Tag: NFTs

Hail, NFTs! 3 Ways NFTs are Changing the World

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NFTs are not just jpegs uploaded and minted on the Blockchain. Industry players are finding new ways to harness this technology and create game changing products that are shaping the way we interact. True, the recent crypto market slump may have dampened the spirits of the general market. However, industry leaders opine this is part of the market cycle and soon we will be out of the woods. This article is a primer on NFTs, their use cases and where the world is headed with regard to this technology.

As an art form.

This is the most notable way through which NFTs have gained prominence.

This technology has democratized art, enabling previously unknown artists to be at the vanguard of artistic development- enabling designers, artists and graphic experts across the world to earn passive income. Some digital artworks have turned artists into instant millionaires and much-vaunted celebrities in the art world . There are exclusive clubs created around some of these artworks, attracting celebrities and sports stars.  NFTs have enabled artists to earn royalties even in perpetuity every time their artworks are resold. In some instances, sovereign countries are adopting them and finding ways to use them to boost economic output. Countries,

such as Japan, recently adopted  NFTs as gifts for the civil service.

Government employees who perform well are gifted with NFTs; they use them for commemoration.

In Supply chain

NFTs have found notable use cases in supply chain management .

Manufacturers can use them to create unique tags for their products  for provenance.

Consumers can easily scan these NFTs and help them get detailed understanding of the products they consume. Businesses can use NFTs to enhance transparency and boost efficiency as they can track products on real time . With one scan all supplier information can be brought to the fore.

This form of transparency can be, especially, helpful for perishable goods, medical supplies and fragile industrial products. Businesses can also use NFTs to enhance collaboration across

the supply chain – enabling them have one permanent track of records of the goods they procure. This ultimately helps businesses maintain a competitive advantage, cut costs, and build better inter- business relations.

As digital Identities

NFTs can also be used as digital identifiers. Their unique identifiers and qualities enable them to be potential tech candidates for a global registry. This is still controversial and industry players are still unsettled on how best to go about this.However, traction has been gained in the gaming industry where players can use NFTs to create unique personalities, ammunition or gaming accessories and even trade them. For sure , this is slowly gaining real-world adoption.

Some companies have developed NFT based KYC identifiers that automate the KYC process wile at the same time maintaining anonymity. What these do is that a user creates a single NFT with attributes  such as age, address, location and gender. These can then be used across multiple platforms anonymously in the event that one needs to pass KYC. The details can not be accessed publicly and can only be shared with express permission from the owner. In the UAE,

the government has established a digital presence(consulate) on the metaverse using web 3.0 technologies that also encompass NFTs. This metaverse is meant to offer a digitally immersive experience where the country can promote their services and  educate people about

the investment potential in this region. Visitors to the country’s digital platform will have a chance to interact with a customer representative and can be issued with a ticket where they’ll get their issues resolved.

These are tech  development that  can be directly  attributed to NFTs and their uses as this industry matures, more products and services will be developed anchored on this technology.

Hail, NFTs.This is the new norm.

5 Tips for Surviving a Bear Market

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The crypto market is fully in bear territory now, even though we have seen some relief over the past few days, with Bitcoin and Ethereum rising again, and a number of DeFi project tokens seeing double-digit percentage rise. For many of us in crypto, this is not the first time we’ve been in this position. We know that the market is cyclical, and that this time round macroeconomic influences are more influential, especially with a recession looming.

So, if you’re a crypto holder, what should you do? Should you sell or buy the dip? Or take some other action? Here is some advice from market watchers.

1. Take some profit

HODLing is widespread in the crypto community, but Tyler Reynolds, a Web3 investor advises selling a percentage of your gains at this time, rather than just sitting on your investment, or selling it all. An anonymous trader also said, “Set sell targets/take profit levels in advance, at least loosely, and stick to them. Your objective self from the past is a better guide than your euphoric self in the future.”

2. Do not panic sell

Its better to take some profit, or devise a strategy for exiting the market completely, but don’t panic sell says Fedor Linnik, an NFT builder. He added, “being greedy and being afraid to miss the top” was a mistake he made in 2018. Make your selling decisions based on data, not on emotion or on advice from social media.

3. Don’t try to ‘make it back’

Alex Svanevik, CEO of data analytics firm Nansen, said that those who invested in 2020 and benefited from the highs of 2021, need to realise the fun is over for now. He warns against entering highly risky trades to try and make back losses.  A trader tweeted, “Don’t trade or invest with the mindset of ‘making back’ what you lost in the bull; it’s an inherently flawed comparison.”

