Buidler DAO Locust Picks: Must-Read Articles on NFT Narrative Exploration
This issue focuses on NFTs and some new gameplay ideas from the community recently.Author: Buidler DAO
Deep Selection is our recommended must-read articles under this week's market hot topics, sourced from Buidler DAO's Cognitive Locust Program daily push; here, senior readers of Web3 Native will extract the core content and personal deep thoughts from the complex information sources.
This issue focuses on NFTs and some new gameplay ideas from the community recently. From the latest intelligence on popular NFTs to case studies of NFTs combined with real-world marketing; from the analysis of NFT lending models to discussions on their liquidity, extending to explorations of AMM mechanisms; from questioning the necessary nature of designing game NFTs to envisioning proof methods for new traffic entrances. This issue covers various aspects of NFT information, read on to understand the core points.
Full text 4900 words, estimated reading time 12 minutes Article Overview:
01/ An Exploration of a New NFT-AMM Mechanism @will
02/ APE Staking Approaches, Regulatory Pressure, Reassessing Yuga Labs' Ecological Value @ Frank
03/ Seeking Liquidity? An Overview of NFT Lending @CatBoss
04/ Why Are Gamers So Averse to NFTs? @xiashuang
05/ Is There a Better NFT Lending Protocol? Existing Problems and Solutions @Frank
06/ Uncovering the Growth Story of Cross-Border Influencer GaryVee, Why Did VeeFriends Succeed? @shuang^
07/ Understanding the Proof of Attendance Protocol (POAP): Will It Become an Entry Point for NFT Adoption? @will
08/ How Did Reddit Make 3 Million People Unknowingly Own NFTs? @Abby
An Exploration of a New NFT-AMM Mechanism @will In the future, NFTs will be present in various fields of the Crypto world, such as Gamefi, DID, DeFi, etc., all of which will have an inseparable connection with NFTs. However, the liquidity of NFTs has not been well addressed so far, and the existing sudoswap's enhancement of NFT liquidity raises questions. Therefore, the author proposes a liquidity solution of "Fraction+Token+AMM."
(1) Fraction: The purpose of fragmentation is to significantly lower the threshold for individual transactions, allowing ordinary players in the NFT circle to participate normally;
(2) Token: After fragmentation, ERC20 tokens will be generated. The purpose of this is to eliminate the characteristics of fragmented NFTs, making them similar to traditional fungible tokens, thus enabling various explorations using fungible token ideas;
(3) Uniswap V3 AMM: With the tokens, a mature Uniswap solution can be used to establish an AMM mechanism, allowing for various LPs, buying and selling transactions, liquidity solutions, etc. If this solution is adopted, the affected participants will include:
Those who want to buy blue-chip NFTs but currently lack funds (NFT insiders)
NFT swing traders (NFT insiders)
Those holding NFTs but need some funds in the short term (NFT insiders)
Project parties (NFT insiders)
Arbitrageurs (NFT insiders or outsiders)
Market speculators (NFT outsiders)
Thoughts Recently, many solutions have emerged in the market to address NFT liquidity, but so far, none have proven to be truly effective. I often ponder whether, in the future, as NFTs integrate into various tracks of Crypto, their speculative attributes will significantly diminish as a fundamental element of the Web3 world, making it necessary to persist in enhancing their liquidity? Just like real estate in the physical world, improving liquidity may actually affect its utility value; as a necessity, its utility value is what deserves the most attention. Future PFPs are merely a part of the NFT domain, a very small part of the Web3 world.
APE Staking Approaches, Regulatory Pressure
Reassessing Yuga Labs' Ecological Value at a Critical Moment @ Frank The NFT ecosystem built by Yuga Labs will empower the token ApeCoin ($APE), but the managers behind $APE are registered in the British Virgin Islands as ApeCoin DAO. Otherside is a project jointly invested and completed by Yuga Labs, metaverse infrastructure provider Improbable, and Web3 gaming giant Animoca Brands.
The Yuga Labs team is one of the strongest projects in terms of roadmap fulfillment among many projects in the NFT IP track. Known future events released through official channels include a staking system in collaboration with ApeCoin Foundation and Horizon Labs, expected to launch on 10.31, possibly a week earlier or later. This will be a key event affecting the short-term future price of $APE.
Current project risk points mainly include:
Insufficient Token Use and Value Capture: Currently, the token functions of $APE mainly lie in staking, payment, and governance, lacking truly meaningful value capture and consumption scenarios, with significant income from NFT transaction taxes not included in the token's value capture.
