Everything you want to know about NFT (non-homogeneous tokens) is here

Written by Devin Finzer, CEO of OpenSea

Translation: Lao Lu

Source: Chain News

Editor's note: This article has been deleted without changing the original intention of the author.

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The non-homogeneous token NFT is a unique blockchain project with blockchain management rights. For example, ownership records for collections, game items, digital art, event tickets, domain names, and even physical assets.

If you have lived in the world of cryptocurrencies for a while, you may hear the words "non-homogeneous tokens" or "NFT". Maybe you are a skeptic, believer, or maybe you don't know what the non-homogeneous token is. Either way, this article is for you.

I dare you to bet a GodsUnchainedCard if you ask us for information about the NFT project. We've heard about it, and it's possible they talked to our developers at some point! The NFT ecosystem is made up of incredible innovators, and everyone is like this: from enthusiasts to developers, from players to entrepreneurs to artists, this is true for everyone. It's our pleasure to be part of this community.

This article aims to provide an in-depth overview of non-homogeneous tokens: the technical analysis of ERC721, the history of NFT, the general misunderstanding of NFT, and the current status of the NFT market. We hope this makes sense for newbies in the field, and for those who already know NFT but want to better understand the details of its internal work.

What is a non-homogeneous token?

Irreplaceable assets are just normal things. Alternative assets are weird!

Most discussions on non-homogeneous tokens start with the idea of ​​homogeneity, and the concept of homogeneity is defined as "can be replaced or replaced by another item of the same project. We think it will make things more complicated. To better understand the meaning of heterogeneous assets, just consider most of the assets you own. Your chair, mobile phone, laptop, and anything you can sell on Taobao. It's all non-homogeneous.

Homogeneous assets have actually proven to be strange assets. Money is a classic example of a homogeneous asset. Regardless of whether the serial number on a specific $ 5 bill is $ 5 or deposited into your bank account, $ 5 is always $ 5. It is possible to replace another $ 5 banknote (that is, 5) with a $ 5 banknote, thereby realizing currency exchange.

Note that swapping is relative; it only applies to comparing multiple things. Business class, economy class, first class tickets. Each ticket is probably interchangeable on the same shift, but you cannot exchange first-class tickets in the form of business class tickets. Even the chair you sit in can be used interchangeably with the same type of chair, unless you have developed some special accessories for a specific chair.

Interestingly, the definition of homogeneous assets can also be subjective. Going back to the ticket example: someone who cares about sitting by the window or aisle seat may think that two Economy Class tickets are not interchangeable. Similarly, a penny coin may be worth a penny to me, but more valuable to a coin collector. We will see that some of these nuances become very important when representing these items on the blockchain.

Heterogeneous tokens based on blockchain

Just as we had digital currencies before the advent of cryptocurrencies (such as aviation credits, gold coins in games), since the birth of the Internet, we have non-homogeneous digital assets. Domain names, event tickets, in-game items, and even social networks like Twitter, Facebook, Weibo are all non-homogeneous digital assets; they differ only in terms of tradability, liquidity, and interoperability. Many games are valuable: In 2018 alone, Epic Games sold clothing through the free game "Fortnite" and achieved $ 2.4 billion in revenue; it is expected that the event ticket market will reach $ 68 billion by 2025; the domain name market will continue Maintain steady growth.

We own a lot of digital assets, but we never really own them.

Obviously, we already have a large number of digital assets. But how well do we "own" these digital assets? If digital ownership only indicates that an item belongs to you and not to others, then in a sense, you own the assets. However, digital assets are not always the case if digital ownership is more like real-world ownership (which can be held and transferred indefinitely). However, you own these assets in a specific context, and these assets may or may not move elsewhere. Try selling Fortnite skins on Taobao and you will find it difficult to transfer digital assets from one person to another.

That's why the blockchain is here! Blockchain provides a coordination layer for digital assets, granting ownership and management rights to users. The blockchain adds the unique attributes of some non-homogeneous assets, thereby changing the relationship between users and developers and these assets.

standardization

In the digital world, from tickets to domain names, traditional digital assets have no unified expression. Games can represent collections in the game in a completely different way than event ticketing systems. By displaying non-homogeneous assets on the public chain, developers can build all non-homogeneous token standards that are universal, reusable and inheritable. This includes basic primitives such as ownership, transport, and simple access control. Other standards (for example, how to display NFT specifications) can be put on top, enabling rich displays in applications.

