NFTs Move into the Metaverse

Into the Metaverse: Non-Fungible Tokens in 2020

The year was 2018 and I was at a hackathon in Hong Kong hosted by Decentraland, CryptoKitties and others. The excitement around digital collectibles on the blockchain was in full swing, and the NIFTY conference was a testament to that. There were talks about new standards of true ownership, as well as the interoperability and composability of digital assets. The idea of buying or earning in-game items and then being able to freely trade and port them over to different gaming universes was all the hype.

Fast forward to April 2020 and, although there are many kinks to work out, I think the NFT crowd can take a step back and feel pretty proud of what we have accomplished over the past 2 years in terms of both product release and community growth. There are entirely new markets for digital art, remote meetups taking place on user-owned virtual land, and real users earning money through play thanks to the interoperability of blockchain-issued assets. If you’re someone in the middle of it all, it’s easy to get lost in the frustration about the slow loads, bugs, and overall inferior user experience when it comes to NFT applications compared to what we’re used to. But there’s a reason folks are excited despite the technical hurdles, we’re stepping closer to – and sometimes even realizing possibilities beyond – the vision we had touted in 2018.

A quick rundown of non-fungible tokens (NFTs) for those who are unfamiliar: NFTs are unique digital items that are issued on the blockchain. What does this mean? Similar to physical goods like limited edition sneakers, these digital items are distinguishable from one another by a serial number. The “serial number” for NFTs is their token ID, which is stored on the blockchain. These identifiers point us to the rest of the information about that particular item: how it looks, it’s qualities, the artist or company that made it etc. While valuable physical goods often come with a certificate of authenticity, NFTs are their own certificates of authenticity because the “factory” that made them (the smart contracts) are publicly available for you to check for yourself.

One use-case for non-fungible tokens is for them to be used as digital collectibles. This experience can be as simple as obtaining NFTs through purchase or winning a giveaway, browsing and showing them off online, and curating your collection. CryptoKitties is an example of this with the added activity of breeding. That is if you own CryptoKitties you can breed them with someone else’s or another one of your own. Breeding gives birth to a new CryptoKitty with some derivative of the traits of its parents. The game is to collect CryptoKitties and their traits, which determine how they look. The different CryptoKitties that you see right now aren’t just random pictures assigned to each Kitty serial number, it is a result of “reading” the traits of that CryptoKitty from the blockchain. 

Some Kitties for sale on the CK  Marketplace
Some Kitties for sale on the CK Marketplace

This is analogous to genotypes and phenotypes if you remember high school biology. Genotypes are encoded in your DNA. Phenotype is how those genes manifest itself in the real world. If you have the genes for green eyes (genotype) then your eyes will be green (phenotype). Similarly, if a CryptoKitty has a trait for googly eyes, an external client like a website can read this trait from the blockchain and build a composite of a CryptoKitty that has the googly eye image.

CryptoKitties is a canonical example of NFT digital collectibles and a primitive blockchain game. Let’s look at other use cases and where these projects are at today.

VIRTUAL LAND

I’ll start with Decentraland. In 2017, Decentraland raised $26 million in just over an hour with the promise of a virtual world where players can own land and build on them. By build, I don’t just mean construct houses like on The Sims, I mean that as well as actual businesses that earn real money inside the virtual world. You can click on a link to visit a merchant in Decentraland and buy virtual items, like a CryptoKitty, or a wearable for their avatar. Each LAND is an NFT that represents a parcel of land in the virtual world.. 

What makes each LAND unique are the coordinates of the location. The price of each LAND is decided on by the market. Like physical real estate, the price differs by location. The higher the foot traffic around your LAND coordinates, the higher it can sell for. 

Let’s see what Decentraland is like today. For comparison, this is the Decentraland scene I built in 2018 as a prototype for Last of Ours

last.gif

Decentraland officially opened its doors on 20th February 2020. This week (April 10th) they launched a COVID-19 campaign with Binance #CryptoAgainstCOVID. Where users can go and donate $10 worth of ETH in exchange for a mask NFT. Here is the entrance to the Crypto Central building in Decentraland and a shot of me buying a mask NFT from the dispenser. 

Screen Shot 2020-04-11 at 1.54.35 AM.png

So I walk into this building to find some dispensers displaying these NFT masks, click on the donate button for one, and that was it. $10 went to COVID relief and the mask was sent to my Ethereum address.

