Loot VS CryptoPunks, the Battle of the Gods in NFT Crypto Culture

Author: Lily King from the Border
Author Bio: Serving as General Counsel at one of Asia's largest alternative investment management funds managing over $40 billion in assets, soon to join Cobo, Asia's largest crypto asset custody platform and institutional asset management platform as COO.
Source: Deep Tide TechFlow
The past week can be described as another historical transition in the NFT world.
First, news of Larva Labs (the original team behind top NFTs CryptoPunks and Meebits) signing a contract with Hollywood agency UTA sparked controversy in the NFT investment circle.
Optimists believe that images like CryptoPunks and Meebits will reach mainstream status through Hollywood, expanding their influence, which will enhance the value of the NFT avatars they hold.
Pessimists, on the other hand, feel that Hollywood's reinterpretation and potential new derivatives will dilute the value of their NFTs, and the profit motives of Hollywood and Larva Labs may lead to more unpredictable operations, possibly harming the cultural status of CryptoPunks and others.
Most NFTs do not include the intellectual property rights necessary for commercialization, which is not news. While the NFT market was booming, few truly paid attention or cared, but the news of Larva Labs partnering with Hollywood reminds everyone: Intellectual property could be an unavoidable shackle for centralized production NFTs.
Also this week, the text-based NFT—Loot—burst onto the scene. Although it features only minimal black text on a white background, it quickly attracted the attention of crypto industry leaders.
With Loot, we seem to see a new paradigm for NFTs: decentralized, Lego-like cultural creation. In the centralized era, the benchmark for the cultural industry was Disney, and Larva Labs' move into Hollywood seems to aim at becoming Disney.
But in the crypto era, the benchmark for the cultural industry must be a new species that is distinctly different from Disney. What will it look like?

Intellectual Property—An Unignorable Shackle for Classic NFTs

When you purchase an NFT, you acquire a token, and its smart contract only confirms the ownership of this token; the cultural work it points to is often not stored on the blockchain. Smart contracts also cannot cover intellectual property rights, which require confirmation from centralized intellectual property institutions in the real world.

NFT creators must provide buyers with an additional licensing agreement; otherwise, even publicly displaying the NFT could be considered an infringement.

Larva Labs adopted the NFT License drafted by Dapper Labs to define the rights of CryptoPunks and Meebits collectors.

What You Can Do:

• Use it for personal, non-commercial purposes
• Use it on trading markets
• Use it on third-party websites and apps (e.g., as a profile picture on social media)
• Use it for commercial derivatives, but not exceeding $100,000 per year

What You Cannot Do:

• Alter the work
• Use the work to promote and sell third-party products
• Use it alongside content that contains hate, violence, or other inappropriate behavior
• Attempt to register the work as a trademark or obtain intellectual property rights

For the top NFT asset CryptoPunks, the lack of intellectual property rights has not shaken its value foundation, as its value is more akin to that of art collectibles.

The value foundation of art collectibles is scarcity, "authenticity," and a historically recognized status. The issuance of 10,000 CryptoPunks has achieved full on-chain status to ensure verifiable "authenticity."

At the same time, the historical moment when NFTs first emerged in 2017 cannot be replicated. Therefore, no matter how Larva Labs and Hollywood reinterpret them in the future, the historical status of CryptoPunks will not be affected.

However, insufficient licensing of intellectual property rights will indeed impact the next evolution of most classic NFTs.

Unlike traditional art collectibles, classic NFTs have thousands of collector communities that could be a significant driving force for the advancement of crypto. If this community is not granted the rights to reinterpret or engage in large-scale commercial operations, it will greatly suppress their enthusiasm for co-creation.

Most great works of art are products of their time, and artists themselves find it challenging to remain at the forefront of their era. If the future development of the CryptoPunks story relies solely on Larva Labs and Hollywood, their value may be limited to commemorating history.

