How CC0, Low Fidelity, and On-Chain Metadata Unlock the Composability Potential of NFTs

Original: Building Expansive NFT Universes: CC0, Fidelity, & On-Chain Bundling

Author: Simon de la Rouviere

Compiled by: Kxp, Rhythm BlockBeats

NFT creative universes are in a phase of crazy experimentation: emphasizing free IP, new economies, and recombination. As these universes develop, success primarily relies on the following three elements:

1. Loose licensing, mainly in the form of Creative Commons Zero (CC0). This model encourages creative recombination, benefiting both original creators and imitators.

2. Focus on low fidelity and metadata that can inspire imagination, as lower fidelity ensures that recombination can have more tangible interpretations.

3. By classifying metadata into on-chain bundles, projects can guide expansion after bundling.

This excites me greatly because combining these three elements can create a new media franchise that is hard to ignore. It will create free, rich IP and generate wealth for all collaborators. Next, let's delve into these three elements:

1. Legitimacy and the CC0 NFT Flywheel

An NFT refers to a typical interpretation: for example, a link to a regularly published document or an on-chain image. The ownership of the NFT is separate from the copyright of the referenced image, and in many cases, regardless of any changes the NFT undergoes, the copyright remains with the original creator. Thus, NFT holders can only enjoy ownership of the referenced image without any other means of using it, especially for commercial purposes.

The value of an NFT comes from the content it represents, and the immutable timestamp engine on the blockchain can legitimize specific references. Various "signals" have been encoded, leading people to want to own them even though they know the reference has no token value.

While the image itself is often immutable coding and adds a significant portion of desirability, who "signs" the NFT is also very important. Most of the value of an NFT comes from the legitimacy of the timestamped encrypted signature of specific individuals, which also confirms the importance of the "signature." It serves as a focal engine that can embed social relationships into cultural objects over time.

This legitimacy engine, built on the ownership of signed cultural objects, also empowers derivative works.

Previously, creators of derivative works often had to meet the following conditions:

1) They could not commercialize the derivative IP;

2) They could not retain any revenue they directed upstream (derivative works direct attention upstream and become potential income sources for original creators).

For original creators, tacitly allowing derivative works means they can accept losing control over potential income and their own creativity, but poor-quality derivative works can also have negative impacts on them.

For derivative works using traditional copyright NFTs, these incentives still exist; however, if original creators allow free commercialization of intellectual property, the incentive effect becomes stronger. With NFTs, the positive incentive value effect becomes even stronger because: derivative creators can not only earn revenue from their derivative works but also earn returns from the attention they direct upstream to the original work.

If derivative creators own the NFT of the original work, they can earn double income. It's like successfully creating a derivative Harry Potter story sequel and earning from the sales of Harry Potter wands. In some cases, this is possible (for example, if you own Disney stock and create an excellent Star Wars derivative work). Of course, this is only feasible if you can create derivative works; that is, as more people join, the CC0 model will become more promising.

Original creators hope so too, as this way they can not only earn royalties from secondary sales but also benefit from the value growth upstream, paving the way for future sales (original or derivative).

The flywheel process is as follows:

• A creates CC0 content

• A sells CC0 content NFT#1 to B

• B decides to create derivative content from CC0

• B sells the derivative content NFT#2 to C

• C loves this derivative work and decides to purchase the original NFT#1

• Therefore: A earns royalties from the sale, B earns income from selling the derivative work + selling the original NFT, and C collects two versions of the NFT

• C decides to create a derivative work of NFT#2 or NFT#1 and enters the next round of the cycle

This model has been practiced in various NFT projects. Although it is still in its early stages, many projects have adopted this model: beginning to recombine free IP in line with trends.

Here are some real examples:

Jenkins The Valet

In this project, a team categorizes bored apes as storytellers, narrating stories that take place in a yacht club. Notably, to participate in this project, they sold a set of their "keys" NFTs.

Yuga Labs' Upcoming Otherside

Yuga Labs (the creator of the Bored Ape Yacht Club) has set a scene in its upcoming virtual world showcasing the possibility of many different NFT universes "coexisting."

For example, the intellectual property agreement of CrypToadz states: "To the extent permitted by law, Gremplin has waived all copyright or related rights to CrypToadz."