Rapid Inflation: The launch of the staking system and the unlocking of investors and team members will lead to a sharp inflation in six months to a year. Thoughts In the short term, the investment logic of $APE is clearly influenced by the launch of the staking system, making this investment opportunity worth paying attention to. In the medium to long term, facing pressures such as investor unlocking, the value capture of APE is incomplete, and caution is needed regarding high-level entrapment. Additionally, the article mentions that the Otherside metaverse is still in its early development stage, and the product has not officially launched; we need to be cautious about whether the scenarios designed by Otherside can support the long-term holding of crypto players. In the bear market, Sandbox and Decentraland only have a few thousand users returning occasionally due to gatherings or poker games, along with landlords who are reluctant to see land prices drop with the heat and often come back to check.
Seeking Liquidity?
An Overview of NFT Lending @CatBoss This article introduces four mainstream NFT lending models and the emerging NFT leasing model, providing a remedy for NFT holders who value cash flow. However, each model has its corresponding advantages and disadvantages, and NFT holders still need to choose the most suitable model based on their needs.
Peer-to-Peer: A convenient NFT lending platform, similar to a bank lending relationship. It uses a simple quoting system that allows anyone to lend and set terms without centralized or third-party intermediaries. Platforms like Arcade integrate multiple NFTs, allowing users to merge or "bundle" multiple NFTs into a single collateral asset.
Peer-to-Pool NFT Lending: Allows users to borrow directly from a liquidity pool rather than waiting for a suitable lender to match. Non-fungible debt positions (NFDP) allow borrowers to exchange DAI (a less risky stablecoin) for over-collateralized ETH (a risk asset) within MakerDAO's collateral debt position structure.
Non-fungible Debt Position (NFDP): A derivative of this structure that provides a similar transaction. JPEG'd is currently the only platform offering this structure, and it is limited to CryptoPunks, so the available market is very small, and the platform risk is also quite high.
NFT Leasing and Capital Leasing: Allow NFT holders to rent out their NFTs in exchange for upfront capital. Thoughts NFT lending and leasing provide cash flow to NFT holders. For borrowers, Arcade's method may be more advantageous, allowing for flexible loan terms. For lenders seeking quicker liquidity, they can choose peer-to-pool or opt for NFT leasing without using NFTs as collateral.
Regardless of the method, NFT liquidity in a bear market is challenging to leverage. At the same time, the application scenarios for NFTs are likely to evolve with market development, and their value needs to be unlocked further.
Why Are Gamers So Averse to NFTs? @xiashuang Blockchain, by nature, is more suitable for sharing or managing a common system and is not well-suited for the field of video games. Although a universal specification for video games could facilitate the application of blockchain, considering that video games must rely on innovative systems as selling points, this universal specification is likely to become a mere formality. Some believe that NFTs can be used to grant players rare honorary titles to recognize their achievements and contributions in games, but most of this data has already been managed through game-specific accounts or general accounts from game companies.
Selling game material resources (which belong to game development materials and do not affect the gaming experience) as NFTs does not improve the gaming experience, and so far, only NFT enthusiasts and speculators have paid close attention to this. Regardless of how heated these community discussions are, they do not bring any benefits to video game players. Additionally, there are plans to use NFTs to trade in-game items (items that players actually use in the game).
However, in online games, players' game records and save data are usually managed by servers, so even without NFTs, the uniqueness of items can still be ensured.
NFT games and the slogan "Play to Earn" actually require the premise that "players profit through speculation and resale." Therefore, it is natural for people to question, "Can players really make money?" If there are no active investments from individuals or organizations outside the player community, NFT games will present a structure of "players competing for in-game assets linked to cash." Some even directly criticize this structure as a "Ponzi scheme." Thoughts Minecraft's ban on NFT private server projects has led to player sentiment leaning towards prohibition, which is a frightening thing for the NFT market. Player support for NFTs is crucial for the future; if NFTs cannot achieve results in enhancing gaming experiences, educating players on technological literacy, and providing legal support, the relationship between player communities, NFT technology, and gaming companies may struggle to progress.
Is There a Better NFT Lending Protocol?
Existing Problems and Solutions @Frank From an absolute level, the total amount of NFT lending is not high mainly because NFTs are still long-tail assets; from a relative level, the low penetration of NFT lending is not due to a lack of supply and demand in the market, but rather a lack of lending protocols that efficiently match both parties' needs while adapting to the characteristics of NFTs. Lending protocols mainly address three issues:
First, efficiently match and facilitate the supply and demand of funds;
Second, securely store collateral;
Third, handle collateral according to agreements in case of borrower default.
