NFT is the number one hot word in the 2021 "Collins Dictionary" list, and many people are willing to call 2021 the first year of NFT. In the past few years, we have witnessed the development of NFT from the Pepe circle culture in the early Myspace to a global trend vane. Whether it is in the music circle, game circle or photography circle, if you want to become a trendsetter in the industry, you must be inseparable from the blessing of NFT. In 2021, the NFT work "Five Thousand Days" sold at Christie's auction for US$69 million announced to the world the infinite possibilities of this track for the field of art.
As NFT is popular all over the world, the domestic market is also moving. As an imported product, after entering the Chinese market, NFT appears more as a "digital collection". At the same time, a series of problems are also emerging. , Compliance supervision urgently needs a consensus.
To get to the bottom of the matter, what path should NFT digital collections take in China in order to create localized vitality? This "domestication and improvement" experiment will collide with and ferment what kind of landing results and commercial responses, therefore, the computing power think tank "2022 Digital Collection Research Report - NFT: The Differentiation of Chinese and Western Value Capture Roads" is released for the first time! By summarizing the development of digital collections at home and abroad, it tries to reveal the differentiation and difference of NFT's Chinese and Western value capture roads, the particularity of domestic digital collections and the industrial ecological map, in order to provide information for the trading of NFT digital collections and future industry compliance. some ideas.
Digital collections: the "naturalization" of the NFT concept
On March 12, Yuga Labs, the parent company of BAYC (Board Ape Yacht Club), announced that it had acquired the IP of the Crypto Punks and Meebits NFT collection from Larva Labs. This news brought back the once-popular NFT project Crypto Punks Back to the public eye.
On the same day a year ago, on March 12, 2021, Christie's auction house in the United Kingdom successfully auctioned an NFT work called "Five Thousand Days" at a price of US$69.4 million. This is the first time in the history of Christie's auction house. The auction of NFT works also kicked off the wave of encrypted art.
NFT, an emerging art carrier and virtual form of expression, provides artists with more diverse scenes to expand the new boundaries of human creativity, and also allows them to quickly "promote" to become the "darling" of the art circle. There are also more and more art exhibition halls and original artists in China trying to explore more possibilities of works in the NFT field.
On June 23, 2021, Alipay and the Dunhuang Academy of Fine Arts jointly released a limited number of 16,000 NFT skins called "Dunhuang Flying Apsaras" and "Nine-Colored Deer" on the Alipay applet of "Ant Chain Vermicelli". Tencent followed suit on August 2 and launched the first NFT trading app in China and named it "Magic Core". In the first period, it released 300 "Thirteen Invitations" vinyl record NFTs. The release of these three NFT works also announced that domestic leading companies have officially begun to deploy on the NFT track. After October 23, all the NFTs sold on Alipay's "Ant Chain Fan Granules" and Tencent's "Magic Core" were renamed digital collections, which also marked the localization of NFTs. Starting from the improvement of naming, digital collections One said that it has laid the tone that China will move towards currency-free NFT, weakening the secondary transaction attributes and financial characteristics of NFT, and more in line with domestic regulatory requirements.
The Differentiation of Chinese and Western Ways of Value Capture
The report pointed out that due to the different positioning of NFT in the Chinese and Western markets and the differences in policy supervision, NFT has embarked on two different paths of value capture in China and the West, mainly in:
(1) Buyer's market and seller's market
From the perspective of the buyer's market, the overseas NFT market is temporarily oversupplied and is in a buyer's market. The relatively simple NFT release process and the fully liberalized secondary market have resulted in the number of overseas NFT casting far exceeding market demand, and the popularity of project sales often depends on internal factors of the project. In the domestic market, due to the current imperfect supervision of the digital collection trading market, in order to avoid the joint relationship of domestic digital collections with the same virtual currency as overseas NFT works and secondary market speculation, the domestic digital collection trading platform currently adopts the PGC model. Mode, that is, timed and limited releases. In view of the huge domestic market, PGC digital collections are completely in the seller's market, and usually the collections are sold out immediately once they are launched.
(2) Types of works and methods of creation
From the perspective of the types of works and creation methods, the vast majority of NFT works in foreign countries are mainly personal creations. New users have a high degree of autonomy in creating NFT works. Users can create their own NFTs, set the transaction copyright fee ratio, the number of works, and the format wait. On the other hand, the creation of the domestic digital collection market is mainly based on the cooperation between the platform and history museums and well-known artists, and the works of ordinary artists account for a relatively small proportion.
