NFTs Are Back and They’re Useful

In 2020, “fungible” became one of the most searched-for words on GoogleGOOG, and by 2021, Collins Dictionary made “NFTNFT” its word of the year. That same year, Non-Fungible Tokens (NFTs for short) were truly all the rage, with over $40 billion spent on digital assets and artwork on Ethereum alone. After the boom came the bust.

2022 saw NFT values all but wiped out. Just ask Justin Bieber, whose $1.3m (500 ETH) Bored Ape NFT is now valued at less than $60k, in one of the most well-publicized examples. Blockchain data providers suggest that the NFT crash saw the whole NFT market volume drop by 97%, contributing to an overall crypto crash that wiped around $2tn in value off the industry.

Reflecting on the Crash & Why Penguins Were Important

When I look back at everything, it’s pretty clear what happened. Hype pushed up the prices, and the “Greater Fool” theory prevailed (there’s always a greater fool to pay more for an overpriced asset – until there isn’t). JPEGs of 8-bit characters without any utility were almost doomed to see steep decreases, as was forewarned by experts like Gary Vaynerchuck. However, there were glimpses of hope from some progressive projects that NFTs would eventually find their place in society. Now, I’m pleased to say that they have done so.

Pudgy Penguins was one project that set itself apart from all the hype, managing to avoid extreme price volatility. While other collections were in chaos, CEO Luca Netz was busy accelerating the brand, forging exciting retail partnerships, and proving the utility. That’s not to say Pudgy Penguin’s story doesn’t feature hurdles and setbacks, but the brand’s appeal and adaptability has led it to thrive all year long.

In 2023, Pudgy Penguins announced the launch of a physical toy line that is available in WalmartWMT and Toys R Us. Each toy comes with a QR code to onboard shoppers to Pudgy World, their Web3 home. At Art Basel, it announced the alpha launch of Pudgy World, an immersive, digital environment that will be accessible to everyone when the early version launches in 2024. Players will be able to explore an open world, customize their unique penguin characters, embark on a story-driven journey, and interact with friends along the way. Pudgy Penguins also announced two new hero characters, Pudgy and Peaches, that will drive the game’s narrative, expanding the company’s IP. This caps an incredible year for Pudgy Penguins that started with the company raising $9m and ended with it innovating across the retail and gaming spaces.

Luca told me, “Much of the NFT market left me frustrated and disappointed. The community and venture capital had raised so much money for so many NFT projects, and the output was weak, comprised of too many buzzwords and not enough utility. It seemed like many of the projects were riding the high and not really innovating. Instead of standing idly by, we decided to take a more driven approach to NFT project development, and the results speak for themselves. In fact, we’ve surpassed NFTs and are working on new areas that will foster greater utility and value for our community.”

What’s Driving the NFT Market Boom?

Throughout most of the NFT market’s lifespan, OpenSea has been the biggest and most active NFT marketplace. In 2023, however, it was surpassed by a new rival called BlurBLUR.io. The main reason that Blur was able to charge into 1st place was because of a new fee structure that offered collectors 0.0% transaction fees and 0.5% enforceable royalties on open and decentralized collections, as well as improved speed and more opportunities to beat bots. In short, it’s faster, cheaper, and more authentic for collections and their collectors, which is why it now controls about 80% of all NFT trading volume. Finally, NFT marketplaces are innovative and competitive again, which could be indicative of a strong comeback for the sector.

I believe the recent rise in NFT activity is about more than just coin prices; It’s down to the rise of utility-based NFTs.

Distilleries, Charities, and Female Empowerment

There are myriads of NFT projects offering real utility, tangible rewards, and even working toward the greater good. A prime example is the Umoja Foundation. If utility is rooted in making our lives a little better or easier, shouldn’t there be major projects targeted at helping those with the hardest lives? That’s part of Umoja’s mission, working with schoolchildren in Uganda to create digital art NFTs that can then be sold to help local orphanages. Their most recent collection is up for auction on Rarible now. The NFTs then boast four utilities – early access to future NFT drops, VIP entry to virtual and IRL events, discounts and giveaways, and governance in future projects with the Umoja Foundation.

