What is Non Fungible Token (NFT)?
Non Fungible Token (NFT) is a crypto token on the blockchain that represents a unique asset class.
It could be utility token, security token, ... their digital and classified assets are evolving along with encryption technology and blockchain. Since NFTs are not interchangeable, they can act as proof of authenticity and ownership in the digital realm.
In this article, Blogtienao will give you how NFT works. Then, analyze the applications of the NFT.
Non-fungible Token how does it work?
There are many different frameworks for creating and releasing Non-fungible Tokens. But the most prominent is ERC-721, a standard for issuing and trading non-fungible assets on blockchain. Ethereum.
A new and more improved standard is the ERC-1155. It allows for a single contract that contains both fungible tokens and non-fungible tokens. The standardization of the NFT adoption allows for a higher degree of interaction, benefiting users. Basically, unique assets can be transferred between different applications easily.
Like other blockchains, NFT's will exist on one address. It is worth noting that NFT cannot copy or transfer without the permission of the owner, not even the NFT issuer.
NFT can be traded in open markets, like OpenSea. These markets connect buyers with sellers and the value of each token is unique. Naturally, NFT prices are subject to changes in the law of supply and demand in the market.
The NFT market begins
The total volume of NFT lifetime on Ethereum has exceeded $ 120 million according to provider data Nonfungible and is likely to be at least $ 10 to $ 20 million higher if calculating Nonfungible excludes some platforms like Rarible that has surpassed 10 million USD compared to the past few months.
In addition to the NFT volume traded over the past month, one of the most notable indicators is the average price. The average NFT purchase price increased significantly QoQ, reaching an average of $ 161, the highest since the launch of CryptoPunks and Cryptokitties in 2017.
The average NFT spending has surpassed its historic average of $ 23 for 150 consecutive days.
More importantly, demand is greater in the cycle, signaling that there are a number of users willing to pay for unique digital collections and non-fungible tokens. This trend is evident from the total number of users who have interacted with OpenSea now totaling more than 25.000.
NFT Liquidity Mining
Liquidity mining in conjunction with NFT is driving the adoption and speculation of new assets and protocols. While platforms like SuperRare and OpenSea have facilitated millions of dollars in the NFT since the beginning of the year, the mining liquidity on Rarible's market has poured gasonline across a growing ecosystem that has sparked tremendous growth. by NFT.
At the current rate, Rarible's annual fees exceed more than $ 6 million. Liquidity Mining NFT has created a period of rapid growth for previously unknown tokens, Whale and MEME. Interestingly, they both implement NFT liquidity mining at slightly different capacities.
- The WHALE community launched Liquidity mining NFT by partnering with artists to create unique NFTs that are added to Whale Vault and can only be purchased using WHALE tokens. This process has helped to add more content to Vault and gives more utility to the WHALE token as a medium of exchange.
- MEME - started out as a joke but later became a legitimate project. Get access to Liquidity Mining NFT by requiring users to stake their MEME tokens in exchange for unique NFTs earnings. In an effort to put greater value into tokens, the MEME community partners with famous artists to create exclusive works of art and memes.
Liquidity Mining is sustainable
The continued success of single NFT projects as individual works of art. Requirements to create real consumer value or expand into other investment categories.
NFT liquidity or marketplace liquidity mining is more sticky than standard DeFi liquidity mining, which is usually mercenary and flows to the best APY. If the big game or top creators maintain exclusivity for certain platforms, then start to take shape as fan and loyal user aggregate towards those platforms . However, it is unlikely that the entire game or its creators will commit to a platform unless they are rewarded for their contributions.
Community token and Culture Investing
Platforms like Patreon and Substack prove: Personal creators can enjoy a great lifestyle supported by loyal fans. Creator tokens take these platforms one step further, creating a new mechanism to encourage a loyal fan base and monetize content.
