninitiated, I argue. If NFTs are potentially the key to onboarding more into the crypto space, surely that suggests that a significant percentage of the NFT community are likely to lack a keen eye to thoroughly discern if a project fits the metric of being “too good to be true”.

At the end of it, buyers ultimately still need to exercise their due diligence while navigating the NFT ecosystem. While rug-pulls and other assorted dangers may yet exist in the darkest corners, the future of NFTs are promising, as Edmund tells us.

“NFTs can integrate themselves into our daily lives with use cases such as loyalty programs, or by bringing conventional services on chain which then opens up a lot of other opportunities to be explored.”

Indeed, with large industry players beginning to adopt NFTs into their sales strategy, such as the likes of Nike’s Cryptokicks or even Starbucks’ Odyssey loyalty program that allow customers to purchase collectible digital stamps, NFTs are quickly finding themselves introduced to our daily lives and experiences.

What this potentially provides for consumers then, is arguably a more immersive and meaningful engagement with the brand, such as allowing for membership clubs and even branching into NFT gaming. Essentially, NFTs could very well be the gateway for traditional businesses to branch into all that web3 has to offer, from smart contract services to even NFT gaming portals.

Under such harsh market conditions, NFTs promise a certain allure of relative simplicity, aesthetic allure, and collectability that may yet see it persevere through this raging winter.

“When in doubt, go back to simplicity,” Edmund advises as we close off the interview. “Really, now’s the time to be building.”

This is an Op-ed article. The opinions expressed in this article are the author’s own. Readers should take the utmost precaution before making decisions in the crypto market. Coinlive is not responsible or liable for any content, accuracy or quality within the article or for any damage or loss to be caused by and in connection to it.