4. Research projects

Use this bear market time to look at crypto projects, new or old. Tyler Reynolds said that what worked for him during the last bear market was to keep investigating both new and old projects. “You will need to keep re-investigating as projects pivot from their original idea and find a much better product-market fit, like Aave.”

5. Get involved with crypto projects

Many crypto projects, especially those in DeFi, are structured as decentralized autonomous organizations, or DAOs. Anyone can join and participate, and if you are a developer looking for a job in crypto, it can be a good way of finding one.

NFT Lending is Trending

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A marketplace called NFTfi, which specialises in loans collateralised by NFTs, has seen a surge in lending volume over the last two months. During the weekend of 3rd July, it hit its highest level with $3.5M worth of non-fungible tokens changing hands. However, we have to look deeper to find the real story.

Richard Chen, a general partner at crypto investment firm 1confirmation, took a look at it and discovered something important. Of that $3.5m, the sum of $3.16M was borrowed by just two whale investors, although there are many on crypto Twitter who doubt that it is two people, and suggest it is a single investor.

The ‘two’ investors borrowed 21,500 DAI against a combined collection of 147 CryptoPunk NFTs. The interest rate on the loan is set by a metaverse-based interest rate protocol called MetaStreet, which acted as sole lender for the loans.

NFTfi specialises in short-term loans, with loans lasting 33 days on average. The interest rate on that period of time is around 4%, which equates to 42% per annum. As might be expected, Bored Apes and CryptoPunks dominate the NFTs offered as collateral.

There is now a rumour floating around that this flurry of activity on NFTfi will launch an airdrop for users. Andrew T of wallet analytics firm Nansen tweeted that NFTfi has been quietly raising funds over the last three months, equivalent to $1m in USDC. He tweeted, “Between that and this possible airdrop farming, could be a token on the horizon.” Others aren’t so sure, with some suggesting there is a pattern at play that looks more like money laundering.

NFT lending is soaring

Whatever the truth of that, NFTfi as a business has been doing extraordinarily well in the NFT lending sector. Since it launched in 2020 it has facilitated 13,402 loans worth $217.6m. It even managed to buck the downward trend of the crypto market in 2022, processing a record $48.7M worth of loans in April, although as market conditions became more strained, volume dropped, with only $15.8M worth of loans being taken out during the month of June.

NFTfi’s excellent results over two years have of course prompted other protocols to enter the market. Arcade, which raised $15M in a Series A funding round in December is one of them and has facilitated $25m worth of loans since it went live in January this year.

Emergence of peer-to-protocol lending

Gmoney, a prolific NFT collector, says that while more protocols are coming along that offer peer-to-peer loans backed by NFTs, the next frontier for NFT lending will be “peer-to-protocol lending.” In a podcast with The Defiant, he said, “At the moment, there’s no peer-to-protocol lending, it’s more peer-to-peer. I think the issue that people are trying to solve is how do you make it a peer-to-protocol lending environment… I know a lot of teams are trying to solve this problem.” Indeed, Messari reviews JPEG’d which offers a token-integrated peer-to-protocol approach, and that because of its utility-driven tokenomics, the demand for the JPEG token is correlated with demand to “maximally utilise the platform.” It will be interesting to observe to what extent peer-to-protocol overtakes peer-to-peer NFT lending, and why.

NFTs and DeFi are the keys to a functioning Metaverse

On By mehranmuslimiblogIn Blockchain, DeFi, Metaverse, NFTsLeave a comment

When Facebook announced it was investing $10 billion in the development of a ‘Metaverse’, a platform based on augmented and virtual realities, the term suddenly started appearing in multiple headlines. However, Facebook didn’t invent it: the term first appeared in Snow Crash, a 1992 sci-fi novel by Neal Stephenson. In the book humans interact with each other and with software agents, such as avatars, in a three-dimensional space that acts as a metaphor for the real world. It might have been fiction 30 years ago, but now it’s fast becoming a reality.

What is the ‘Metaverse’?

Broadly speaking, the technologies that make up the metaverse can include virtual reality—characterized by persistent 3-D virtual worlds that continue to exist even when you’re not playing—as well as augmented reality that combines aspects of the digital and physical worlds.