Community—The Driving Force of NFT Evolution

The Bored Ape Yacht Club, which was born in April 2021, quickly became the second top asset in the avatar NFT space after CryptoPunks due to its adept use of community power. Unlike CryptoPunks, Bored Ape Yacht Club granted all commercial rights to NFT collectors from the outset, igniting tremendous enthusiasm for co-creation among the collector community.

Bored Ape collectors have already created magazines, animations, novels, skateboard series, craft beer brands, and clothing brands based on their Apes. There is a strong sense of identity among Bored Ape collectors, leading them to support each other's created content or products.

Goner, the founder of Bored Apes, holds a very supportive attitude towards this: "Anything created by a collector enhances our brand."

Larva Labs' new work Meebits launched in May 2021 with a much higher starting point than Bored Apes, with its initial auction starting price reaching 2.5 ETH, while Bored Apes' issuance price was only 0.08 ETH.

Meebits' high starting point also means it only gathered a wealthy community. Wealthy communities are willing to invest capital but find it difficult to dedicate much time and effort to reinterpret their NFT collections or frequently communicate and collaborate with community members. Thus, the community influence of Meebits quickly lagged far behind that of the concurrently launched Bored Apes.

As of today, the floor price of Bored Apes is 39 ETH, while Meebits is only 5 ETH. The story of this dark horse's comeback is rooted in the power of community.

Cultural Lego—A New Paradigm for NFTs

In the past week, the NFT project Loot, consisting of black text on a white background, suddenly became the hottest meme in the crypto world.

At first glance, it seems absurd, with eight lines of randomly generated text listed plainly on a black background; in contrast, the low-resolution images of CryptoPunks seem like a high-quality production. It was initiated by Dom Hofmann, founder of the social app Vine and NFT project Blitmap, and each Loot NFT represents a set of equipment for an adventure game, devoid of images and data, and was free to mint, with a total of 8,000 sets in the first edition.

In this extremely simple NFT project, crypto industry giants saw the future of NFTs, even the foundational paradigm of the metaverse.

Bottom-Up Approach

Famous NFT investor Tandavas on Twitter first pointed out that Loot is disruptive because, prior to it, NFTs were created through a top-down value creation approach, while Loot is bottom-up.

Previous NFTs were designed by creators with the main content already established before being handed down to collectors, whereas Loot requires collectors to add images, stories, and games to this black text NFT to truly give it value.

Co-Building Community and Ecosystem

Ethereum founder Vitalik Buterin strongly agrees with the co-building philosophy represented by Loot. He stated on Twitter: "I think the philosophy of the Loot project is correct; anything created by anyone is a form of existence, and what causes different outcomes is how people continue to build on it."

AAVE founder Stani Kulechov proposed the concept of Loot-verse, saying, "The entire Web 3.0 community is building the Loot-verse; what are you doing?" He even changed his Twitter name from Stani.jpg to Stani.txt.

Loot has built an active community and a rich ecosystem within a week.

A token called Adventure Gold (AGLD) was airdropped to all Loot holders, instantly becoming the currency of the still-blank Loot universe. Adventure Gold itself is a game project that has yet to be developed, but this blank token, connected to Loot, overnight achieved a market value of $300 million, closely rivaling leading metaverse game SANDBOX.

Projects like LootRealm (Loot Territory) and LootCharacters (Loot Characters) have also emerged to fill in elements like spatial maps and character roles for the Loot-verse.

At the same time, many are creating visual content and scripts based on Loot's text, and even a Chinese team has developed a Chinese version of Loot, airdropping it to Loot holders, garnering attention from AAVE's founder.

Loot is an almost blank canvas, yet it possesses immense allure for collaborative creation, construction, and dissemination.