(3) Pricing method and secondary market
Take the Opensea pricing method as an example. After the creator completes the creation, he can choose to publish it on the Opensea platform: fixed price, bidding, or bundled sales. The final works can be put on sale after being reviewed by the OpenSea platform. In order to further stimulate users' creative enthusiasm and increase market activity, OpenSea has launched the Collection Manager (Works Manager) function, which allows users to release NFTs for the first time without paying Gas fees, and users will pay the corresponding Gas fees after the NFT is sold , and the gas fee for users to sell NFT will decrease with the increase in the number of transactions, and the price reduction will be obvious. At the same time, Opensea completely liberalizes the secondary market and encourages users to conduct secondary transactions. The price of NFT will fluctuate more with market conditions and supply and demand.
In the domestic market, in order to prevent speculation on digital collections and potential money laundering risks, the digital collections released by the platform in the same batch adopt a unified market price, and the pricing power of collections is usually in the hands of platforms or institutions, that is, platform-led "Negotiating, and most of the platforms are not open to secondary market transactions.
Indigenization experiments: the road to a digital renaissance
The popularity of digital collections in China not only evokes the rise of new art paradigms, but also contains vigorous business opportunities. Digital collections inject a natural fan effect into cultural and creative IP marketing, with their own "seed users", giving fans a closer sense of participation and acquisition, and making artworks more accessible, and entering thousands of households from the cryptopunk circle Ten thousand households. At the same time, it drives the reconstruction of the entire upstream and downstream value chain of digital content from asset distribution, copyright confirmation and protection, transaction circulation, etc.
The change in valuation and pricing is an important manifestation. Art products will be tilted from a platform-led bargaining model to a "marketization", which is the so-called "creator economy". From a global perspective, top NFT exchanges pay more attention to active user atmosphere and unique community mechanism. For example, Foundation adopts the system of inviting creators to settle in to ensure the high quality of platform collections; SuperRare focuses on mobilizing the enthusiasm of community users , Improve the quality of digital collection supply.
The creator economy improves the status of content creators to a certain extent and reduces the commission share of centralized platforms. Through the smart contract embedded in the digital collection (NFT), creators can obtain continuous royalties from subsequent transfers. To a certain extent, the division of monopoly and authority has made the division of labor between the upstream and downstream of the art industry more fair, and the voice of creators has increased. First of all, it plays a positive role in promoting the construction of a healthy creative ecology.
The huge value hidden in the field of digital collections has attracted domestic companies to enter the market one after another. According to the statistics of the report, there will be as many as 38 distribution platforms for digital collections in China in 2021, and they can be roughly divided into three echelons based on comprehensive factors such as the distribution quality, quantity, cultural connotation, platform's own traffic, and the underlying technical performance of the blockchain. .
Computing Power Think Tank Tabulation: Three Echelons of Digital Collection Issuing Platforms
Prospects for the future trend of digital collections
According to the report: Under the PGC model, domestic digital collection distribution platforms have gradually explored a set of legal and compliant survival rules that are suitable for domestic policies and technical environments, but if digital collections want to achieve longer-term development in China, the The creation of the cultural value of the collection itself, the construction of the market supervision system and the gradual liberalization of the secondary market are inevitable trends.
(1) Business model: the core competitiveness of digital collections will be transformed from the endorsement of the issuer to multiple elements such as content quality and operating mechanism
With the diversification of distribution channels, the core competitiveness of the platform to issue digital collections will gradually transfer to the collection itself, so improving the diversity and artistic quality of digital collections will become the core factors affecting sales.
(2) Infrastructure: The secondary trading market, distribution channels, and cross-chain transactions of digital collections are expected to be further opened up, and the Cultural Exchange may become the first stop for pilot secondary transactions
As my country is vigorously promoting the development of blockchain technology and the popularization of digital renminbi in the future, the market needs to simultaneously step up the construction of regulatory mechanisms to prevent speculation and financialization of digital collections. However, with the improvement of the market and the regulatory system, it is expected that the secondary trading market, distribution channels, and cross-chain transactions of digital collections will be gradually liberalized in China, and officially designated cultural property trading venues such as cultural exchanges may become digital assets. The first stop of the pilot project of collection trading.
(3) The supervision mechanism and compliance policy are gradually improved and improved
At present, the basic consensus on digital collections in China is to "prevent hype". From a technical point of view, this is not difficult to achieve. Since most platforms use alliance chain technology, it ensures that each platform can handle collection transactions and data processing. On the one hand, it is within a controllable range and can effectively prevent market speculation. But even so, there are still hidden dangers of speculation in the market.
Relying on the self-discipline of enterprises is far from enough for the market development of digital collections. In the future, relevant regulatory authorities need to "clarify the nature of digital collections and related business activities" as soon as possible and "establish a sound working mechanism to deal with the risk of hype in digital collection transactions." "Strengthen the risk monitoring and early warning of digital collection trading hype", refer to the legislative style of the relevant departments of virtual currency, improve the digital collection legislation and regulation system, and ensure that the digital collection industry is on a safe and controllable development track.