These are similar to other building blocks in the digital world, such as the file format of JPEG or PNG images, the HTTP protocol requested between computers, and HTML / CSS for displaying content on the Web. A layer has been added to the top of the blockchain to provide developers with a new set of stateful primitives for building their own applications.

interoperability

A heterogeneous asset standard allows them to move freely between multiple ecosystems. When developers launch new NFT projects, these NFTs can be immediately seen in dozens of different wallet providers, can be traded in the market, and have recently been shown in the virtual world. This is possible because open standards provide a clear, consistent, reliable, and licensed API for reading and writing data.

Tradability

Interoperability is most convincing in open market free trade. For the first time, users can move out into the original environment of the item and enter a market. They can take advantage of complex trading functions such as eBay auctions, bidding, bundling, and the ability to sell any currency, such as stablecoins and special currency.

Especially for game developers, the tradability of assets represents a transition from a closed economy to an open market economy. Game developers no longer need to manage every aspect of the economy: from resource supply to pricing to funding control. Instead, they can let the free market take on this part of the responsibility!

fluidity

The rapid tradability of non-homogeneous assets will lead to improved liquidity. The NFT market can meet the needs of various audiences, from strict traders to less mature traders, which can make assets more widely available to more buyers. Just as the ICO boom in 2017 spawned a new class of assets driven by instant liquid currency, NFT expanded the unique market of digital assets.

Invariance and provable scarcity

Smart contracts allow developers to place strict caps on the supply of non-homogeneous tokens and force the use of permanent attributes that cannot be modified after the NFT is issued. For example, developers can programmatically enforce that they can only create a specific number of specific rare items, not more general items. Developers can also force specific attributes to not change over time by encoding the chain. This is particularly interesting for art, because art relies heavily on how to prove the scarcity of the original work.

Programmability

Of course, like traditional digital assets, NFT is also fully programmable. CryptoKitties (which we will discuss later) are directly represented by breeding technicians as digital cats. Many of today's NFT mechanisms are more complex, such as forging, making, redeeming, randomly generating, and so on. Design space is infinite.

Heterogeneous token standard

The standard is the part that makes heterogeneous assets robust. They assure developers that the asset will behave in a specific way and accurately describe how it interacts with the basic functionality of the asset.

ERC721

ERC721 proposed by CryptoKitties is the first standard to represent non-homogeneous digital assets. ERC721 is a inheritable smart contract standard, which means that developers can easily import it to create a new OpenZeppelin library consistent with ERC721-contracts (we created the first useful tutorial for ERC721 contracts here). ERC721 is actually quite simple: it provides a mapping of a unique identifier (each identifier represents an asset) to an address, and thus represents the owner of the identifier. ERC721 also provides a license method for asset transfer using the transferFrom method.

  interface ERC721 {  
       function ownerOf (uint256_tokenId) external view returns (address);  
       function transferFrom (address_from, address_to, uint256_tokenId) external payable;  
     } 

If you think about it, these two methods are really all that is needed to represent NFT: one is to check who owns what, and the other is to send what. There are other features of this standard (some are very important for the NFT market), and the core part of ERC721 is very basic.

ERC1155

ERC1155, pioneered by Enjin's team, proposed a semi-homogeneous solution for the NFT world. In ERC1155, the ID does not represent an asset, but rather the category of the asset. For example, an ID might represent a "sword" and a wallet might have 1,000 of them. In this example, the balanceOf method will return the number of swords owned by the wallet. The user can transfer any number of these swords by calling "Sword ID" from transferFrom.

  interface ERC1155 {  
       function balanceOf (address_owner, uint256_id) external view returns (address);  
       function transferFrom (address_from, address_to, uint256_id, uint256 quantity) external payable;  
     } 

One advantage of this type of system is efficiency: with ERC721, if users want to transfer 1,000 swords, they need to modify the state of the smart contract (by calling the transferFrom method) to get 1,000 unique tokens. With ERC1155, developers only need to call 1000 transferFrom and then perform a transfer operation. Of course, this increase in efficiency has also led to a loss of information: we are no longer able to track the trading history of a single sword.