I have a soft spot for Women Rise, an NFT project focused on inclusion and diversity and launched by Maliha Abidi. This computer-generated 10,000-piece NFT collection features female artists, professionals, scientists, coders, and many more from around the world. Some of the utilities include airdrops of Abidi’s book “RISE: Extraordinary Women Of Colour Who Changed The World,” surprise giveaways, and hand-drawn traits of the Women Rise NFTs. The project reports that around 40% of the approximately 5,600 Women Rise holders have purchased Women Rise as their first NFT.

“There were few women-led NFT projects when Women Rise first launched, and it was important for us to take up space in a busy and competitive crypto space, I was keen to establish Women Rise as a woman and Pakistani-led team with a global community that could leverage NFTs to represent women and also campaign for girls’ education on many different platforms and stages. To that end, NFTs have been very supportive of our mission,” Maliha Abidi, Founder of Women Rise NFT, and a member of the 100 Most Inspirational Women of Web3.

Next up is Degen Distillery. This is a crowd-created and community-driven spirits brand that has partnered with Scotland’s BrewDog brewery and Google. Their first NFT collection contained 721 NFTs – 360 Day, 360 Night, and 1 unique. The Unique NFT winner received a trip for 2 to Las Vegas for three nights, with a $750 tab at the BrewDog BrewPub in LV. All 721 NFT holders could exchange or burn their NFT for a collector’s edition bottle of 721 Vodka. Only 721 bottles were made.

Those who held onto Degen’s NFTs received membership pricing for life, access to events & some guest lists, priority access to future drops, and more. I love how this project blends the digital and physical, leverages a passionate community, and makes holding the NFT more appealing than selling. As part of Google’s involvement, Degen will have access to Google Cloud credits, a Web3 business community, funding, Google’s unparalleled network, and Google’s technical support team.

Other utility-backed projects in real estate, carbon credits, fractionalized BitcoinBTC mining, and renewable energy also ignite the imagination. Right now, however, I want to get back to my point about utility supporting the recent NFT boom.

2021’s NFT Boom Was a Proof-of-Concept

When I zoom out and look at the entire lifespan of NFTs, I realize that 2020 and 2021 were just proof of concept. So many people were dismissive of them, but I remembered that novelty typically precedes utility and was confident that with time, they’d come good.

The first NFT boom might never have happened had it not been for the pandemic, lockdowns, and the state of art, popular culture, and technology at the time. So many factors contributed to the first NFT boom, and I’m starting to see a similar pattern now. There are established marketplaces, a Bitcoin ETF looks to be on the way, crypto prices are rising, Web3 is flowing nicely, tokenization is getting ready to become a multi-trillion dollar industry, and there are new dynamics with AI and spatial computing that will irrevocably change culture as we know it. The setup for a 2nd NFT boom looks like it is in motion.

Of course, now the NFT market is saturated with cartoons and renderings, and AI has only propagated that, so it’s the responsibility of utility NFTs to distance themselves from non-utility-backed NFTs to carve out their success. Making NFTs useful rather than flex-worthy will elevate this new generation of digital assets.

One company that has loudly, proudly, and defiantly continued its march in the NFT world despite all market upturns, downturns, corrections, and complications is NikeNKE. Nike knew that building collections probably wouldn’t equate to long-term success in the NFT space – building an ecosystem, however, would. On top of the $185m+ in revenue they’ve made from NFTs, they’ve invested heavily in Web3 integrations, the Metaverse, blockchain-based community growth, and so much more. They’re having the last laugh.

In 2024, NFTs are going to be relevant again

That’s good news for everyone. The space will finally move away from flexing and speculative trading to push for genuine utility and progress. I’m all for it and can’t wait to see what happens! NFT marketplaces being competitive, innovative new NFT utilities making headlines, and the rise of Web3 will all stir up demand.

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