I have seen a couple of NFTs recently that are deflationary. These NFT holders can evolve 3 NFTs with certain traits into 1 NFT. Some examples are:

1. Tokenmon holders can evolve Level 1 Tokenmon to Level 2 Tokenmon

2. SuperBunnies holders can evolve 3 bunnies into 1 tiger

The thesis for such deflationary NFTs sounds reasonable in theory:

• Level 2 NFTs may look amazing or are scarce in nature, thus causing people to evolve the NFTs

• As more people want to evolve their NFTs, they will have to buy NFTs with certain traits, thus causing the NFT’s price to go higher

• Then it’s a positive feedback loop from here

However, deflationary NFT will eventually have an issue with community. As more NFTs are burnt, say a project with 10K items are burnt down to 5K items, fewer people will be able to own one item. Deflationary NFT will have a deflationary community. Unless you can keep minting new NFTs by yourself. It is not clear yet how you combine minting with the current scheme.

In contrast, the mutant apes approach by the BAYC team seems smarter. Instead of having a deflationary NFT, you mint more NFTs with limited supply, thus expanding the existing community. The limited supply here is important, otherwise with unlimited supply you become the OG cryptokitties which is pretty much dead.

In summary, deflating or inflating an NFT will decide how the community grows. How the community grows is the root of an NFT project.

#NFT #crypto #deflationary #community

I have seen a couple of NFTs recently that are deflationary. These NFT holders can evolve 3 NFTs with certain traits into 1 NFT. Some examples are:

1. Tokenmon holders can evolve Level 1 Tokenmon to Level 2 Tokenmon

2. SuperBunnies holders can evolve 3 bunnies into 1 tiger

The thesis for such deflationary NFTs sounds reasonable in theory:

• Level 2 NFTs may look amazing or are scarce in nature, thus causing people to evolve the NFTs

• As more people want to evolve their NFTs, they will have to buy NFTs with certain traits, thus causing the NFT’s price to go higher

• Then it’s a positive feedback loop from here

However, deflationary NFT will eventually have an issue with community. As more NFTs are burnt, say a project with 10K items are burnt down to 5K items, fewer people will be able to own one item. Deflationary NFT will have a deflationary community. Unless you can keep minting new NFTs by yourself. It is not clear yet how you combine minting with the current scheme.

In contrast, the mutant apes approach by the BAYC team seems smarter. Instead of having a deflationary NFT, you mint more NFTs with limited supply, thus expanding the existing community. The limited supply here is important, otherwise with unlimited supply you become the OG cryptokitties which is pretty much dead.

In summary, deflating or inflating an NFT will decide how the community grows. How the community grows is the root of an NFT project.

#NFT #crypto #deflationary #community