NFT is considered to be the most likely to take over DeFi and become one of the hotspots of the next market. In this article, BKFUND founder Xu Chaoyi introduced several categories of NFT and the industry layout, and elaborated on the internal logic and typical cases of the NFT market.
Xu Chaoyi further stated that the development direction of the NFT industry should be studied from the four directions of deformation agreement, recast agreement, blind shooting agreement and anti-cheating agreement, and promote the implementation of technological innovation and commercial application in the NFT field.
Author |Xu Chaoyi
01
Several classifications of NFT
The blockchain industry in 2020 is an extremely magical year. When the concept of "DeFi liquidity mining" was on fire, the annualized mining yield continued to rise, reaching an annualized rate of several thousand or even tens of thousands.
With the decline in DeFi popularity, many new concepts have emerged and become popular, such as CoFi that combines computing with DeFi, GameFi that combines games and Defi, StaFi that combines the concept of POS Staking with DeFi, and the concept of IPFS and Defi. Integrated IPFSFi. Due to the appearance of some phenomenal Defi products related to NFT non-homogeneous tokens such as MEME and DEGO, NFT has started to enter people's field of vision again.
The literal meaning of NFT is "non-homogeneous tokens", that is, commodities that cannot be separated and cannot be replaced with each other. From the perspective of the attributes of the underlying assets, NFT assets can be divided into three categories: physical assets, Internet assets, and encrypted assets .
Among them, physical assets refer to a large number of offline physical objects that are actually guaranteed, such as a painting by Van Gogh, or a set of second-hand houses located in the inner ring of Beijing. The physical assets require a third-party organization to combine the physical objects with NFT tokens. Guarantee and exchange;
Internet assets refer to digital information assets based on the Internet, such as domain names and QQ accounts. Internet assets also require Internet companies or public Internet organizations to guarantee and exchange information assets and NFT tokens on a one-to-one basis;
Encrypted assets are native to the blockchain network . Since the bottom layer of its network facilities has been constructed based on cryptography and distributed account technology, the assets naturally have "free intermediary" properties, such as Ethereum domain name ENS, encrypted cat, virtual land, etc. Wait. From the perspective of the speed of asset scale development, the scale of NFT encrypted assets has developed the fastest, followed by NFT Internet assets, and finally NFT physical assets.
To study NFT encrypted assets more deeply, we can divide the current tens of thousands of NFT encrypted assets into five types:
The first is: NFT encrypted game assets, represented by CryptoKitty and Decentraland, the game company builds its own complete game logic on the blockchain network through smart contracts, and uses the player’s personalized game assets in the form of NFT tokens To express, game companies use the sale of game assets as the main form of income. By continuously expanding the player base and increasing the popularity of the game, players can profit by hyping NFT encrypted game assets.
The second is: NFT encrypted artwork. Artists directly create encrypted artwork based on the blockchain network for display and sale. Compared with traditional oil paintings, sculptures and other artworks, encrypted artwork can present more flexible and rich styles At the same time, the cost of display, auction, and sales is also lower. Using NFT technology, it is easier for artists to protect their original rights and publicly verifiable “multi-edition limited” artworks. The core content of encrypted artworks is its rare attribute. , High-value encrypted artworks are more of a status symbol for collectors.
The third type is: NFT encrypted financial assets. Due to the development of decentralized financial technology, there are more and more financial derivatives based on cryptocurrency , and NFT is the best technical expression form of encrypted financial derivative certificates .
For example, if we pledge part of our ABC tokens to a validator node of a POS network for 30 days, we will be able to obtain a bond certificate NFT with a maturity date of 30 days. Any user who holds the certificate NFT can receive it within 30 days. Then retrieve the pledged ABC tokens and their corresponding interest from the corresponding network node.
NFT-based financial derivatives certificates can greatly simplify the workload of certificate issuance, circulation, and transfer . On the contrary, if FT Token (homogeneous token) is used to represent encrypted financial certificates, a series of network will appear ABC7, ABC14, and ABC21 tokens will undoubtedly confuse and confuse certificate holders and investors.
The fourth type is: NFT encrypted network assets, which refers to the right to use the blockchain network, including the right to use the account, the right to use the name (name), the right to use storage resources, the right to use computing resources, and network parachain insertion. Slot (essentially network security), etc. , ENS and similar blockchain short domain names are currently the most typical encrypted network assets. By purchasing or leasing ENS domain names, companies or KOL users can enhance their account brand Recognition.
With the emergence of public storage blockchain networks and public computing blockchain networks, a large number of idle storage resources and computing resources will be released by miners in the future and flow into the market in the form of NFTs for transactions with demanders.
The fifth type is: NFT encrypted data assets, which refer to the right to use blockchain network data. It is fundamentally different from the aforementioned encrypted network assets. Encrypted network assets are a kind of public resource. There is only a difference in pricing between resources. Does not have privacy attributes .
