Author: Carbon 5; Editor: Black Soil
If 2017 belongs to ICO, 2018 belongs to IEO, 2019 belongs to CBDC, and 2020 belongs to DeFi, then 2021 - undoubtedly belongs to NFT.
01 The NFT market develops amidst disputes
NFT (Non-fungible token), an emerging asset type called non-homogeneous tokens, can convert digital artworks and other collectibles into unique and verifiable assets, and put them on the blockchain for transactions. Nowadays, as long as you know a little about the digital currency industry, it is impossible not to have heard of NFT. As a new type of digital asset linked to the real world, it has almost become the next outlet that has attracted the most attention from the industry.
However, in the development process of the NFT market, there are also many controversies.
On the bright side, in mid-April this year, the total market value of NFT tokens broke through 30 billion U.S. dollars, hitting a record high. Although the sharp drop in the price of Bitcoin in May caused most digital currencies to suffer setbacks under extreme market conditions, the trading volume of NFT Still maintained a growth trend.
According to a recent report released by DappRadar, the recent market turmoil does not seem to have had much impact on the NFT industry. As shown in the figure below, since the previous digital currency market crash, the average number of NFTs purchased, traded and sold by users has reached 85,787 , with an average daily transaction volume of approximately US$5.8 million, an increase of 277% compared to January this year (when the average daily NFT sales volume was 21,815), and in the first 11 days of June, the average daily transaction volume reached $14.9 million.
If we extend the time a little longer, you will find that NFT has maintained an exponential growth trend for most of the last year. Collectors, traders, gamers, and artists continued to trade, buy and sell NFTs as if they had never been affected by the turmoil in the digital currency market. In addition, with the re-heating of NFT, more and more traditional industry giants and celebrities have recently begun to "covet" this emerging industry, such as:
Alipay and Dunhuang Academy of Fine Arts jointly launched the payment code skin NFT based on two AntChains;
Fox Group established a $100 million NFT creator fund;
Sports car and F1 racing giant McLaren will list and display the history and heritage of McLaren racing and NFT of famous drivers;
Marvel began to target the NFT market to attract IP collectors;
Elon Musk's mother, Maye Musk, has also launched a personal #DiamondsAreForever NFT.
On the other hand, NFT applications still have certain limitations. So far, there are no large-scale NFT use cases in the real economy, and NFT application scenarios are still limited to a few vertical fields such as digital art, collectibles, and games, which in turn leads to the fact that most NFT transactions are still low-frequency, high-value transactions. The service fees and transaction fees of many NFT trading platforms are also beyond the reach of ordinary traders. Coinbase co-founder Fred Ehrsam even predicted that the NFT market capacity will decline, and eventually "90% of NFT will be worthless."
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02 Difficulties and innovations of NFT
As a breakthrough product that ignited the blockchain field after DeFi, although the growth rate of NFT is very rapid, it is undeniable that it is still in the early stage of industry development, and there are bound to be some unavoidable bottlenecks, such as NFT at this stage The degree of ecological perfection is still relatively low, and the market track is clearly differentiated. There are large differences in investment logic, business logic, and circulation logic among various projects, making it difficult to form a stable and continuous business synergy.
In addition, the NFT project has many practical problems that need to be improved in terms of technical construction such as the expansion of its application scenarios, and network congestion caused by transaction bursts. NFT asset issuance, token exchange, etc., are also likely to have serious impacts on the business level due to technical differentiation. Handicapped situation. If these problems cannot be dealt with better, it is likely that the development of NFT will be in trouble.
Traditional NFT transactions are all carried out on the chain, which is basically realized by the concept of "decentralization", but NFT has a lot to do with the real world. As the market gradually matures, property rights, value, transaction experience, liquidity, etc. will undoubtedly touch the substantive issues of "decentralization" versus "centralization".