Metaverses, in some limited form, have already been implemented in video games, such as Second Life and Fortnite. It is also a digital economy, where users can create, buy, and sell goods. 

It’s all about Web 3.0

Nobody knows yet exactly what Web 3.0 will be like eventually, but we do know that it will allow individuals to use the Internet without giving up their privacy and valuable personal data. The downside of Web 2.0, which is where we are now, was that users were providing the companies that controlled platforms, such as Facebook, with personal information and data. This contributed significantly to the platforms’ profits, as they sold this data to third parties without the knowledge or agreement of users.

Web 3.0 would remove this theft, as many see it, because it will be made possible by decentralised networks, such as those of Bitcoin and Ethereum. In this system no single entity controls a platform, yet we will be able to trust them because every user and operator on the network must follow a series of hard-coded ‘consensus protocols’. Blockchains with smart contracts, such as Ethereum, EOS and Tron, are leading the way in building this new iteration of the Web.

But Web 3.0 has even more innovations to offer. The networks will allow ‘money’ or ‘value’ to be transferred between accounts. Furthermore, as Decrypt points out, “On Web 3 money is native. Instead of having to rely on the traditional financial networks that are tied to governments and restricted by borders, money on Web 3 is instant, global, and permissionless. “

NFTs are the key to accessing the metaverse

Non-fungible tokens (NFTs) will be critical to making the vision of integrating the digital and physical world by giving a unique identity to avatars or digital items, writes lawyer Michael Tomasulo. He goes on to say: “For example, an NFT-supported avatar would be comprised of all the user’s prior digital interactions and experiences (effectively reflecting their digital “life”) and possessing all the digital items the user has accumulated (which would themselves be backed by NFTs). In effect, NFTs give users and items an “identity” within a virtual space that is completely independent from a developer’s control of the code.”

Due to the explosion of interest in art-based NFTs, there is likely some confusion over their potential use. Chief amongst their potential is NFT-controlled access to the metaverse. In the future world of Web 3.0 all the processes and protocols will coalesce into a central, interoperable space offering finance, communications, game worlds and much more. Crucially, NFTs in the form of real life identities tied to a digital avatar, are one way to access this metaverse world. As Decrypt says, “In time, the metaverse may even develop an independent state of its own, presided over by various DAOs.” (A DAO is a dentralised autonomous organisation).

And in terms of DeFi (decentralised finance), peer-to-peer lending and trading, could take on the role of a virtual financial system while NFTs represent our keys, ID cards, and passports.

The marriage of DeFi and NFTs

It’s important to remember that all NFTs are unique and can’t be swapped/traded or replaced with another NFT of equivalent value. This makes an NFT an illiquid asset, meaning that finding a seller or buyer would be harder compared to traditional cryptocurrencies.

Romi Kumar at Hackernoon points out that although we have seen a meteoric rise in the NFT Market, clocking over 2000% in just a little over a year, the segment still remains highly illiquid. He suggests that problems in the NFT sector may be solved by combining NFTs with DeFi applications (Dapps) and that those working on this have seen “results that are truly splendid.”

Suppose you bought an NFT at a price of 2 ETH during a specific period when that NFT was popular. A year later you decide to sell it, but your NFT is now unfashionable, and you struggle to find a buyer, let alone make a profit. The problem is that you can’t exchange it for anything else because it’s non-fungible, whereas ETH or BTC can be exchanged for fiat currency or products, because they are fungible.

DeFi can solve this NFT problem. With Defi in play, NFT owners can fractionalise the asset so more than one person can own fractions of it. Furthermore, it will create a liquid environment for NFTs because you can use fractional selling.

For example on Werewolf, a DeFi platform with Dapps, including yield farming, a decentralised exchange (DEX) and a blockchain game, users can access a dedicated NFT marketplace. Here there is an auction system and a raffle-style competition pool. An NFT holder can start a competition, deciding the minimal entry price, minimum and maximum number of entrants, and a period to run the pool. The seller sells the NFT faster, and the winner only has to pay a fraction of what the NFT was worth.

While many may still see NFTs as a passing fad, industry leaders have realised that incorporating blockchain technology with NFTs for integration into the Metaverse is the missing piece in the creation of a ‘Functional Metaverse’. This is one where the way people interact with and transcend the digital world, merges with the real world. And DeFi will play a central role in making that fully functioning Metaverse happen.