Influencers and individuals leveraging their brands are quite common. Michael Jordan, the shoe line now makes the basketball legend more money each year than he earns during his basketball career.
While a single example, individuals whether they become artists, athletes, writers or educators are likely to leverage their personal brands to create out-of-field business empires. their existing expertise.
Individuals who are leading the top five social tokens account for nearly $ 200 million in fully diluted market value
Community tokens appear to be a trend that will likely develop in the coming years. Especially with the development of additional infrastructure such as Collab.Land and Forte. Or the upcoming launch of community token platforms like Rally Network.
What is the application of NFT?
NFT can be used by decentralized applications (DApps) to release unique digital items and crypto collectibles. These tokens can be a collectible item, an investment product, etc.
The gaming economy is not new as many online games have their own economies. Using blockchain to tokenize in-game assets is just one more step up. In fact, using the NFT has the potential to solve or mitigate the common inflation problem many games face.
While the virtual world has flourished, another way of using NFT is to tokenize assets in the real world. These NFTs can represent small chunks of real-world assets that can be stored and traded as tokens on the blockchain. This helps increase liquidity for many poor markets such as art, real estate, ...
Digital identity is also an area where NFT's attributes can benefit. Storing identity and ownership data on the blockchain will increase privacy and data integrity for many people around the world. At the same time, easy and trustless transfer of these assets can make the global economy smoother.
Why is the NFT so special?
Non-fungible tokens have unique properties, they are usually associated with a specific content. They can be used to demonstrate ownership of digital items such as game interfaces through physical property ownership.
Other tokens are fungible, like coins or paper money. Fungible tokens are identical, they have the same properties and value when exchanged.
The idea of NFT as a portfolio
The idea of NFT as a portfolio has been more widely recognized. It is catalyzed by RARI liquidity mining and a new understanding of the potential applications of digital ownership through NFT.
There are currently a number of large categories to capitalize on the growth of the NFT Region:
- Collection and individual NFT
- Financial products, derivatives and NFT indices
- Layer-1 and layer-2 platform tokens support NFT-based project and protocols
- Governance token of the NFT platform
- Social token related to NFT
- NFT platform and infrastructure
Popular projects on NFT applications
Axies, Lands, and other in-game items called NFT are currently deployed on the Loom Network and will be migrated to the platform's Ronin sidechain to expand the technical infrastructure. Ronin is an application-specific sidechain designed specifically for Axie Infinity and is currently in the testnet.
Decentraland is a decentralized virtual reality world where players can own and trade virtual plots and NFT items in the game. Cryptovoxels are similar, where players can build, develop, and exchange virtual assets.
Gods Unchained is a digital collectible card game in which tokens are issued as NFT on the blockchain. Since each digital card is unique, players can own and trade them for the same level of ownership as if they were physical tokens.
My Crypto Heroes
My Crypto Heroes is a multiplayer role-playing game (RPG). Players can level up historical heroes through quests and battles. In-game heroes and items are issued as tokens on the Ethereum blockchain.
Binance Collectibles is released in collaboration with Binance and Enjin on special occasions. If you want to own, follow Binance on Twitter and look for gifts.
Crypto Stamps is released by the Austrian Postal service and connects the digital world with the real world. These stamps are used to transport mail just like any other stamp. They are also saved as digital images on the Ethereum blockchain, making them a tradable digital collectable item.
The future of Non-Fungible Tokens
Non-fungible Token is being deployed in the game and collecting cryptocurrencies. For games, NFT can be used to represent in-game items such as skins. Additionally, allowing them to be transferred to new games or traded with other players.
Non-fungible tokens add the potential for creating security tokens, encrypting digital assets. This security token is non-fungible so the ownership of the asset is completely trackable.
Additional NFT applications can be certification certificates, software licenses, warranties, or both birth certificates and death certificates. Smart contract of a Non-fungible Token always proves the identity of the receiver or the owner. It can be stored in a digital wallet for easy access and representation.