Chapter 9: Utility-Based NFTs

CoinGecko
2022-07-07 15:01:11
Collection

Many people think NFTs are just for vanity, used as avatars or displayed in virtual art galleries. However, certain NFTs can carry some form of utility and grant owners special rights. From decentralized naming systems to attendance verification systems, NFTs can help improve user experience and assist creators in ensuring that the right participants receive appropriate rewards.

Imagine a decentralized name that enhances the readability of blockchain addresses, rather than random strings, making it easier for users to share their blockchain addresses. Or creators of limited edition NFTs unlocking special privileges, such as exclusive access to private groups or events. The possibilities for these utility-based NFTs are endless.

We will explore some of these NFT projects that aim to add compelling use cases, giving NFTs useful functionalities, such as Ethereum Name Service (ENS) and Proof of Attendance Protocol (POAP).

Ethereum Name Service (ENS)

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As the name suggests, Ethereum Name Service (ENS) is an open, decentralized naming system built on the Ethereum blockchain. The main goal of ENS is to map machine-readable identifiers, such as Ethereum addresses and InterPlanetary File System (IPFS) content hashes, to human-readable names.

For example, we have associated the Ethereum address 0x4Cdc86fa95Ec2704f0849825f1F8b077deeD8d39 with the ENS address coingecko.eth. This makes it easier for other users to remember and reference a specific address using human-readable words instead of a long string of random characters.

It works similarly to how internet domain names function. For instance, https://www.coingecko.com/ is mapped to the IP address of our server where CoinGecko is hosted, while coingecko.eth is mapped to our Ethereum address.

The functionality of ENS is akin to the traditional Domain Name System (DNS) used by websites around the world, and ENS .eth domain owners have complete control over their subdomains. Since we control coingecko.eth, we can create new subdomains like buzz.coingecko.eth and configure them according to our preferences. All ENS registrations comply with the ERC-721 standard, meaning they are transferable NFTs.

When they are under your control, you can configure them to have additional records, such as addresses and social media links. As shown in the image below, ENS holders can receive currency from other blockchains by including wallet addresses for Bitcoin, Litecoin, or Dogecoin.

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ENS ownership is not permanent, as they need to be renewed upon expiration. You can check the expiration date on the ENS account dashboard and even set reminders. The cost of registering a .eth domain varies based on the number of characters in the name. Due to the smaller pool of available names, shorter names are significantly more expensive than longer ones.

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This covers the basics of ENS! Developers have more technical use cases to utilize ENS and integrate it with their applications. However, for regular and new users, ENS is a great way to adopt another self on-chain, allowing you to send and receive funds in a simpler manner. Before we move on to the next section, here’s a step-by-step guide on how to register your own ENS!

How to Register ENS

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Step 1

Go to https://app.ens.domains/. Make sure to connect your wallet to the Ethereum mainnet beforehand.

Then, search for a name you want to register. In this example, we will look for "howtonft2021".

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Step 2

If the name is unavailable, the expiration date will be displayed. If it is available, it will be highlighted in green.

Click on the available name.
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Step 3

Select the number of years you want to register the ENS domain for.

You will see the amount you need to pay in ETH (including transaction fees).
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Step 4

After selecting the registration period, click "Request Registration".

You will need to confirm the first of two transactions to complete the registration.

Confirmed the first transaction.

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Step 5

After the first transaction is completed, you need to wait 1 minute to ensure no one else is trying to register the exact same name.

Once the waiting period is over, click "Register" to confirm the second transaction.
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Step 6

You’re all done!

You can manage your ENS domain by visiting your account and selecting the relevant name.

Here, you can transfer ownership, add records, and update your name before it expires.

Proof of Attendance Protocol (POAP)

Proof of Attendance Protocol (POAP) is an application that records the events you have attended. For example, if you attended a concert, a physical ticket can serve as proof of your attendance. However, physical tickets can be misplaced, and their evidence can be lost forever.

With POAP, attendees receive a digital badge represented as an NFT when they participate in a specific event. Event organizers can provide POAPs to attendees as mementos of attending the event, further encouraging attendee participation and serving as a bridge to extend the relationship between event organizers and attendees.

Each POAP has a unique design representing that event. Organizers can also add features such as private chat rooms, raffles, and even send symbolic airdrops to POAP holders, creating a richer experience for attendees. Additionally, event organizers can ask attendees to vote on future events.

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Graphic NFT badges designed by POAP

For collectors, this provides a way to bookmark their life experiences. Each POAP series will look very different and unique. POAP is not just a collection of badges. It offers a story that can be shared with others. Collectors can access private chat channels using the badges as verification, allowing for meaningful interactions with others who have similar interests.

The cost of minting POAPs is low because POAP NFTs are issued on the xDai blockchain, which is an Ethereum sidechain with fast and inexpensive transactions. Event organizers can decide the timeframe during which the event can be claimed and distribute POAPs to anyone who attended the event via a link or QR code.

The only requirement to claim a POAP is to participate in the event and use an Ethereum address to claim the POAP. The POAP then appears in the address's collection and can be viewed at https://app.poap.xyz/. Below is a guide on how to apply for your POAP NFT for each event.

Step 1

Click the link provided for the event.

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Step 2

Enter your Ethereum address in the box.

Click the "Claim POAP Token" button.

Project Examples


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Collab.Land

Collab.Land has a use case similar to POAP to create more active communities. Owning an NFT from a collection can serve as a verification process for entering gated Telegram or Discord communities.

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Handshake

Handshake is a decentralized naming protocol where top-level domains are auctioned off every two weeks. Users can participate in these auctions using their native currency, HNS. Auctions are conducted on a parameter base, a handshake registrar, and an exchange.

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Unstoppable Domains

Unstoppable Domains allows users to create blockchain-based domain names that can be used to retrieve and send over 275 different tokens. While it is similar to ENS, Unstoppable Domains allows users to own the domain name without renewal fees.

Conclusion

From ENS and POAP, it is clear that NFTs are definitely more useful than most people imagine. Some projects, like APYVision, offer yield farming tools and analytics, even using NFTs as a subscription form for premium services. As long as you hold an NFT, compared to holding fungible tokens, you can gain access to professional features for a fixed period.

We also use NFTs in the cryptoverse as a form of entry into our CoinGecko Premium+ Telegram and Discord groups! Collaborate using the tools provided. On the land, users holding these special NFTs can connect their wallets to verify ownership of their NFTs to gain access to our exclusive group.

Beyond the crypto world, NFTs have many other applications, such as movie and event tickets.

Entrepreneur Mark Cuban is trying to use NFTs to represent sports tickets for the Dallas Mavericks, allowing fans to purchase and resell. Each occasion may have commemorative designs, and a secondary market for these NFT tickets can exist, allowing tickets to retain some form of value in the future. This is just one example of how NFTs will continue to pave the way for smoother and more transparent ownership exchanges in the future.

ChainCatcher reminds readers to view blockchain rationally, enhance risk awareness, and be cautious of various virtual token issuances and speculations. All content on this site is solely market information or related party opinions, and does not constitute any form of investment advice. If you find sensitive information in the content, please click "Report", and we will handle it promptly.
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