Buying a mask from a dispenser in Decentraland
Buying a mask from a dispenser in Decentraland

Decentraland is just one example of a blockchain-powered virtual world that people can experience today. CryptoVoxels is another favorite of mine. This project is more “grassroots” in a sense that they didn’t have an ICO or VC backing of any sort, the revenue came from users buying parcels of land and then building on it. Already, there are art installations and community spaces that you can check out. In fact, there’s a virtual meetup that happens here every week, where artists and project leads can jump on stage and tell everyone what they’re working on and what they need help with. They also recently integrated a PDF viewer so I’m anticipating a higher fidelity presentation experience as well. Here is the TokenSmart Amphitheater on CryptoVoxels where every Friday, Matt and Rizzle hold weekly Work-in-Progress meetups.

Picture3.png

Despite the technical hiccups, the community is growing by the day as more projects bring their meetups into the virtual world. No flight and accommodation costs, no ticketing costs, no catering costs, with the benefits of being able to network with people who are passionate about the same things as you very much intact. You click on a link and you’re there. While these virtual experiences can’t replace the experience of being in the same room as someone, they are an incredibly liberating alternative, especially during these times. The attendance to these CryptoVoxel meetups breaks records every week as people flock in to hear new ideas and meet people in the NFT space, so much so that scaling enhancements can’t keep up. But I believe they will and these experiences will only get better. Eventually, business meetings will happen in virtual worlds, similar to how you meet someone at a conference and go off to have 1-1s. 

Imagine hearing an interesting presentation from someone on stage in the virtual amphitheatre. You reach out, and transport to your office where you can learn more about each other (you can already talk by voice on here) and eventually agree to collaborate on something that pays a huge dividend for the both of you. All the while feeling like you’re in a game, and probably without even putting on pants.

Speaking of collaboration, this is a nice segway into another corner of the NFT space that has grown a lot in the past year…

ART

Virtual worlds have been teeming with activity from digital artists displaying their work in immersive galleries; giving viewers and potential buyers a fresh, interactive way to discover and buy art. We’ve seen virtual galleries where artists can display their collections. There are digital artwork marketplaces like SuperRare, KnownOrigin, and more recently Nifty Gateway where artists can tokenize their artwork into NFTs, put them on auction and allow users to bid on them. If these users also happen to own virtual land, they can put these up on their walls and have people experience their collection as well. 

Here’s me walking through CryptoVoxels checking out a virtual art gallery by digital artist  Connie . I can walk around and read the signs on the wall for information on the art, and even make bids on it.
Here’s me walking through CryptoVoxels checking out a virtual art gallery by digital artist Connie. I can walk around and read the signs on the wall for information on the art, and even make bids on it.

There have been some amazing collaborations between prominent cryptoartists for different events and causes. Here’s a scene from an charity auction event on CryptoVoxels.

So, there’s a new possible avenue for artists to create, explore, and gain revenue for their work. What about the art itself? How can we leverage the digital medium to produce something that isn’t possible in the physical world?

Async Art is a project that is making it possible for collectors to influence the artwork itself. The artwork is tokenized into two types, Master and Layer NFTs. A Master is a 1 out of 1 NFT that you can own, like you could normally. However, within this artwork there is also a set of Layer tokens that can be owned by other people. A Layer links to a specific portion of the Master. The artist decides on the parameter that Layer token owners can influence, and at any time, a Layer token owner can make change to that portion of the art, regardless of who owns the Master. For example, if the Mona Lisa was a piece of Async Art, and the Louvre owns the Master token, individuals around the world could bid for the mouth layer, or eyes layer, or background etc. If I owned the mouth layer I might decide to change the smile into a frown, someone else who owns the background might decide that instead of the natural background, Mona Lisa is now in space. 

A Master NFT on sale on Async Art
A Master NFT on sale on Async Art
You can bid for Layers to be able to influence parts of the artwork
You can bid for Layers to be able to influence parts of the artwork

Obviously this isn’t possible with all art, but blockchain-based assets and the digital medium itself creates new ways an artist can converse with her audience. The artist is still deciding the constraints for a layer and the parameters available, I think this creates really interesting possibilities for dynamic, “living” art that would be another unique component of the metaverse. One person viewing a piece of art one day might see a different thing than another person viewing the same piece of art the next. A gallery on Decentraland full of Async Arts might look completely different one day to the next without the curator or artist ever doing anything.

Besides collecting, breeding, trading and walking around virtual worlds, what else can we do with NFTs in 2020? Play games and earn money of course!