For example, we can issue the right to use the Polkadot No. 1 slot in February 2021 as an NFT, while the data assets are provided by the network's enterprises or individual users, and need to pass zero-knowledge proofs, privacy calculations and other technologies To ensure data security.
For example, 1,000 volunteers uploaded their own blood test reports for medical research. These 1,000 reports are 1,000 encrypted data NFTs. With the protection of privacy computing technology, any external application cannot directly read the NFT. Detailed data information, but the calculated value can only be obtained through the interface: positive or negative, and the NFT holder needs to be paid for each use.
From the perspective of the current development of NFT, in fact, the current NFT technology is at a very early stage. According to the data of the nonfungible platform, the monthly transaction volume is less than 10 million US dollars, which is less than one hundred thousandth of the FT Token market. Even with a conservative attitude toward the development of NFTs, there will be hundreds or even thousands of times the market size growth space in the next two to three years.
02
NFT's layout and opportunities
This year’s NFT market gives everyone a very lively overall feeling, but it is neither easy to use, nor fun, nor profitable . In other words, it lacks assets, lacks users, and lacks liquidity. What is fundamentally lacking, In fact, it is the public technical infrastructure of the NFT industry. In addition to wallets, there are currently only more than a dozen industry ecological platforms, and almost only Cocos-BCX is the platform that serves NFT application developers, but Cocos-BCX has The high threshold of programming technology is not easy for most people to accept and use.
Different from NFT Token, a single currency of FT Token can have a very high market value, a large user group and excellent liquidity. Therefore, FT Token does not have such a strong demand for public technical facilities, but NFT has every coin. They are all unique and have different values and market prices. Therefore, the soundness of the NFT public technology infrastructure is extremely important to the overall development of the industry.
As an investor in the NFT industry at this stage, we suggest to pay more attention to the "small innovations" of the NFT protocol layer and tool layer. Although small innovations are a small step in technological advancement, they may become a big step in ecological expansion. Fortunately, there are currently many teams in the industry working on the expansion of the NFT protocol layer. In addition to the standard metadata structure of ERC721, from the starting point of application landing, there are successively mortgages, leases, father-son NFT, RFT, royalties, batch transfers, etc. The emergence of an agreement or agreement proposal.
Imagine that when the protocol layer of the entire NFT industry is gradually improved, tooled, and productized, it will become extremely simple for ordinary users to create a new NFT game or NFT application, just like building Lego blocks. The NFT protocol interface is just like our "one-click DeFi" today. Even people without programming experience can use the stock of NFT assets to design and launch a fun, interesting, and exciting NFT mini game. At that time, I believe that the NFT market will quickly blow out and become popular, so that more out-of-circle users, out-of-circle funds, and out-of-circle traffic will pay attention to the field of NFT.
For example, an encrypted NFT enthusiast named Yaoyao bought a favorite encrypted artwork in SuperRare, but at the same time she also collected a lot of cute encrypted cats and Decentraland virtual land, in order to simplify the management of these encrypted assets She used a combination agreement to package the encrypted artwork, encrypted cat, and virtual land into a new package NFT, and split it into 10,000 pieces of nToken, and sold some of them on the Uniswap market for profit, while the other part she still hopes It can hold, so it retains its own ownership of the fragments , but leases the use rights to another encrypted NFT enthusiast Xiao Ai.
Xiao Ai himself is also a krypton gold player in encrypted games, so he upgraded the weapon and equipment attributes he possessed in the game using the deformation protocol , easily defeated other players, and made it to the top player list. After that, another encrypted NFT big Crocodile has collected a limited edition of other artwork NFTs, and eagerly hopes to collect this final artwork NFT in Yaoyao's hands and become the exclusive owner of the artwork, so it acquires all nToken fragments from the market and Synthesized into a complete original encrypted artwork NFT through the recast agreement , and the creator of the original artwork can continue to profit from the secondary sale or even multiple sales of the artwork because of the royalty agreement , which inspires his creative enthusiasm .
Finally, let me briefly introduce to you what our team is currently doing. We have established a community-based organization "NFT Labs" composed of NFT technology enthusiasts, dedicated to researching innovative protocols in the NFT field and its products化.
At present, we are studying four directions, deformation protocol, recast protocol, blind shooting protocol and anti-cheat protocol. The deformation protocol is used to design the rules for the mutual combination transformation between NFT and NFT, NFT and FT , and the recast protocol is used to solve The fragmentation and reorganization of NFTs , the blind auction protocol hopes to introduce the Nobel Prize-winning second-price auction sealing mechanism into the blockchain world through privacy computing technology, and the anti-cheating protocol is to identify and Filter NFT's false and fraudulent transactions to purify our trading environment and protect the rights and interests of ordinary users.
We are also cooperating with the physical merchants and virtual operators of Jingdezhen Ceramics to study the mechanism and methods of physical assets and Internet assets on the chain, hoping to promote technological innovation and commercial application in the NFT field through our own "small contributions" .
In the "big market" of NFT, huge development opportunities are still brewing, and there are opportunities to lead the next wave of blockchain, which deserves more attention and practice.
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