Also note that ERC1155 provides a superset function of ERC721, which means that ERC1155 can be used to build ERC721 assets (you only need to set the ID and quantity separately for each asset). Because of these advantages, the ERC1155 standard has been increasingly adopted recently.

Analyze the ERC20, ERC721, ERC1155 standards. ERC20 maps addresses to amounts, ERC721 maps unique IDs to owners, and ERC1155 has nested mappings that map IDs to owners and quantities.

Combinable items

ERC-998-led combinable items provide a template through which NFT can own non-homogeneous and homogeneous assets. Although only a few NFT combinations have been deployed on the mainnet, we think there are many exciting opportunities to use them!

Crypto cats may have scratching columns and food plates, and there may be some homogenized "pig" tokens in this dish. If I sold this crypto cat, I would sell all related assets.

Non-Ethereum Standard

Although Ethereum is currently home to most businesses, several other NFT standards have emerged in other business chains. DGoods is a pioneer of the myth game team, and it has been working on providing feature-rich cross-chain standards since EOS. The Cosmos project is also developing NFT modules, which are available as part of the Cosmos SDK.

Heterogeneous token metadata

As mentioned above, the ownerOf method provides a way to find the owner of the NFT. For example, by querying ownerOf (1500718) in the CryptoKitties smart contract, we can see that when writing CryptoKitty # 1500718, the owner of CryptoKitty was the account address 0x6452.

You can use OpenSea or CryptoKitties.co by accessing their CryptoKitty verification file.

But how does OpenSea and CryptoKitties determine the appearance of # 1500718 CryptoKitty? What is its name and unique attributes? This is the metadata.

Metadata provides descriptive information for a specific token ID. For CryptoKittty, the metadata is the name of the cat, a picture of the cat, a description, and any other characteristics (cattributes in CryptoKitties). For tickets and the like, in addition to the name and description, the metadata can also include the date and ticket type of the event. The cat's metadata looks like this:

  {  
       "name": "Duke Khanplum",  
       "image": "https://storage.googleapis.com/ck-kitty-image/0x06012c8cf97bead5deae237070f9587f8e7a266d/1500718.png",  
       "description": "Heya. My name is Duke Khanplum, but I've always believed I'm King Henry VIII reincarnated."  
     } 

The question is how and where to store this data so that NFT-aware applications can access it.

On-chain and off-chain

Developers must first decide whether to represent metadata on-chain or off-chain. That is, do you place the metadata directly in the token's smart contract, or do you host it separately?

On-chain metadata

The benefits of representing metadata in the chain are:

1) it exists permanently with the token and remains unchanged for the lifetime of any given application;

2) It can be changed based on the logic in the chain. The first point is important if the ongoing value of the asset far exceeds the value it originally created. For example, digital art will continue to exist throughout the age, whether or not the original website used to create art is still there. Therefore, it is important that the token identifier's life cycle must retain its metadata. Moreover, on-chain logic may need to interact with metadata. For example, for CryptoKitty, its "generation" affects the speed of CryptoKitty's reproduction, and all reproduction occurs on the chain (higher generation cats reproduce more slowly). Therefore, the logic in a smart contract needs to be able to read metadata in its internal state.

Off-chain metadata

Despite these advantages, most projects are off-chain storage of metadata based on the current storage limitations of the Ethereum blockchain. Therefore, the ERC721 standard includes a method called method tokenURI that developers can use to tell applications where to look for metadata for a given item.

  function tokenURI (uint256_tokenId) public view returns (string) 

The tokenURI method will return a public URL. It then returns a JSON data dictionary, similar to the example CryptoKitty dictionary above. The metadata should be consistent with the official ERC721 metadata standard for use by applications such as OpenSea. At OpenSea, we want developers to build rich metadata that can be displayed on our market, so we've added extensions to the ERC721 metadata standard so developers can include features, animations, and background colors.

Off-chain storage solutions

If you want to store metadata off the blockchain, you have two options:

Centralized server

The simplest metadata storage solution is to store it on a central server or cloud storage solution like AWS. Of course, there is a disadvantage to doing this:

1) Developers are free to change metadata

2) If the project is offline, the metadata may no longer exist.

