NFT Roundup #3: Decentralized gaming; lending with NFTs; Binance gets into NFTs; Ethereum's hashrate and NFT demand; Anthony Hopkins to star in an NFT-related movie
Buy the rumor, sell the news
Quick programming note: this newsletter has been converted from a general theme to one which covers NFTs (non-fungible tokens) exclusively. For more on this change, please refer to this introductory note here.
Why decentralized gaming is the future
By now, anyone familiar with NFTs is familiar with Axie Infinity, the video game in which you have to acquire NFTs just to play. Now comes a platform called Ulti:
Ulti is a platform that is seeking to help gamers, artists and developers better monetize their offerings through its marketplace and innovative features. It is the first NFT Marketplace for Game Assets built on Binance Smart Chain and prioritizes the ability to track digital asset usage on a blockchain network. First, it allows for the tokenization and trading of in-game assets. Assets such as skins, tools, and even characters have been traded within and outside of the gaming world for years but with Ulti’s marketplace, these assets can be securely traded with proper, irrefutable records of transfers of ownership, as well as increased revenue for the developers and artists behind the assets.
If you’ve never played Fortnite, or, really, any other video game made in the past twenty-five years, you might not appreciate how sophisticated and dynamic these games’ in-game economies have become. In a very real sense, these games are the precursor to the fully realized virtual economies that we see in movies like Ready Player One. The metaverse is coming, and both game development companies and platform plays like Ulti are making moves to try to establish themselves as the dominant marketplace for digital in-game goods.
NFT-based fixed lending protocol Pledge backed by Stanford alumni announces successful fundraise
For a different spin on NFTs than what we have seen thus far, let’s take a look at Pledge Finance:
Pledge Finance is leveraging NFTs to further differentiate itself from other DeFi protocols. Pledge will initially mint 50 NFTs, each representing a fixed-rate bond. These will be fully exchangeable in an NFT-based bond market, with each NFT representing the ownership, obligations and yield for a financial instrument. Financial institutions can use this tool to execute refinancing operations, swapping in and out of credit obligations.
This approach capitalizes on the current excitement for NFTs, repurposing it to make financial products such as bonds, loans, and derivatives more accessible to the DeFi world. Pledge’s ultimate aim is to serve the trillion-dollar financial supply chain market, bringing the legacy financial sector closer to the innovative and new decentralized ledger space. This mission is further supported by the success of Pledge’s first private round which raised $3 million in December 2020.
I come from a finance background, and I have to admit I don’t really understand what NFTs bring to the table here that non-NFT DeFi does not. Add to this the regulatory complexity inherent in offering financial securities on chain, and it will be interesting to see whether this company can execute on its plans.
Pledge Finance claims in its ToS to explicitly exclude US persons from its offering and platform.
APENFT is yet another NFT marketplace:
APENFT is supported by the world-renowned public chain Ethereum and TRON’s underlying technology, combined with the world’s largest distributed data storage system, BitTorrent File System (BTFS). APENFT has won the attention and support of TRON founder Justin Sun and other industry celebrities and has partnered with leading art institutions such as Christie’s, Sotheby’s, NiftyGateway and others. With the blessing of resources, APENFT Foundation and Tpunks will further enrich and improve the creative design and circulation of NFT works, create more boutiques and become the most influential brand in the industry.
The problem that this company, and all of its competitors, will face is that marketplaces generally have room for only a few platforms. Two-sided marketplaces are usually winner-take-all or winner-take-most, meaning most of supply and therefore most of demand aggregates around one or two dominant platforms. And, given OpenSea’s current dominance in this world, all of its competitors will have to feast on the remaining supply and demand.
Ethereum’s hashrate reaches all-time high, because of NFT minting?
Demand for NFTs has made Ethereum’s hashrate increase to record levels:
Despite their digital nature, NFTs can’t just be created like a standard file. Instead, they’re “minted” on the Ethereum blockchain, which allows them to be tracked and traded just like the ETH cryptocurrency, but with a nifty piece of digital art as well. (A step-by-step guide to minting an NFT can be found on the Ethereum.org website.)
All of this means one explanation for Ethereum’s record-high hashrate is the fact that NFT creators need miners to help them mint digital art that can fetch absurd prices from collectors, despite the mostly theoretical application of “ownership” they impart. Nobody tell The New York Times that’s where all this energy’s going.
“Hashrate” refers to the total computational power used by a blockchain. A good explainer is available here. Here’s a chart of Ethereum’s hashrate over the past year:
One note: hashrates are relevant for proof-of-work blockchains. Ethereum 2.0, the long-anticipated upgrade to Ethereum, which will vastly increase its scalability, will be a proof-of-stake blockchain, and so concerns about its high hashrate will not be relevant for the longer term.
Anthony Hopkins stars in NFT Based ZERO CONTACT, Cameron Chell talks about how Vuele will enable it
A direct-to-video movie starring Anthony Hopkins will be released as an NFT:
The movie will be released exclusively as an NFT, and it will provide consumers will access to exclusive content. This model is very promising for the entire entertainment industry and adds new revenue streams for everyone from the independent producer to the big studios.
I don’t quite understand what it means to release a movie “as an NFT”. Perhaps it means that whoever buys the NFT will be the one who owns the movie, or owns the rights to its distribution, or the right to cash flows that emanate from the movie.