OFR Partners: Reflections on Attending NFT NYC and Future Trends

Original Title: “NFT NYC Summary & Reanalysis of NFT Value”
Author: jxblock.eth, Partner at OFR

Part.1 Impressions from NFT NYC

No.1 Never buy a main stage ticket.

The organization of the main stage is extremely chaotic: there is no conference agenda available on-site or on the official website, leaving attendees completely unaware of the order of speeches or the backgrounds of the speakers; there is no ticket checking at the main stage, allowing anyone to enter freely, making the $1000+ ticket a complete waste; the number of speakers is too high, resulting in a lot of low-quality and inefficient presentations, and panel guests are unfamiliar with each other, with no rehearsals beforehand.

In short, don’t go to the main stage.

No.2 Numerous side events, not effective but exhausting

Various project teams and fund offices host after parties and side events with numerous names, and it seems that the NFT circle is oblivious to the winter of the cryptocurrency market crash, with events generally packed. Therefore, it is essential to plan which events to attend in advance; it is not necessary to go to every event, and there is no need to run to 3-4 events in one night (like I did), as it can easily drain your energy, and socializing lacks purpose, leading to random and low-quality interactions, with most attendees being the same group of people.

It’s best to register for tickets or invitations in advance and arrive about 10 minutes early; otherwise, you may face long queues in the crowd or be denied entry by security if you rely on finding acquaintances to get in. (This does not apply to women, as they come with their own access cards, iykyk.) Of course, if the market is even more bearish next year, there may not be any queues.

No.3 NFT holders events are must-gos

Blue-chip projects like BAYC, Doodles, Coolcats, Azuki, etc., held holders events, requiring NFT ownership and registration to participate, followed by a lottery for the guest list. These events generally have very high quality, with diverse formats, such as Doodle’s launch event, Azuki’s "Enter the Alley," and BAYC even invited Snoop Dogg and Eminem (missing Eminem was truly heartbreaking for several days). Moreover, the participants are often seasoned players in the NFT space, making the quality much higher than typical after parties.

It is advisable to closely follow the Twitter and Discord of various blue-chip projects or your favorite projects two weeks before NFT NYC to ensure you can register for events as soon as they are announced, significantly increasing your chances of being selected. If you miss out on some events, you can use your winning add-one quota to swap with others.

Overall, Doodles prepared the most thoroughly, BAYC spent the most extravagantly, Azuki had the most Eastern flair, and Goblintown was the most cult-like. CloneX, as a major blue-chip, failed to organize a decent event, making it the most disappointing. Additionally, the collective absence of Solana’s NFTs reflects, to some extent, that Solana’s NFT projects still lack long-term investment planning and the ability to reach mainstream audiences.

These are some insights from my first attendance at NFT NYC; compared to seasoned players, I stumbled into many pitfalls and exhausted myself. I hope this is useful for everyone.

Part.2 Further Discussion on NFT Value and Future Trends

Looking back at the development of NFTs, they were initially defined as in-game assets. This path began with CryptoKitties and a series of early crypto on-chain games with NFT elements, which have since branched into two categories: one led by Axie, focusing on various P2E games where NFTs serve as tools for earning; the other includes projects like Decentraland and Sandbox, which profit from selling virtual land, although the purchased land currently does not generate direct returns.

Later, NFT emerged as a category represented by platforms like SuperRare, expanding NFTs from game assets to collectibles. Art, in essence, is a luxury niche consumer good, and its higher participation threshold means that art NFTs can only circulate within small circles. However, art NFTs have proven through auction events like those of Beeple that NFTs can be high-priced products. As a result, although the characteristic of low liquidity in NFTs has not disappeared, the emergence of high-priced NFTs has boosted the overall trading volume in the NFT market.

The real explosion of NFT application scenarios came from PFPs (profile picture NFTs), which most people did not anticipate. The reason lies in the fact that the value of PFPs is rooted in web2 applications; the applications we use for avatars are all web2 applications, such as WeChat, Twitter, Telegram, Instagram, etc.

The value discovered by PFPs is the unmonetized value of Web2. Before the emergence of PFP NFTs, there was no window for social network avatars in web2 applications to create paid scenarios, representing a new unexploited territory for monetizing social relationships on social apps.

Previous analyses have commonly attributed the value of NFT PFPs to the sense of flaunting or social recognition, but cultural recognition is inaccurate. Social recognition and recognition within cultural circles are merely results of PFP NFTs acquiring value, not the reasons for generating value. The real reason is that NFTs have uncovered the residual value in web2 social relationships that had not been previously explored.

So, the question arises: what will be the next hot NFT application scenario?

Let’s take a step back and consider another question: why did the original PFP NFT, CryptoPunks, emerge in 2017, but its price did not exceed $1000 until January 2021?

The reason is simple: initially, CryptoPunks were auctioned as NFT artworks, with no distinction from Beeple, Pak, etc.; there was no category for NFT avatars. The following excerpt is from a New York Times report dated March 11, 2021:

After the rare versions of CryptoPunks were hyped as crypto artworks, their prices increased, and naturally, the prices of non-rare versions rose as well. More importantly, since Punks are avatars, buyers naturally began using them as profile pictures on social apps, leading to a secondary dissemination effect in their social networks after changing their avatars, which in turn increased the number of followers and purchases of Punks. Therefore, I tend to believe that the emergence of this new category of PFP avatar applications was a series of "accidental" encounters.

In terms of attribution, we can only say that the necessary conditions are for quantity and price to find their point of explosion: quantity - the web2 value of social networks; price - the auction and speculation of art NFTs. However, this is not a sufficient condition, so finding a disruptive innovation opportunity is challenging; sometimes it really is just luck.

Of course, we cannot wait for luck to come our way when working on projects. We may miss the opportunity of CryptoPunks, but the success of BAYC and Azuki has traceable patterns: clear image positioning, high-quality artistic production, refined community culture, etc. This type of analysis is abundant and will not be elaborated further.

Returning to the initial question, what are the new opportunities for NFTs beyond PFPs?

To spark some ideas:

1. Category Iteration

The prices of top NFTs are not low. Previously, the technical hope was to simulate the trading of ordinary tokens through fragmentation, but the problem is that fragmented tokens are not NFTs themselves; traders are not actually buying and selling NFTs, but rather fragmented NFTs.

I believe this issue can be addressed differently: the granularity of NFTs should be minimized. For example, if a series issues 10 to the power of 8 NFTs, then the price of each NFT will become very small. Using batch aggregation trading tools similar to the next-generation Gem/Genie can create an experience akin to trading fungible tokens.

This only leaves one question to solve: what should such a massive number of NFTs represent?

It certainly cannot be avatars; there aren’t enough people on Earth to use that many avatars. It must be a category of some extremely large quantity of objects. Perhaps notes? Code? Pixels? Addresses?

So what does each NFT represent? Does it have meaning when combined, or does it not? I do not have answers to these questions yet.

2. Scene Expansion

From the previous exploration, we found that the application scenarios of NFTs uncover unmonetized social value.

Further, are there other scenarios we use daily that have never been monetized?

For example, the short videos we scroll through every day, or the messaging chats we engage in daily, the Twitter feeds we browse, the maps we use? Which scenarios can naturally incorporate NFTs?

The complexity of these questions is too high to expand upon at this moment.

But it can also explain why I am not optimistic about most current music NFT products; simple sales models are essentially repeating products that have already been monetized, which is not very meaningful.

In summary, this serves as my reflections and notes from attending NFT NYC, and I hope to discuss them with like-minded individuals and entrepreneurs.