To address issue 2, several services (including OpenSea) currently cache metadata on their own servers to ensure that metadata is effectively provided to users even if the original hosting solution fails.

IPFS

More and more developers, especially those in the digital arts, are using the Interstellar File System (IPFS) to store metadata offline. IPFS is a point-to-point file storage system that allows content to be saved between computers, so files can be copied to many different locations. This ensures that A) the metadata is immutable because it is uniquely addressed by the hash of the file, and B) as long as one node is willing to host the data, the data will persist over time. Now, with services like Pinata, developers can simplify this process (in theory) by handling the infrastructure for deploying and managing IPFS nodes and the high-expected Filecoin network, which is to add a layer on top of IPFS to motivate nodes to host files .

History of non-homogeneous tokens (2017-2020)

Now that we know what heterogeneous tokens are and how to structure them, let's take a closer look at how they are generated.

– 0 BC: before CryptoKitties

The experiment in NFT started when colored coins appeared on the Bitcoin network. Rare Pepes (Pepe, the first frog image based on the Bitcoin opponent system). Some were sold on eBay and later sold rare Pepes at a live auction in New York.

The first NFT experiment based on Ethereum was CryptoPunks, consisting of 10,000 unique collectible punks, each with its own unique set of characteristics. CryptoPunks, built by Larva Labs, has an on-chain market that can be used with wallets such as MetaMask, thereby reducing the barriers to entry for interaction with NFT. Today, with limited and strong brands available to early users, CryptoPunks is likely to be the best candidate for true digital antiques. In addition, punks live on the Ethereum network, which allows them to communicate with markets and wallets (although they have fewer new assets than earlier using the ERC721 standard).

0 BC: The birth of the crypto cat

CryptoKitties is the first project to mainstream NFT. CryptoKitties was launched at the ETH Waterloo Hackathon in late 2017. It features an original chain game that allows users to breed cats together to produce new and rare cats. This "Cat 0" cat is being auctioned through a Dutch auction, and these new cats may also be sold on the secondary market.

Although some people in the gaming community later labeled CryptoKitties as "not a real game", considering the design constraints of the blockchain, the team actually did a lot of work to develop game mechanisms on the chain. First, they built a chain breeding algorithm that is hidden in a closed-source smart contract that determines the cat's genetic code (thus identifying the "category" of the cat). The CryptoKitties team has even ensured the randomness and predictability of breeding through a perfect incentive system. These predictive kittens can be retained as a tool for future promotions. Eventually, they launched a Dutch auction contract and became a major price discovery mechanism for NFT. The CryptoKitties team is visionary and has provided a huge boost to the development of the NFT space.

We think the reasons for the viral outbreak of CryptoKitties can be attributed to:

Speculative mechanics

CryptoKitties's breeding and trading mechanism brings us a clear path to profit: buy a few cats, breed them into a rare cat, and then repeat it over and over (or just buy a rare cat, I hope someone will buy it ). This drives the breeding community: users who are dedicated to breeding and raising rare cats. As long as new users join and play this game, the price will rise.

During the crazy peak period, the volume of CryptoKitties was close to 5,000 ETH, while the price of Founder Cat # 18 ($ 110,000) was 253 ETH. Subsequently, the Dragon # 600 ETH exchange (September 2018) was traded for $ 170,000, offsetting Dragon's trading price, although many speculated that Dragon trading was illegal. This high price has attracted more users into the gold rush.

Viral story

CryptoKitties' success lies in its story. CryptoKitties is cute, shareable, and fun, and the idea of ​​spending $ 1,000 on an encrypted electronic cat is so ridiculous that it becomes good news. In addition, the urgent users of smart contracts "break Ethereum", which is a story in itself. Since Ethereum can only process a limited number of transactions at a time (about 15 per second), the high network throughput results in an increase in pending transaction pools and a rise in transaction fees. The average number of transactions processed per day has increased from 1,500 to 11,000. New potential cat buyers pay astronomical fees, and finally wait for time to confirm.

These factors have led to the "CryptoKitty bubble": new demand has entered the CryptoKitty world, and rising prices have brought new demand. Of course, all bubbles must eventually be eliminated. In early December, the price of average kittens began to decline, and the number of kittens also decreased. Many people recognize that CryptoKitties gameplay is very primitive compared to "real games" and won't attract more speculators. Once new products disappear, the market will also be affected. CryptoKitties' weekly trading volume is now around 50 ETH.