Renegade Comics

Renegade Comics is an example of acquiring IP images from the NFT universe and turning them into comics. The comic shown below comes from Chain Runners:

Blitwear

Inspired by Blitmaps, this project upgraded it to create digital fashion that can also be exchanged for physical clothing.

Nouns Center

There are many such derivative works, and we cannot catalog them all here. NounsDAO even created a website to catalog all its derivative works: https://nouns.center/projects.

Interestingly, the low fidelity of the original reference has become an emerging trend: these references are often pixelated or simplified. This may be due to many projects referencing the early pixelated CryptoPunks, but now low fidelity projects are becoming increasingly valuable. I believe that in the future, more projects will choose low fidelity or even move towards metadata.

2. Expanding with Fidelity and Metadata

When you were a child, a branch had infinite possibilities in your eyes: it could be a sword, a gun, or a magic wand. However, a plastic toy sword could never become a real gun. Sometimes, the more abstract an object is, the greater the possibility of it being recombined or interpreted. So, higher fidelity does not always lead to better images.

2022 4K HD version

90s CRT TV version

To expand and spread, the more interpretable the exemplary reference is, the easier it is to disseminate. It's like the space for imagination offered by a branch is much broader than that of a high-fidelity toy.

Take Chain Runners as an example; their own expansion pack is increasing the fidelity of their typical reference.

We can note that the concept art derivative works of HyperLoot have increased the resolution for Nouns, CrypToadz, and Blitnauts.

Many NFT games are moving in this direction.

Some critics in the gaming industry argue that you cannot reuse NFTs through games because that is not how games should operate. While this is true, it is not important because with CC0 and the foundational low fidelity, using NFTs in games is merely to reinterpret classic images/files. Some projects simply allow you to access additional files that can be used in games, but even then, it is not necessary. Chainrunners XR, Meebits, and Forgotten Runes provide you with the corresponding files, but if it is CC0, a recombined work does not need to rely on classic files/images.

Value comes from reinterpretation, and if the fidelity of the typical reference is lower, reinterpretation becomes easier. In the future, NFT projects will only disclose some features when releasing classic versions, and their first derivative works will only be conceptual image displays. Thus, what was previously a single series of collections now becomes two.

The only issue is that we may lose control over creativity. Therefore, this flywheel does not apply to all creative works. Some projects are willing to hand over creative control to others, while some are not. You can still see this opposition in some loose licensing projects, such as Fluf World (which is not CC0).

AngelBaby is a derivative character from Fluf World, and these NFTs have undergone significant changes in their application within music projects: they can be used to create virtual bands/artists.

Here is the intellectual property agreement from Fluf World:

As long as you have ownership and control of the relevant NFT, you will have non-exclusive commercial rights to the FLUF and the underlying artwork of that specific character, as stipulated in our licensing agreement. You will not have any rights to use the FLUF World brand or any of its registered trademarks, including the FLUF logo, without the explicit written permission of the NF Labs team. The ownership of the NFTs will be fully regulated by our smart contracts. Under no circumstances can we seize, freeze, or otherwise modify the ownership of any NFT.

You may transfer some rights to other commercial projects, but the transfer of your NFT will be subject to the rights you have already transferred. You can print your FLUF World character on clothing or merchandise, include it in video games and video projects, or do anything with it. You cannot use the name "FLUF" on any commercial product unless directly connected to the name or number of your FLUF, indicating that you own that NFT. You may not use your FLUF in any project or derivative work involving hate speech, racism, pornography, or any illegal content.

These provisions are quite reasonable because any derivative work filled with hate speech would affect the entire project and all subsequent derivative works. We cannot truly avoid such risks, but we can continuously strengthen the project's stylistic characteristics, so derivative works will also become positive and sunny, with further expansion possibilities.

So far, most of the projects I have described are primarily avatar or identity projects. By nature, they may not spread widely. Combining CC0 and low fidelity will certainly help expand dissemination, but keeping it as is is also perfectly fine. For example, Chain Runner does not force you to promote it. Currently, many of these projects are social clubs and hope to expand into the metaverse (like Yuga Labs' Otherside). Therefore, they invite you to use their NFTs and set them as your profile picture on Twitter and Discord.

