Bloomberg: Startups are using NFTs for gaming, finance and art

Author: Hannah Miller, Bloomberg; Compiled by: Deng Tong, Golden Finance

In 2022, when the cryptocurrency bubble bursts after a series of scandals, no corner of the market will be better than non-fungible tokens Experienced more pain. Global NFT sales plunged 63% to $8.7 billion last year, leaving many assets virtually worthless, according to CryptoSlam.

Those who spend big bucks to buy the hottest tokens are derided as fools, with some investors even suing celebrity NFT promoters, claiming they were defrauded. Now, with Bitcoin surging with the launch of a U.S. exchange-traded fund tied to the digital currency, the NFT industry is looking for ways to turn a new leaf and reignite excitement in the digital space.

Startups are making a renaissance about NFT applications in gaming, finance and art, claiming they have learned hard lessons from the past that will make their latest efforts more durable. They want the tokens to be seen as more than just expensive profile pictures restricted to the rich and famous, but the digital asset has yet to establish a solid foundation.

According to CryptoSlam data, NFT sales in November nearly tripled from the previous month, reaching 9.18 billion and then surpassed $1.7 billion in December. However, January trading volume fell 33% to $1.2 billion, suggesting that NFT recovery may be bumpy. Sscepticism about blockchain gaming, the uncharted territory surrounding financialized NFTs, and doubts about whether NFT art can recapture sky-high sales all pose challenges for a troubled market.

“I think this desire for exclusivity is a huge mistake,” said Luca Netz, CEO of NFT startup Pudgy Penguins. “I think people really What they want is fans. They want collectability."

Gaming

According to Netz, industry fluctuations are part of the reason why Pudgy Penguins developed a toy line inspired by the chubby characters from its popular NFT line. Cartoon bird. The Pudgy Toys line sold 750,000 units in seven months, generating sales of $10 million.

“We knew we needed to create real revenue streams that were not based on variables we had no control over,” Netz said.

Pudgy Penguins for sale on OpenSea Source: OpenSea

Each toy has a QR code that can Take the owner into the Pudgy World online game, which is still being launched. Netz said he hopes to release a full version within the next 12 to 18 months. There are plans for the toys to include NFT features, such as costumes for the player’s penguin avatar, which can be sold within Pudgy World.

Like Pudgy Penguins, Bored Ape Yacht Club creator Yuga Labs is hoping to capitalize on the success of its still-popular PFP NFT in the gaming space. During the cryptocurrency bull market, Yuga raised funds at a $4 billion valuation and began a controversial token project, A collaboration with adidas AG and a trilogy of short films currently on hold. Former CEO Daniele Allegri said in an interview with Bloomberg before his resignation that the company had too much to do.

Yuga is focused on developing the BAYC-inspired Otherside game, which failed to sell NFTs tied to virtual lands in its eponymous digital metaverse and received mixed reviews for its trailer. Alegre declined to reveal an official release date for Otherside, which was originally slated to launch last year. “We’re kind of strapped for time,” he said.

Yuga co-founder Greg Solano posted on X when he announced his return as CEO: "Otherside is also a huge transformation." "We have a lot of work to do."

Bored Ape #2967 physical artwork by Bored Ape Yacht Club (left) and Mutant Ape #1933 by Mutant Ape Yacht Club , both sold as NFTs, will be showcased on the Hong Kong CoinUnited cryptocurrency exchange in 2022. Photographer: Paul Yeung/Bloomberg

As Yuga and Pudgy Penguins work harder to push NFTs into gaming, they are entering spaces with varying degrees of success. Axie Infinity, one of the best-known blockchain games, has been criticized for its $600 million hack in 2022 and for its poor gameplay.

Zollpa CEO Aaron Jacobson said,The mistake many NFT projects make is focusing on making money rather than creating interesting game.

“It’s not a sustainable model where you do an Initial Coin Offering or NFT minting and require all players to spend a lot of money up front before the game is released,” he said .

Zollpa launched a public beta of a shooter called RoboSquad Revolution in November. The company plans to eventually integrate NFTs that represent weapons or features for player robot avatars.

Finance and Art

Some startups are looking to use NFTs in the financial sector. Stephen Young, CEO of P2P lending platform NFTfi, said the popularity of collectibles such as BAYC and Pudgy Penguins makes them good candidates as collateral for loans. "Volume remains quite high in the top blue-chip PFPs," he said.

Since its launch in 2020, NFTfi has hosted more than 56,000 loans worth approximately $500 million. Lenders decide how much they want to loan and set the interest rate, Young said.

Framework Ventures co-founder Michael Anderson said he sees other financial uses for NFTs, noting that more and more companies are introducing tokens that represent "real world assets," or RWAs, such as bonds, merchandise or real estate.

"Even if we're talking about something like a Treasury bond, it has different maturities, different yields, different prices, so the customized information needs to be stored in something that is inherently irreplaceable," he explain.

But NFTs, including those related to finance, may be subject to regulatory scrutiny. The SEC settled with media company Impact Theory LLC in August, saying its NFT offerings were unregistered securities.

"Everydays: The First 5000 Days" by Beeple, cast on February 16, 2021. Source: Christie's 

Art NFT sales in 2021 were equivalent to $69 million worth of digital works by artist Beeple and are currently the best performers in a set of NFT indexes created by Nansen category. These indices track the market performance of different types of NFTs, with the social category including PFP NFTs.

Auction House Digital Art Director Michael Bouhanna said Sotheby's has been selling NFTs since 2021 and continues to see interest in the tokens.

“Some artists have more of a coding background, and for them it’s very natural to use blockchain technology or some generative art program in their creative process,” he said.

Sotheby’s sales of NFTs and digital art exceeded $30 million last year, a 50% increase from 2022 but still less than half of Beeple’s NFT sales in 2021. In January, Sotheby’s auction house saw $1.6 million in sales of Ordinals, NFT-like items based on the Bitcoin blockchain and collected by bankrupt crypto hedge fund Three Arrows Capital. Sales of digital artwork also exceeded $1 million.

Concerns that cryptocurrencies’ links to scandal, crime and chaos could hinder new growth in the category A bit of a break from the optimism surrounding NFTs.

Zollpa's Jacobson said: "As soon as they hear the word web3 or NFT, they immediately avoid the game and think it is a scam."

Zollpa's Jacobson said. p>