2018: Hype, Hot Potato Game, and Second Tier

Despite the market downturn, the establishment of CryptoKitties brought a magical moment to many people. For the first time, a team deployed a non-financial blockchain-based application that has become mainstream technology, although it only lasted a few weeks. Since CryptoKitties, NFT has experienced a second small hype in early 2018, and investors and entrepreneurs have begun new ideas for owning digital assets.

Second layer games and experiences

In the period after the appearance of CryptoKitties, this game developed by third-party developers on top of CryptoKitties had nothing to do with the original CryptoKitties team. The magic of CryptoKitties is that these experiences can be developed "unhindered": developers only need to place their own applications on top of public CryptoKitty smart contracts. In a sense, CryptoKitties can have a life beyond its original environment. For example, KittyRace allows users to win ETH by competing with CryptoKitties, while KittyHats allows users to decorate their own CryptoKitties with hats and paintings. Later, by letting your CryptoKitties and CryptoKitties exchange ERC20 tags, various interesting results can be achieved on the CryptoKitty market, allowing kittens on the CryptoKitty market to interact with DEFI. Dapper Labs (the new company behind CryptoKitties) used these projects to form KittyVerse.

During this period, the "Hot Potato" game also appeared. If you already know what a "hot potato" game is, then you really are NFT OG. In January 2018, a game called CryptoCelebrities was launched. The working principle is simple. First, buy a celebrity NFT that you can collect. Now celebrities can buy (or "snatch") higher prices, higher than before. When someone buys your celebrity, you get the difference between your purchase price and the new purchase price (minus the developer's purchase price). As long as someone is willing to buy your celebrity, you will gain something. But if you are the last celebrity, you will get nothing.

Because of this speculative mechanism, CryptoCelebrity's viral mechanism is terrible, and celebrities like Donald Trump can sell it at sky-high prices (123 ETH or $ 137,000). Although CryptoCelebrity games can ruin the entire space, we actually think that experimenting with pricing and auction mechanisms in the NFT design space is a crazy part.

Venture Capital Interest

In early 2018, venture capital and cryptocurrency funds also began to wonder about the space for NFT.

CryptoKitties raised $ 12 million from top investors, and another $ 15 million in November.

RareBits, co-founded by Farmville, raised $ 6 million in funding in early 2018.

LucidSight, a blockchain game studio, raised $ 6 million.

Later, Forte and Ripple together raised a $ 100 million blockchain game fund. Immutable (the company behind Gods Unchained) has raised $ 15 million in funding, including Naspers Ventures and Galaxy Digital. Mythical Games raised $ 19 million, and Javelin VenturePartners, a Javelin Investment Partner, led the funding for the development of EOS flagship brand Blankos Block Party.

OpenSea has also made a modest seed round of financing and strategic investments to further develop our vision of building a universal open market. Thank you so much to all our investors!

2018–2019: Back to construction

The NFT project began its construction phase after a small hype cycle in early 2018. The Elephant Team ’s AXIe Infinite and Neon Zone, CryptoKitties became their starting point, and doubled their core community. NonFungible.com launched an NFT market tracking platform and integrated the term "non-homogeneity" as the main term to describe the new asset class.

The art of math

Around this time, the art world was excited about NFT. Digital art has proven very suitable for irreplaceable currencies. The core element that makes a piece of art valuable is the ability to reliably prove its ownership and display it somewhere, something unprecedented in the digital world. Excited digital artists began their attempts.

Digital art platforms have emerged as the times require. SuperRare, Known Origin, MakersPlace, and Rare Art Labs all have a platform for publishing and discovering digital art, while Mintbase and Mintable have some tools designed to make it easy for ordinary people to create their own NFT. Other artists, such as JOY and Josie, are using their own wisdom to build a real brand in the space for themselves. Cent is a social network with a unique micropayment system that has become a popular topic for people to share and discuss encryption technology.