However, avatar projects are just one category of projects; there are many categories yet to be explored. In my view, we must first have avatars, but once we have avatars, we can start exploring other projects. To fully leverage the metadata-first approach, we must place the metadata layer on-chain. Currently, for many projects, metadata exists independently. It is an API for expansion, but it is done in a web2.0 manner and does not exist within the same modular framework. If the metadata of the NFT world exists within the same modular framework, it will become easier to combine and expand in specific directions.

In addition to avatars, loot combinations are also a new development trend. Let's take a look at how Loot and Dopewars utilize these components to build expansive NFT universes through CC0, low fidelity, and expansion into specific domains.

3. Loot Combinations: Guiding Expansion

Loot aligns with the current PFP craze, and their loot combinations are purely metadata about features. Its typical reference is merely a combination of text records, while other information, including statistics and images, is intentionally omitted.

Without reference images, people can interpret their understanding.

You can mint accompanying NFT images at Loot Character.

Hyperloot is a new interpretation.

In addition to direct display using information from the package, because the NFT features are on-chain, other NFT projects can incorporate them into their derivative works: it is precisely because the metadata is on-chain that these projects can emerge.

Genesis Project is an example:

Each bag has at least one item with the "of" suffix. Collectors find that these loot combinations have been scrambled by the initial or "Genesis" adventurers. Therefore, the Genesis project is a collection game aimed at refining these loot combinations into "mana" based on these "of" suffixes. These suffixes are now separated from the original combinations, and if successfully pieced back together, you can summon and recreate a new combination to represent these Genesis adventurers.

Due to this combinability, it neither produces direct derivative works nor related derivative works. Loot Realms is such an example.

Here is another example of utilizing low fidelity for expansion.

These are layered, and this interaction occurs at the metadata level, with expansion guided by on-chain bundling.

Another example of expanding by bringing metadata on-chain and into bundles is: Dopewars. Its example NFT is also just a text package.

In Dope Wars, the example NFT can be refined into independent equipment NFTs.

This can then be recombined into a Hustler.

The emergence of loot combinations indicates that all elements can be recombined, with vast prospects: CC0 IP, low fidelity example NFTs, and guiding expansion through bundling and on-chain metadata.

Even in the NFT space, the metaverse does not have just one typical representative; almost all NFTs are combined with their classic interpretations. For example, the image below shows the area map of Cryptovoxels:

Its metadata shows you the features of the image.

However, it does not show you the content within, and it links to off-chain metadata, so you cannot use this information on-chain. In my view, the future development of the NFT universe will mainly rely on consumable on-chain loot combinations. Moreover, compared to Cryptovoxels, it may resemble Loot Realms more. The interpretation of experiences will depend on specific UIs (or "viewers"), with metadata becoming mainstream, followed by interpretations. Currently, the so-called metaverse is a diverse world composed of metadata.

I believe standards will emerge soon, after which we can use this standard to customize how items are placed in bundles and how they fit together.

Loot combinations are just one example of expansion through categorization; there are many other categories we have yet to explore. A true metadata map will be able to perform operations such as adding/building/expanding on a piece of land. In the future, we will discover more ways to recombine specific types of NFTs. "Record books" will help us bundle metadata. Over time, more metadata will be placed on-chain, allowing us to track and bundle events into specific "record books," while the types of "record books" will also increase: telling stories through on-chain events.

Takens Theorem has been notorious for tagging and linking events to NFTs.

In their project called "Mesh," your NFT changes based on the historical projects you own and its relationship with all other NFT holders in the mesh. Of course, posting on this art network will also change everyone's NFTs.

It visualizes our shared, public framework that is timestamped. Moreover, it resembles a vast story universe, linking our avatars together based on historical records.

Questions and Conclusions

My assessment may not be entirely accurate. Is low fidelity really important? Famous NFT collections (like BAYC) do not have low fidelity images and do not collect on-chain metadata in bundles, but that hasn't significantly affected them. Therefore, in my view, while these three elements have some effect, what is more important is the greater possibilities they bring. Loot is the most typical example, but I do not believe it will be the last. As for CC0, is it viable in the long term, or is this flywheel not as powerful as we expected? To what extent can on-chain metadata and bundling achieve expansion?

These questions will be tested over time, and at the very least, it provides fertile ground for emerging cultures. In the future, with timestamp engines, open APIs, and free culture, how many more possibilities will they create? At least, for a long time after we leave, we will embed the friends we made along the way into it.