Simplicity and Composability
NFT veteran Shen Yu believes that the core of Loot lies in the limited performance of the blockchain, which cannot support overly complex applications, so it must be presented in an extremely simple way on-chain while ensuring composability.
Loot allows different games and metaverses to share a set of scalable attributes, creating the most fundamental and even cross-chain NFT framework.
Ethereum of the NFT World
During the peak fervor for CryptoPunks, people often compared its value source to Bitcoin in the NFT world, representing a cultural symbol. The consensus and belief of NFT OGs made it a new identity symbol.
The emergence of Loot reminds people of early Ethereum; although it is still just an experiment, it bears striking similarities to Ethereum.
VariantFund researchers summarized:

Perfectly conceived by legendary figures
Interest immediately floods into an open ecosystem
2017 ICO frenzy -> Loot derivative frenzy
World computer -> foundational layer of the metaverse
Dissent from Bitcoin players -> Dissent from CryptoPunks owners
The earliest adopters reap wealth rewards and have natural incentives to reinvest in the ecosystem
Most importantly, builders continue to create a plethora of cool things
Loot's programmability and composability provide new imaginative space for NFTs, just as Ethereum has birthed numerous flagship projects like MakerDao/Aave, Loot may also have the opportunity to give rise to the Maker and Aave of the NFT world.
Breaking Scarcity
Since Loot represents a new paradigm, the traditional approach of spending money to grab scarce NFTs may not be the right way to participate. Founder Dom has consistently been reluctant to let his project become a game for the wealthy; he has stated: "People shouldn't need an NFT to participate in the game."
This past weekend, he also put his words into practice by launching the dynamically supplied More Loot. The project has a tentative cap of 1.3 million MLoot tokens, with an annual increase of 250,000, allowing more participants to join the ecosystem at a low cost. This move also caused the floor price of Loot itself to drop sharply, from a low of 19 ETH to 6 ETH.
The Crypto Era Does Not Need Disney and Hollywood
In the past week, we have seen two completely different directions for NFT development: one is Larva Labs signing with Hollywood, and the other is Loot launching an open co-creation wave.
The former represents the traditional cultural industry centered around intellectual property, with Larva Labs becoming more like Disney, profiting from IP licensing while selling expensive IP derivatives. Their NFTs are essentially IP derivatives, with the central team creating the IP and then using NFTs to turn them into ownable products.
Loot, on the other hand, breaks away from the framework of centralized intellectual property creation. The principle of intellectual property is to protect the "expression of ideas" rather than the ideas themselves. Loot's starting point simplifies expression to the extreme black text on a white background; it is closer to an idea, designing a mechanism for the entire Loot-verse similar to "cultural Lego," where anyone can continuously contribute to the Loot-verse based on freely shared modules.
In 2000, when I was still a law student, I was fascinated by a Copyleft movement in the American legal community. It argued that while traditional copyright aims to protect originality, its excessive use actually limits a society's creativity, as cultural innovation is fundamentally based on the extension and mixing of previous works.
The initiator of the Copyleft movement is legal scholar Lawrence Lessig, and the phrase "Code is Law," commonly used in the crypto community today, was first proposed by him in 1999.
With Loot, I once again see the spirit of Copyleft. Previously, many NFT participants merely profited from hoarding and speculating on later arrivals, but now every participant should become a builder to add value to NFTs together. Even though minting a Mloot NFT still requires spending dozens of dollars in gas fees, it is significantly more accessible compared to the current floor price of Loot, which has once again surpassed 10 ETH.
Epilogue
Recent changes in crypto assets have been dizzying. While people are still puzzled about why a JPEG profile picture can sell for a million dollars, text-based NFTs have emerged, single-handedly transforming previous NFTs from "popular" to "classic."
At the same time, I see a main thread becoming increasingly clear: Crypto assets are practicing their unique mission of social and cultural transformation. The volatility of assets and the wealth effect are merely masks that attract participants; the next star project will always be the one that is most disruptive to the existing social and cultural mechanisms.
When I showed NFTs like Meebits to friends in the traditional cultural circle, they felt that realistic, 3D, exquisite cultural products were no challenge for them, but when I placed the black text on a white background Loot before them, their faces filled with shock, confusion, and anger gave me unprecedented confidence.