Josie's "Tune In", a CryptoArt, sold on OpenSea for 6 ETH

Incoming traditional IP

Following CryptoKitties, traditional IP owners have entered multiple collection spaces. Major League Baseball (MLB) partnered with Lucid Sight to launch an MLB cryptocurrency in April 2018, which is mainly used for games on the baseball chain. Formula 1 partnered with Animoca Brands to launch F1DeltaTime, a race to sell OpenSea-powered 1-1-1 cars, costing $ 100,000. Star Trek has launched a series of spaceships in the Lucid Sight game CryptoSpaceCommanders, and some licensed football trading card companies have joined in, including Stryking and SoRare. Recently, PaniniAmerica, one of the largest physical collection sellers, announced the launch of a blockchain-based collection of transaction cards. MotoGP also collaborated with Animoca to develop a blockchain game.

Japanese leader

Japanese games have pioneered more advanced game user modes and attracted early players. The RPG game MyCryptoHeroes, a complex economy in the game, continues the DappRadar ranking. MyCryptoHeroes is one of the first games to combine on-chain ownership with more complex off-chain activities. Players can use their heroes in the game, and when they want to sell heroes on the secondary market, they transfer the heroes to Ethereum.

Here are some "secrets" about why My Crypto Heroes have such high sales on OpenSea. The My Crypto Heroes Playbook – Episode 2: NFT Economics: https://t.co/Jvuu3etuob @ mycryptoheroes # マ イ ク リ _

—Michael Arnold | akzent.eth (@marnold_mch) November 15, 2019 Virtual world expansion

Launched NFT in the new blockchain virtual world to gain global land ownership and assets. Decentraland has raised a $ 25 million ICO for MANA tokens and has started selling packages for $ 10 million in the virtual reality metaspace. For most of 2018, Decentraland's LAND NFT transaction volume was larger than other NFT transaction volumes. The Decentraland project now has a public beta version that has a pretty good early experience, such as BattleRacers, a racing game that can run globally.

Another virtual world project, Cryptovoxels, has adopted a more streamlined approach. In mid-2018, CryptoVoxels launched with a very simple webVR experience, and was led by a developer to gradually expand its business, but be careful not to sell more land than needed. Today, CryptoVoxels' trading volume exceeds 1,700 ETH, and land prices are steadily rising.

The most exciting element of CryptoVoxels (and Decentraland) is the ability to show NFT to the world. Collection enthusiasts have created the CryptoKitty Museum, Cyberpunk Gallery, the NFT "Advent" calendar, a tower with top NFT items, and a virtual store where you can buy wearables. The CrypoVoxels environment is rapidly growing among digital artists, especially Cent users as a new content platform for the crypto population. Some artists even use the Roll app to build their own currency or "social currency", which can easily deploy new ERC20 tokens and sell artworks in social currencies.

Other virtual world projects have also come out, including works by Second Life creators such as Somnium Space and HighFidelity. Recently, the sandbox company sold its land similar to the Roblox universe with the goal of empowering builders and content creators. This is one of the most anticipated blockchain games.

Trading card games

From the beginning, card games were great for NFT. A physical card game like Magic is more than a game. It is a whole economy with dozens of partner sites and markets for buying, selling, and exchanging. In theory, like Hearthstone, Magic's digital equivalent can build an in-game market for their cards, but such efforts will be very cumbersome and may not be consistent with the business model of selling new products. Blockchain provides an instant secondary market that can be run outside the game.

@Blizzard_Ent just banned @blitzchungHS and stripped him of Hearthstone's bonus because they care more about money than freedom. We will pay for all his lost bonuses and a ticket to the $ 500,000 tournament: no player should be punished for his beliefs.

Before the game was released, the GodsUnchained team “locked” the card for a long time (allowing to deviate from the core functions of ERC721). During this period, third-party markets allow users to sell cards, but because they cannot be transferred, they cannot actually make a purchase. When the card was unlocked in November, the GodsUnchained trading market suddenly opened, gaining more than $ 1.3 million in secondary trading volume.

Other card games have quietly established dedicated advocates. Horizo ​​leader Skyweaver raised $ 3.75 million in seed funding from Initialized and released its public beta. Epics became the first blockchain-based collectible e-bidding trading card, while CryptoSpells was a Japanese card. The leader in trading games.