NFTS MEET DEFI: THE PLAY-TO-EARN MEME

The core theme and meme for NFTs in 2018 was the interoperability of NFTs: users able to port different digital assets between games. For example, you can train Pikachu to learn “ThunderShock” in one game and then plug him into another game to use ThunderShock as a power to stun enemies. Or… growing some herbs in a Farmville-like game and then porting those herbs over to a battle game to heal your character. While there is still some effort being put into that, the meme of play-to-earn is growing in prominence for NFTs thanks to games like Axie Infinity.

The base earning mechanic for the NFT ecosystem has been collecting scarce assets: looking for rare things, buying them at a good price and then selling high when more users want to get their hands on it. Now that the ecosystem has grown, we’ve begun to explore where NFTs and decentralized finance (DeFi) can intersect. Axie has an in-game currency that you can only earn through play. You can then trade this in-game currency on the open market for other assets like DAI and Ether, earning real money for your gaming efforts.

Axie Infinity PVE & Breeding tutorial

Though it’s still in community alpha, Axie has demonstrated that if games can be hooked to other decentralized finance applications like Uniswap where users can get instant liquidity for their in-game rewards, it opens up many new avenues for playing and earning that has not been possible in traditional games.

While the traditional mobile monetization model is about ads and money going to game developers, Axie is exploring the play-to earn mechanic further by distributing other blockchain tokens. They recently partnered with MakerDAO to drop random amounts of the stablecoin DAI to the top players of a tournament.

In 2017-2018, you might open up your wallet one day to some amount of a token you’ve never heard of before after someone got a hold of your Ethereum addresses and decided to airdrop their token on you as a marketing tactic, kind of like what Apple and U2 did to us a few years ago

A more elegant evolution of this is that token projects will start to look at play-to-earn blockchain games as a marketing mechanism to get the attention of an existing community of already engaged users, distributing their tokens through the game to drive network effects and and value for the underlying assets. 

ART + METADATA = NFTS. INNOVATING FOR THE LONGEVITY OF NON-FUNGIBLE TOKENS

I think this topic deserves a series of articles in itself. In late 2019 I caught wind of a very unique project that wasn’t a new game nor a novel use case for NFTs, instead it was how the project was built to truly incorporate the vision of true ownership and asset permanence. I am talking, of course, about Avastars. First, a short primer on the motivation behind this project…

In reading about NFTs you’ll see phrases like:

  • “True ownership”
  • “Live forever on the blockchain”
  • “Permissionless, censorship resistant”
  • “Decentralized”

These claims are true to the extent that the blockchain says your wallet address owns an NFT with a certain serial number (its token ID). However, how often do you think about the “serial number” of something you own? Sure, if you own #0001 there’s something extra special about that piece, but chances are you won’t care if you own #4777 versus #6932 especially if there is no other distinguishable aspect about that asset.

Let’s bring back CryptoKitties using the example tokenIDs we randomly selected above: #4777 and #6932.

See # 4777  and # 6932  on CryptoKitties website
See #4777 and #6932 on CryptoKitties website

They look different and have different traits that might allow you to develop a preference for one or the other. What gives these assets meaning to you is unlikely to be their tokenIds, but these other observable characteristics. However, today these observable characteristics are NOT the thing that “lives forever on the blockchain” or something that you have “true ownership” over. The tokenID and the external “pointers” are.

In general this may not feel like it’s a big deal because you can still collect these assets and play games. CryptoKitties has been a high quality project and pioneer of the NFT space, but if they were ever to shut down their servers, all you have left will be what’s on the blockchain: a serial number with a broken link.

Current accepted practices for storing digital artwork is a decentralized storage solution like IPFS. Here while the image itself is not on the blockchain, the image is hosted on a decentralized file storage system, which means the hosting isn’t purely dependent on one company, instead anyone can choose to pin the content on the network similar to seeding a BitTorrent file. I won’t go into the technical details of this, but the takeaway is that it’s a notch closer to the “decentralized” ideal than storing art and metadata on a normal server.

The question is: Can we do better? And the answer is: Yes, look at Avastars

avastars.png

The value that Avastars is perpetuating, living and breathing is that Art + Metadata = NFTs. With an NFT stripped from its associated metadata and art, what do you really own? Avastars are facial avatar tokens, each with a unique look and traits that make up the background and face. At first glance this looks like another NFT project where you collect traits that you want. Except the fact that all the metadata and art is stored on the blockchain itself.

WHAT DOES THIS MEAN AND HOW DID THEY ACHIEVE THIS?

