On 26th April 2022, history was made on this day with the newly launched Okay Bears NFT on Solana. Reminiscent of Bored Ape Yacht Club, the Okay Bears collection comprises of 10,000 different bear avatars in a variety of colours and outfits. It launched with a mint price of 1.5SOL (~$150 USD) and within 24hrs, the project reported approximately 187,000 SOL in secondary trading volume in all marketplaces (mainly Magic Eden and OpenSea). This was certainly a record-breaking milestone in the history of Solana NFTs.
At the time of writing, it currently sits at the top spot in “Top NFTs” traded on OpenSea. This reportedly marks the first time a Solana NFT project came in top on OpenSea. What does this show? Are Solana NFTs finally getting the attention that it deserves? Are we in for another NFT summer?
Before we get too excited, let us dive deeper into the bull case of NFTs in general. It would be good to know why is this happening and what kind of potential NFTs have in the future.
1. NFTs help to give recognition to artists
Back before NFTs were a thing, we often had talented artists who worked hard but did not get the recognition they deserved. An artist would be people who practiced music, painting, sculptures, film, literature, theatre, etc., professionally. These people were mostly freelancers or worked for large organizations. Oftentimes, they were overworked and underpaid. The emphasis on Science and Technology in the past decade has greatly overshadowed these talents in the Art industry.
The advent of NFTs gave our artists an avenue to showcase their art pieces. Given the fact that art pieces can now be generated digitally on the blockchain, the artist will be able to publish and sell his own artwork on-chain. The outreach has increased by multiple folds as art collectors and the artists can now connect with each other on a global stage.
Artists can now also have a greater share of the revenue earned because they no longer have to work for these profit-driven organisations to publish their work. Hence, there will no longer be a middle entity that controls how much the artist is entitled to earn.
Hear about the struggles of being an artist in web 2: https://www.youtube.com/watch?v=Tvj-XnVKQI8&ab_channel=AsianBoss
2. NFTs allow startups to raise funds more easily
Proof was a media startup founded by a renowned venture capitalist, Kevin Rose. They launched an NFT collection named MoonBirds on the 16th April 2022, which raised a total of 25,000 ETH (~$75,000,000 million USD) within one day.
MoonBirds’ quick success has been driven by a few factors: 1) Backing of Rose; 2) The success of Rose’s previous Proof Collective project; 3) Collectors opting for NFT projects with a successful track record
Therefore, startups who manage to strategise their business model and marketing campaigns well will be able to leverage NFTs to raise huge amounts of capital. Back then, funds raised would normally only come from VCs. Now, retail investors like you and I could get involved too.
https://www.theblockcrypto.com/post/143249/moonbirds-nft-record-sale-1m-kevin-rose-project
DeGods is an NFT project that has recently risen to blue-chip status on Solana. The founder @frankdegods has recently announced the acquisition of a professional basketball team. According to him, he wishes to make DeGods a global brand by winning a championship with the team. You could say that DeGods is a company/startup that is looking to bring its brand to greater heights
3. NFTs help to build on brands
Famous brands McDonald’s, Adidas, NBA, etc., have made use of NFTs to promote their brands. Many companies all over the world have seen the success of using NFT as a marketing strategy, and they are hopping on the trend of doing so.
Take the example of McDonald’s. The famous fast-food chain made its first-ever NFT promotion. The idea was to promote the return of the McRib, and they did so by issuing a limited collection of the McRib NFT. In order to get this NFT, the user will need to participate in a raffle by retweeting the brand’s invitation, which more than 21,000 people did within just a few hours. Now, that is good marketing.
4. Stake your NFTs to earn rewards (NFT + Defi)
If you are an NFT trader, you would know by now that there is a trend of staking/locking up your NFT to earn financial incentives. This has been an ongoing trend in Solana NFTs since Jan 2022, and I think this feature will be here to stay. From the NFT project’s perspective, this would ensure the long-term sustainability of the project because it discourages holders from dumping immediately after mint. By staking your NFT in the vault, it essentially reduces the supply of the collection in the marketplace. Hence if done right, with steady demand and decreasing supply, it will drive up the prices of the NFT collection in the secondary market.
You might ask, “Where do the financial incentives come from?” Normally after the NFT mint sells out, the project owner will take a portion of the mint proceeds and add it to a newly created liquidity pool. A native token will then be created for the NFT. For each NFT staked in a day, the NFT will allow the holder to earn $X amount of token each day. The token can be swapped into USDC so the holder of the NFT earns “passive income” each day for diamond-holding their NFT.
5. NFTs are used to hedge against bear markets
In Tradfi, investors buy physical assets like gold, real estate, and commodities to protect themselves against dollar inflation. The same logic applies to Defi. Investors buy digital assets like NFT, to protect themselves against slumps in the crypto market.
Money in crypto is often rotated around to chase hypes. As of April 2022, there have not been many bullish movements in the top 100 coins due to overall gloomy market sentiment as a result of the macro world view. However, the NFT scene has been flourishing in the recent weeks to months.
Investors are often opportunists, so they would flock to whatever the next bullish narrative is. This time around, money has flown to chase the bullish hype in NFTs. If you are an NFT trader, it is surely euphoric right now and you would be almost oblivious to any bearish macro sentiments because the gains in NFTs greatly outweigh the fall in token prices. That is, of course, if you know how to trade NFTs. As the saying goes, always DYOR and this is NFA.
References
https://hypebeast.com/2022/4/solana-nft-project-okay-bears-launch-record
https://www.lifestyleasia.com/hk/culture/the-arts/mcdonalds-mcrib-nft/