Decentralized Domain Name Service

NFT's third "asset class" (after gaming and digital art) is a domain name service similar to the ".com" domain name, but based on decentralized technology. The Ethereum Name Service was launched in May 2017 and is funded by the Ethereum Foundation. From 2017 to 2018, 170,000 ETH under the name was locked (as long as the bidder owns the domain name, it will succeed Of bids are locked into the contract). In May 2019, the team upgraded the ENS smart contract to ERC721 compatibility, which means that the name can be traded in the locally open NFT market.

Due to standardization (more standardized this year; more interoperability & more network effects), many of the best projects this year are growing. The best example is that @ensdomains is compatible with ERC721, so they can use the @opensea auction name in the fourth quarter of pic.twitter. com / mN1K8FuEJn

-Brian Flynn (@Flynnjamm) December 31, 2019 Unstoppable Domains recently launched a decentralized domain name system, which is backed by venture capital, and raised $ 4 million from Draper Associates and Boost VC for Series A funding. UnstoppableDomains was originally built on the Zilliqa blockchain and recently released .crypto as an ERC721 asset.

Other experiments

Although most of the NFT experiments are done in collectibles and games, other use cases are gradually being added. Both NFT.NYC and Token Summit sell their event tickets for two teams, NFTs and Coin. Kred. The Cored Kred team released the "NFT Gift Bag" for the event. Binance recently launched a holiday commemorative book, and Microsoft has also released the Azure Heroes for use by Azure ecological contributors.

CryptoStamps (a project of the Austrian Post Service) allows those who purchase real postal services and physical stamps to receive a special QR code so they can access those private possessions of rare random "encrypted stamps" that can be sold on OpenSea key. This project is particularly interesting because it connects the scarcity of digital assets with useful physical assets and attracts existing groups of collectors.

DapperLabs, the creator of CryptoKitties, has launched a match-style game called CheezeWizards. Interestingly, due to the initial error in the smart contract, the bifurcation of the game led to the appearance of "not pasteurized" and the wizard of "pasteurized". The project is a complex chain game, emphasizing the need for NFT metadata, contract upgradeability, and when the core attributes of items change, ensuring that auction capabilities are appropriately updated to achieve more standardization.

Casualties and recovery

Over the years, there have been no casualties. Today, almost all the hot potato games of early 2018 are dead (although OpenSea still has assets to show). Interestingly, some of these projects were brought back to life by community members. Whether CryptoAssault or Etheremon (now Ethermon) has been restored. Attempts to revive CryptoCelebrities through celebrity breeding games have not failed.

Symbolic myths of heterogeneous tokens

Now that we have given a broad overview, let's talk about misunderstandings.

Scarcity alone can drive demand

In the early days of the heterogeneous token ecosystem, people believed that users would care about the provable scarcity of NFT, and just because they were in the blockchain, they were eager to buy NFT. Instead, we believe that demand is driven by more traditional forces: utility and source .

The utility is obvious: I'm willing to buy NFT tickets because it allows me to attend meetings, and if I can show it in a virtual world, I would rather buy an artwork, and I would like to buy an item if it Words that can give me special abilities in the game. The origin of the concept encapsulates the story behind NFT. Where does it come from? Who ever owned it? As space technology matures, interesting NFT stories become more complex and begin to have a meaningful impact on the value of tokens.

Smart contracts mean assets always exist

It is also believed that assets can only exist permanently through the deployment of smart contracts. This ignores the fact that other entities (websites, mobile applications) exist as a portal for ordinary users to interact with these applications. If these portals fail, the value of assets will be greatly reduced. Of course, in the future, decentralized applications may be deployed in a completely distributed "unstoppable" manner, but from the current point of view, we are in a mixed world.

Removing the blockchain will solve all our problems

In 2018 and 2019, some projects adopted the "blockchain abstraction" method to hide all NFT mechanisms from users and provide username and password authentication for escrow wallets. This is an interesting approach because it provides a simplified getting started experience like a centralized application. The problem is that interoperability with the NFT (virtual world, wallet, market) ecosystem has been lost. We found that projects entering into the existing NFT ecosystem may sacrifice some usability in the short term, which is more attractive to current early adopters.