What this means is that as long as the Ethereum blockchain is alive, anyone can recreate the artwork and metadata associated with their Avastars regardless of whether the individuals/company that created it is around or not. All the information that is needed to construct an Avastar, including the metadata text and individual .svg files has been put on the blockchain.

It wasn’t easy to figure out how to do this, they had to work with the artists on svg optimization and spent many hours further optimizing the layers after that. Each trait: eyes, hair, mouth etc. a total of 12 traits, has different variations: upturned mouth, green hair, winking eyes…, each with their associated .svg image file, which each had to be uploaded to the blockchain only once. The subsequent steps are to reconstruct a composite image based on the Avastars’ gene, which is stored on-chain. The game for collectors of Avastars is to find and trade rare traits. Some users may even seek out the ones that look nice regardless of trait rarity. This genotype and phenotype and rarity idea is similar to CryptoKitties, except the art itself can be reconstructed from the on-chain information even if the company that made it stopped work on it.

The reason that NFT projects give for not using this approach from the beginning is usually that it’s unfeasibly expensive to store large files on the blockchain. Every kilobyte that you store on the blockchain costs money, so the big tradeoff was to store data the traditional way, on a hosted server. I believe that even Avastars hosts images on a server as a redundancy for performance purposes, but if they were to stop, Avastars owners still own* their art and the metadata, which is more than you can say for most NFT projects today.

*By own, I mean really own. You have a license to the copyright and commercial use of each Avastar you own. While this isn’t true for the artwork of individual traits, it is for the “Complete Art” composite that is derived from your Avastar’s genes. Here is the full Digital Asset Ownership License released by the team.

What this license means is that you can find yourself an Avastar that you like and use it as a persona or logo for your personal brand, building reputational and monetary value for it. One power user and NFT collector WhaleShark is already recognizable across cryptoart Twitter and Discord for his “Old Money” Avastar profile picture. Old Money is Avastar #63 that he obtained for 6 ETH. Given the reputation that he has built around it, I don’t think he’ll sell it anytime soon.

The team behind Avastars is nft42. They are also the people behind the TokenSmart Discord channel. Beyond Avastars, they have other exciting NFT-related products brewing in the works.

Here’s a monument of Old Money and a Founder Avastar on CryptoVoxels. Check it out  here
Here’s a monument of Old Money and a Founder Avastar on CryptoVoxels. Check it out here

To learn more about how on-chain art and metadata were implemented on Avastars you can read their docs here and their code here.

THE METAVERSE MEETS THE REAL WORLD

In leveraging online communities, we can aggregate attention and resources from people we wouldn’t have otherwise had access to before. In the realm of crypto art, virtual world building, and the blockchain gaming space as a whole we’ve already seen a myriad of partnerships to create artworks and experiences that even the builders themselves are mind blown by. NFTs have given people a new way to earn a living, to supplement their income, be a part of a community, and have fun. Because we are a part of building these experiences together, we can bring in real world causes that matter to us, tap into the pooled creativity and create impact like never before possible.

I’ve only scratched the surface by touching on a few of my favorite NFT projects here. Hopefully this gave you an idea for the NFT space and what a “metaverse” might feel like. The ecosystem has evolved a lot over the past 2 years that I’ve been around it, and right now it feels that innovation in the space is accelerating the more developers, artists, and capital pour in. Compared to the blockchain and crypto ecosystem as a whole, NFT occupies a small niche. Those who understand the advantages of crypto have an understanding of money, the pitfalls of traditional finance, and censorship. Thus in encouraging the masses to adopt cryptocurrencies they have explained its benefits using these terms. However these only occupy a small subset of the world population compared to the number of gamers worldwide. Kids understand the value of in-game currencies because they allow for power ups, the value of a gem in Duolingo, or the value of a heart in Candy Crush. These virtual worlds and games powered by NFTs are already things that they can experience for yourselves, so I believe that the metaverse and the NFTs that float around in it will be a gateway to the adoption of cryptocurrencies and decentralized products.

As always let me know what you think! What sort of activities do you want to be able to do in open virtual worlds? What is your favorite NFT project or NFT that you own? Also you can find out about the next virtual meetups on Cent and the TokenSmart Discord.

Until next time, 🙏🏼

If you enjoyed this post you can buy me a coffee using nich.eth as the Ethereum address, though there’s a non-zero chance that I’ll hold off on the coffee and buy an NFT instead 😇 Hope you’re all staying safe and healthy out there.

PUBLISHED BY– nichanank

NFTRADAR

Share and Enjoy !

Shares

Leave a Reply

Your email address will not be published.