I’m not a fan of ‘given days’. I struggle with Christmas Day; always prefer Christmas Eve, if truth be told.
But on International NFT Day, it’s good to take the time to think about what these weird jpgs — and other digital assets — actually mean.
Naturally, it’s always nice to do that on a day when prices are going up.
It would be facile to start the discussion without stating that the main reason people are interested in NFTs is because they are the purest incarnation of global capitalism we’ve yet seen.
And having bought jpgs for tens of dollars and sold them for tens of thousands of dollars, I can only say I’ve been a massive beneficiary of that hype cycle.
But — in my defence — I didn’t get into NFTs to make money and even now — when investment is definitely a factor in certain purchases — I still happily buy NFTs without any expectation of financial gain.
Because, fundamentally, I believe NFTs simply represent how — some and increasingly most — people price their passions. Of course, people have always done this, even in the physical world.
Personally I’ve never been a massive collector for its own sake but on occasions have dabbled with soccer cards, stamps, first edition books and 35mm cameras. Over time, increasingly sophisticated online tools have reduced the friction of such trading.
But trading physical goods always involves friction and fraud, which is why the rise of frictionless blockchain with their immutable, decentralized and trustless digital assets has taken the price velocity to another order of magnitude.
NFTs Mark 2
That said, it’s still the case that the vast majority of NFTs to-date have attempted to create price as an a priori process: that is these NFTs have value purely because people agree they have value because everyone has access to buy or sell these NFTs at a live market price.
Clearly this is not how the market will develop, and — indeed — is not developing. NFTs are now attempting to provide they can have inherent value beyond the second-by-second equilibrium generated by speculators.
For example, there are plenty of projects in which you can now passively stake an NFT to gain some sort of reward, generally an allocation of the project’s underlying token, or actively use the NFT in some way for reward — notably in a game.
Obviously, the value of that token is also influenced by speculative pressures, but over time, I’d expect the best projects to be able to generate some level of consensus about how their tokens should be priced, and that will feed back into how NFTs should also be valued over time.
That isn’t to say I expect NFTs to be rationally valued at any point in the future, just as you could argue GameStop or Tesla stock is not rationally valued.
But as a hybrid digital asset — something between a stock and a stamp — it’s clear to me that as a whole, NFTs will become a highly valuable asset class: something perhaps best understood as the bastard offspring of discounted cash flows and degen competitive scarcity pressure.
As is often the case, I’ll leave the last word to Gabe Leydon (as quoted by Patrick O’Shaughnessy).
And in that regard, I don’t think we’ve started to scratch the surface in terms of how revolutionary NFTs will be, both in terms of functionality and also in terms of value accrual.
Happy International NFT Day
This Substack is sponsored by Hiro Capital: All of who rock OG Avastar NFTs — my joining gift to the team.
Extended Funding news
There’s an interesting trip down memory lane arising from the announcement of Boulder, CO startup Random Games.
One co-founder is Tony Harman, previously of Nintendo of America and then UK studio Realtime Worlds (Crackdown, All Points Bulletin). Realtime Worlds’ co-founder and one-time CEO David Jones (Lemmings, GTA) is also involved as an investor.
The other co-founder for Random is Wyeth Ridgway, who — reading between the line of the PR — is bringing his Leviathan Games into the mix, in that the 20-year-strong studio is also based in Boulder.
Other co-founders include Paul Walborsky (AI Reverie, GigaOM), who’s president, and Brent Friedman, who’s leading the narrative.
As for what Random Games is planning, it’s a sci-fi themed “massive community-owner franchise” called Unioverse, which will include a series of games interlinked by NFT characters.
More importantly, thirdparty developers will be able to use those game assets royalty-free, whether in games or in any other ways. There will also be a game developer fund to finance activity in the ecosystem.
As part of the reveal, Random has also announced an unusual $7.6 million seed round; unusual in terms of the nature and mix of the investors, many of which have not been previous active in the sector
It was led by Resolute Ventures (trad) and Asymmetric (crypto). Other investors included 2 Punk Capital (degens), Polygon (strategic) and IGNIA and ID345, both of which are Mexican-focused VCs. Angels included Mark Kendall, Antonio Rallo (ID345) and Jud Valeski (Gnip/Twitter).
More Neat Skyweaver news
While I have the utmost respect for how Skyweaver team is approaching web3, and think it’s a lovely game, as a non-TCG player, I’ve never been able to muster the time, let alone the skills to really get into it.
Nevertheless, I'm always fascinated to see how they are building out their product and the addition of Legacy Hero skins looks great.
Simply put, creating a Legacy Hero skin requires the burning of 10 Gold versions of the hero, plus a USDC fee.
One of the genius decisions in Skyweaver is that it doesn’t (yet) have its own token so all trading occurs in the USDC stablecoin, priced in USD.
If you don’t own the 10 gold cards, you can just directly pay an additional USDC fee, and the system will buy the cards from the marketplace in the background.
Even more significantly, the USDC fee required will increase over time — from 20 USDC for the first 10, 29 USDC for the next 10, 41 USDC for the next etc — rewarding early adopters.
And as well as looking neat, and being a deflationary sink in terms of NFT economics, each Legacy Hero skin also provides a 25% points bonus in Conquest mode.
Minting will start from Thursday 22th September. Find out more here.