Market for non-homogeneous tokens

Current market size

Due to low spot asset prices, the market for heterogeneous assets is still small and harder to measure than the cryptocurrency market. In order to perform this analysis, we mainly focus on the secondary transaction volume (that is, the equivalent sales of non-homogeneous assets) as an indicator of market size. Based on this indicator, we estimate that the current monthly volume in the secondary market is around $ 2 to 3 million. Volume of the following items in the past six months:

Market growth

The number of users interacting with NFT is determined by sending, bidding, buying, or selling. The market is beginning to see signs of steady growth.

Following the CryptoKitties bubble at the end of 2018, the number of independent accounts that interacted with NFT increased from approximately 8,500 in February 2018 to more than 20,000 in December 2019. The market appears to be power users driven by the following core groups. For example, on OpenSea, a medium seller sold something worth $ 71.96 and an average price of $ 1,178, which means that there are many sellers. Note that large accounts like official game accounts do increase the average game number. OpenSea has an average purchase of $ 943.81 and a median purchase of $ 42.72.

Given that it's too early, the best way to measure market growth is probably to look at the leading indicator: developer interest in the field. Last year, as new developers entered the field, the number of major network ERC721 contracts doubled, reaching 1,000 in June 2019.

Currently, NFT is mainly sold in decentralized ETH trading markets. Surprisingly, stablecoins like DAI or USDC are rarely traded, and this is most likely due to the friction of acquiring the currency. Dutch auctions and fixed-price sales are often used for low-price items, while English (eBay-style) auctions are large items, such as great Gods Unchained cards or legendary games. Bundle sales are also a very popular sales method, and their percentage steadily rose to 20% in December.

Sales mechanism

NFT distribution

One might ask: what overlaps are there between various NFT projects? Is the community around the project relatively isolated ("GU" players can only play "GU" games), or is there too much overlap between communities? Is it possible for CryptoKitties enthusiasts to own the ENS domain name and participate in the digital art ecosystem?

The NFT network diagram is based on raw data on OpenSea and has approximately 400,000 addresses

Takens Theorem is an anonymous but very friendly Twitter account that provides some excellent analysis of the blockchain ecosystem (highly recommended to follow!) An analysis of the overlap between various NFT communities. The network diagram above is about 400,000 addresses based on raw data on OpenSea. On the outer ring, each network consists of unique addresses with NFT type. The number of nodes in the graph represents the number of nodes in the actual data-for example, thousands of addresses have only CryptoKitties. The size of the nodes in the graph is determined by the size they have.

In "GU", you can see many cards on many addresses! . The light gray nodes connecting NFT projects represent a prominent pattern of joint ownership. On the right side of the entire scene, you can see thousands of addresses with two NFT games. However, there are some smaller co-ownership systems between Cryptovoxels and Decentraland, while ENS and many others are represented by a decentralized linkage between different systems.

What's next for NFT? Our predictions for 2020

If you can see this, we congratulate you! We hope that you can learn a lot from the fun and grotesque world of NFT and inspire you to research some projects and even build your own projects. In the next article, we will discuss the future of NFT and make a series of predictions for the coming years.

Comment

1. Fortnite is the most popular battle royale game in the world. On July 27, 2019, Fortnite held a grand celebration to celebrate its second birthday. This event is properly called the first World Cup. And gave away millions of dollars (some more than $ 30 million). Kyle "Bugha" Giersdorf, 16, from Pottsgrove, PA, received a $ 3 million prize and was Fortnite's first World Cup champion.

2.On November 19, 2018, Opensea supports the use of Dai to auction and bid on NFT

3.OpenZeppelin library: github.com/OpenZeppelin

4.EOS's NFT standard game mythical.games

5.Cosmos NFT Module https://github.com/cosmos/cosmos-sdk/issues/4046

6.ERC721 metadata standard https://github.com/ethereum/EIPs/blob/master/EIPS/eip-721.md

7. Simple way to use IPFS https://pinata.cloud/

8. Colored coins: a method for representing and managing real-world assets on the Bitcoin blockchain https://en.bitcoin.it/wiki/Colored_Coins

9. Pepe the frog character http://rarepepedirectory.com/

10. Dragon worth 600 ETH or about 170,000 USD

11. Ethereum Domain Name Service https://ens.domains

12.Unstoppable Domains https://unstoppabledomains.com

13. Lao Lu's Blockchain Notes Luyaoyuan111

Source link: opensea.io

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