The existing Peer-to-Pool and Peer-to-Peer models have not effectively solved the first issue; their matching efficiency is low, either with high implicit funding costs or high time costs. One could envision a Peer-to-Orderbook model that balances the advantages of both. For example, orders with the same collateral, loan amount limits, and terms but different interest rates could be centralized on an order book, allowing both parties to bid and match at different interest rate levels, thus reducing implicit funding costs and time costs, achieving higher matching efficiency. Thoughts The Peer-to-Orderbook model is similar to over-the-counter trading of financial derivatives and is an upgraded version of the Peer-to-Pool model, creating trading pools at different interest rate levels for counterparties, saving time for bidirectional matching. However, several issues remain unresolved; as long as consensus is reached using a pool, it will still rely on oracle pricing, making it a significant challenge to assess fair prices for NFTs.
Uncovering the Growth Story of Cross-Border Influencer GaryVee
Why Did VeeFriends Succeed? @shuang^ This discusses GaryVee's growth and the current market situation of the NFTs he launched. Each NFT in the first series of VeeFriends (Series 1) is based on one of the 268 traits originally hand-drawn by GaryVee, where he attributes the human qualities he admires to these characters, such as an ambitious alpaca, a responsible ant, etc.
Gradually, by continuously expanding the ecosystem of the VeeFriends series and providing benefits to its NFT holders, the VeeFriends series has now expanded to include multiple series such as Mini Drops, Book Games, Series 2, and Iconics. The integration of NFTs with consumption is also evident in the hotel service company he founded, where NFTs are applied, such as membership systems, allowing NFT holders to access FlyFish restaurant and various culinary, cultural, and social experiences. Flyfish member NFT holders can rent their NFTs to others monthly or resell them; there will be no repeated annual fees (not yet opened). Thoughts Three innovative and referable methods for promoting NFTs and building ecosystems:
GaryVee linked his book with the VeeFriends ecosystem through Book Games; users receive an NFT through airdrop for every 12 books ordered, resulting in over 1 million copies sold within 100 days.
He launched limited sub-series that empower the main series—creating "cultural vitality," and the team simultaneously planned a total of 18 exclusive gift experiences, further gaining favor from collectors and expanding the ecosystem.
Collectors can participate in daily lottery activities by burning Book Games tokens; the series includes characters, with different characters corresponding to different rarities, requiring different amounts of tokens. In the future, VeeFriends will also support the intellectual property development of characters.
Understanding the Proof of Attendance Protocol (POAP):
Will It Become an Entry Point for NFT Adoption? @will POAP stands for "Proof of Attendance Protocol." It is used to verify a user's presence at online or offline events. Since a person cannot exist in two different bodies, the nature of NFT tokens is used to prove their uniqueness. For brands, POAP can be applied to track consumer purchase frequency; each purchase can earn a POAP, and brands can set corresponding consumption rights based on POAP.
By connecting their wallets with projects, project parties can directly connect to users' worlds, and users can similarly connect directly to the project parties' worlds. Once the wallet is connected, project parties can airdrop items of future value into users' wallets. You can effectively communicate with project parties through your wallet at any time. Thoughts POAP does not have the speculative value of PFPs, but it can empower membership economies. For brands, members are more loyal and have deeper value than ordinary users, with higher recognition and dissemination strength for the brand.
If POAP is used as a threshold for obtaining membership status, it can incentivize consumers to spend or participate in activities, further deepening the connection between consumers and merchants until a certain quantity is accumulated to obtain membership status, which can also be issued in the form of NFT Pass cards. Using the characteristics of NFTs to prove the participation process is an advantage that cannot be achieved in the Web2 domain.
How Did Reddit Make 3 Million People Unknowingly Own NFTs?
Reddit's NFT Strategy:
Use "Vault" instead of "Wallet" (a custodial wallet based on Polygon) to reduce user understanding pressure.
Give away NFTs for free to top users as a symbol of identity (scarcity); importantly, Reddit still does not use the term but refers to them as "collectible avatars" instead of "NFTs."
When users create a Polygon wallet, they do not need to navigate to third-party websites, remember mnemonic phrases, or pay gas fees (Reddit covers the costs).
Collaborate with artists to release NFTs that can be purchased with dollars.
A wave of free airdrops in August ignited user enthusiasm.
Thoughts The user experience in Web3 is notoriously poor. To attract users to open crypto wallet accounts, Reddit not only provided free avatars but also set the barriers to entering Web3 as low as possible. In just three months, 3 million people obtained wallets and NFTs, surpassing the number of users on OpenSea in the past five years. This is a validated Web3 experiment, and every strategic step is worth pondering and learning from.
