With the closure of 2021, the NFT market has has reached US$23 billion in trading volume and is expected to further increase with the NFT market reaching mainstream adoption.
With the NFT market becoming more saturated, creators have come to realise that there is a need to reimagine a way that NFTs can be utilized apart from just a picture.
Today, NFT holders don’t just hold for the art but the utility, but the array of benefits they get from it.
From a range of exclusive memberships to access to future whitelists, NFT project teams have been creative in coming up with ways for individuals to purchase NFTs.
Let’s take a look at how NFT scarcity helps to create a more unconventional type of asset just like gold, and how utility has changed the way NFTs are traded.
A new layer of assets
Scarcity of any asset has long been associated with value, even if it technically has no worth. It is attributed to the demand and supply of a market.
This is one of the key elements that has allowed gold to maintain its allure over its inception. NFTs have the same principle as scarcity thanks to its non-fungibility, but with an added layer of complexity, digitality and technicality thanks to smart contracts.
NFTs can not only add as an asset in a basket of goods, but also act as a medium in the Metaverse or advance industries today.
Its unique properties have brought about a new layer of connectivity, most notably enhancing consumer digital asset spheres such as fan engagement, gaming, and loyalty and rewards.
What are utilities do NFTs have?
Unlike standard NFTs, utility NFTs have various valuations, depending on perks, access, and opportunities they present to any token holder.
Take a look at our article on how to value NFTs for more information. Although we are at the nascent stages of Utility NFTs, this new trend has given more accurate value accrual for NFT technology and limitless opportunities for visionary enthusiasts.
The Utility NFT industry can be classified into these broad categories of:
- Social NFTs
- Community NFTs
- In-Game NFTs
- Gambling NFTs
Utility NFTs are already distributing the industry, and it is expected that more of these categories will be developed in the future.
In the gambling sector, blockchain adoption has been rather slow as these typically still rely heavily on traditional technologies.
However, some projects like Sloties have been innovative in incorporating blockchain onto their gambling platforms. Sloties is a 10,000 NFT project on the Ethereum blockchain offering utility in the gambling sector.
Users are able to play slot machines but instead of earning cash, they earn Sloties. Sloties get a stake in the casino through their Sloties, and the community can invest their NFT assets to get rewards.
Besides just generating a passive income for users, this NFT holding model promotes holding culture and drives the demand and additional value for these tokens.
In the community sector of utility, the Bored Ape Yacht Club is one of the most famous NFTs besides CryptoPunks.
BAYC has a utility of perks including exclusive access to a members only space like the Bathroom. Known as one of the best blue-chip NFTs, it comes with an array of benefits that cost more than the NFT itself, incentivizing its exclusivity.
Some other perks that have come with it are an exclusive merchandise store exclusive for members, MAYC, BACK, mansion party access, and more recently FnB and Gucci BAYC partnerships.
Yuga Labs, the company behind BAYC also launched ApeCoin, an ERC-20 governance and utility token used to empower a decentralized community building at the forefront of Web3.
BAYC is also in the process of building a Metaverse in collaboration with Animoca Brands, and its Land NFTs are set to be minted on 1 May.
The amount of utility this NFT provides is enormous, making it a valuable hold for many users.
NFTs can also be used in the social sector, such as Ghetto Sharkhood. Ghetto Sharkhood is an NFT that brings real-world incentives to underlying users.
Featuring a collection of 10,000 unique NFTs, some of the main utility that comes with it are its impact fund which supports environmental courses and funding community initiatives. The Shark Coin also allows collectors to stake and spend, as well as play and host NFT games.
Beyond just that, its initiative plans to bring out more real-world utility, where proceeds from its play-to-earn games go to community agricultural programs in rural areas. It also empowers farmers to cultivate sustainable farming, cover children education and healthcare in developing countries. Moreover, it participates in animal conservation and beach clean-ups.
Figment is another utility NFT project still in its early stages of development and is a Web 3.0 project aiming to bridge the gap between Web 2.0 and Web3.0, with the aim to connect business leaders from both Web 2.0 and Web 3.0.
In Figment, there are 3 types of NFTs of Citizen, Patron, and Angel, all with different supplies. Each of these NFTs have exclusive benefits and perks by holding it, and essentially can be considered like a pass. Holding this NFT grants exclusively access to its virtual and physical club location.
2022 will see the launch of its NFT museum and physical location in Singapore. Its utility Is pretty great for an NFT and could be one of the leading NFTs in the future. For example, the Angel rank contains these perks and benefits.
NFTs have evolved tremendously throughout its initial inception and NFTs combine both exchange and experiential value by containing utility. A simple jpeg has now become a medium for endless opportunities with the utility benefits that come along with it. The verifiable uniqueness of NFTs will impact both analogue and digital realms the world over.
Main enterprises and content creators have began to realise how utility NFTs can be customized for any purpose. NFTs are simple and intuitive, and may be the bridge for mainstream adoption in the next bull run.