Although blockchain technology represents the idea of "decentralization", it can provide a completely independent value transmission system. But for NFT projects, trading experience and liquidity are obviously the first and unavoidable problems, especially as NFT is becoming more and more popular, the liquidity of NFT is still relatively insufficient compared with other cryptocurrency markets, and then further Limit the value increase of NFT. In this regard, the centralized exchange NFT market can actually bring better solutions and deal with the related challenges brought about by the traditional model.
In fact, some leading centralized exchanges (CEX) have already begun to deploy in the NFT market:
It is no exaggeration to say that the entry of CEX into NFT will inject more impetus and innovation into this field. Take KuCoin as an example. As the first mainstream cryptocurrency exchange that supports the deposit and withdrawal of NFT assets, KuCoin has long been committed to NFT market expansion and project empowerment. Its NFT zone includes a number of high-quality NFT projects, such as LYXe, DEGO and THETA. Its BurningDrop platform also helped many early NFT projects to distribute tokens fairly, such as XCAD and TCP, so that more ordinary users have the opportunity to participate in the early investment of high-quality NFT projects.
In fact, if we benchmark DeFi, we will find that the early DeFi market developed very slowly. It was after a number of CEXs announced their support for DeFi from the end of 2020 to the beginning of 2021 that this trend continued to heat up. NFT is likely to follow the same trend. As far as the current NFT market size is concerned, according to the latest data from Coingecko, the market value of NFT tokens at this stage accounts for about 1.2% of the total market value of the entire cryptocurrency. The volume is not large, so it has Good potential for improvement, and as CEX begins to develop in this field, there will undoubtedly be more "new ways" to attract users in the NFT market, which will promote the further expansion of the industry. For example, Kanaria, the first NFT collection on KuCoin and Kusama recently The new NFT gameplay launched is a typical example.
Kanaria is an NFT collection, built by the NFT protocol RMRK.app, dedicated to establishing a standard cross-chain NFT infrastructure on Polkadot and Kusama. Kanaria's NFT collection is also known as Kanaria chick eggs, which are extremely scarce. These chick eggs can hatch into more practical and ornamental "canary" NFTs under certain circumstances, holding "canary" NFTs Specific benefits can be obtained, such as discounts, revenue sharing, and early participation in the RMRK project.
It is worth noting that due to the limited number of Kanaria, unsold Kanaria eggs will be destroyed after the sale ends. Therefore, both young eggs and hatched "canaries" are extremely scarce and valuable for collection. Users can choose to sell NFTs such as chick eggs or hatching "canaries" on the Kanaria platform or collect them for appreciation.
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03 NFT+CEX Market Development Outlook
NFT is a non-homogeneous token, and the vast majority of cryptocurrencies including Bitcoin and Ethereum are homogeneous tokens. The two are essentially different, so use the "traditional" blockchain to decentralize It is not appropriate to look at NFT from the perspective. From the current point of view, centralization seems to have more advantages, at least in the early stages of market development, to provide quality services and experiences for a wider range of users.
Frankly speaking, the support of centralized exchanges for NFT does not make them abandon the concept of "decentralization", and at the same time, it can provide a better value transmission system. The entry of CEX has made more and more people discover that NFT does not have to be forced "Decentralization". More importantly, with the integration of traditional industries and digital currency industries, CEX can play a more important role in the development of the NFT market. On the one hand, when the entry threshold will be greatly reduced, the development of the blockchain industry will Injecting more fresh blood, especially in the case of trying NFT, users in the real industry will also convert to CEX users, which is of great benefit to both CEX and NFT.
In terms of liquidity, the combination of NFT and CEX can also make the circulation of many non-circulating assets and assets with less credibility easier and more credible, especially promoting the circulation of the long-tail market on a global scale As well as the circulation of scattered distribution of niche groups.
With the support of CEX, the development momentum and application scenarios of NFT are bound to further expand. In today's relatively sluggish digital currency market environment, some people may question that the crazy growth of NFT has come to an end, but in fact, everything has just begun...
