In this episode, Yau Teng Yan, the lead researcher at Delphi Digital, joins our #tokenomics team to discuss #NFT trends for 2023, the possibility of creative-friendly marketplaces, and enforcing royalties on #blockchains, among other topics.

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The Open Metaverse Podcast is brought to you by Animoca Brands’ #tokenomics team, Mohamed Ezeldin, and Mehdi Farooq. If you are interested in learning more about broadly understood crypto, follow Animoca Digital Research.

 

The information provided in this podcast is for educational purposes only, and should not be considered financial advice.

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Teng’s Origin Story 👶 (1:06 - 4:19)

• Discovered Bitcoin and Ethereum in 2017 (intrigued by volatility and massive increases)

• Working on a healthcare data analytics startup

• Got more involved in 2020 (around DeFi Summer)

  • Deeper research - began to understand technology and potential

  • Convinced it would transform many industries in next 30 years

• Got into NFTs in late 2020

  • First purchase: Non-Fungible Apes (went to zero)

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Transferrable Skills from Previous Life 🗝️ (4:20 - 7:06)

• Healthcare space is still too early for blockchain implementation

• Inside perspective on how startups work

  • Understands what challenges these teams will face

  • Understands product timelines

• Fascinated by generative AI + the intersection of blockchain and AI

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Surprising NFT Themes from 2022 🤯 (7:07 - 12:14)

1. Solana NFT Ecosystem

• NFTs began on ETH - most OG projects on ETH

• Saw small, very engaged NFT trading community on Solana in 2021

• Large collapse in confidence after FTX collapse - communities have been very resilient and bounced back quickly

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2. Creator Royalties on NFT Marketplaces

• Everyone expected royalties to be around forever (method for artists / creators to continuously fund their work)

  • Brought many talented artists into the space

• SudoSwap launched without creator fees and set the precedent (X2Y2, LooksRare) for optional or no-fee marketplaces

• Difficult to enforce royalties and stay in line with the “open, permissionless” blockchain model

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Views on NFT Marketplaces & Royalty Fees 💸 (12:15 - 14:17)

• Will be a wide variety of marketplaces (different fee models and different users)

• Bifurcation between:

  • Creator-friendly marketplaces - appeals to artists (royalty fees) and collectors who do not mind paying the fees to support artists

  • Feeless or low-fee marketplaces (e.g. Blur) - appeals to traders who do not want royalty fees to eat into their profit margins

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Emerging NFT Themes for 2023 🔮 (14:18)

1. NFT Finance / Derivatives (15:24 - 19:08)

• New utility for NFTs : lending / borrowing + derivatives

• 10x cumulative NFT loan volume during 2022

• Excited about nftperp (futures speculation for NFTs)

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2. “Unbundling of NFT Marketplaces” (19:09 - 24:08)

• NFT marketplaces generate huge amounts of cash flows - leading to fierce competition

• Large, generalized marketplaces (like OpenSea) will lose market share to specialized marketplaces

• Projects are launching their own marketplaces to maintain more control over fees, in-game economy, and ecosystem

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2. Mainstream Adoption of NFTs (24:09 - 33:08)

• Adoption driven by large social media and tech platforms (ex. Instagram, Reddit, etc.)

• Big tech is very good at creating great user experiences

• Many large clothing and lifestyle brands have launched NFT projects or are planning to (ex. Nike, Adidas, Gucci, Tiffany & Co., etc.)

• Excited for sports teams and companies to launch NFTs (greater fan involvement, easier + more efficient monetization)

• Expects to see NFTs as social tokens (rather than fungible tokens)

  • Better experience for token-gated access

  • Dynamic NFTs (changing metadata based on involvement)

  • Fans want to have something that they can show off to their friends

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Favorite NFT Collections 🔖 (33:12 - 41:08)

Yuga Labs Ecosystem (33:47 - 35:13)

• Cemented itself as #1 NFT ecosystem

• Large war chest ($400m fundraising)

• Strong team with substantial experience

• Large, faithful community

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Azuki (35:13 - 36:17)

• Potential to be “the Bored Apes of the Asian world”

• Strong following in Singapore

• Built a large, engaged community

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Doodles (36:18 - 38:10)

• Launching Doodles 2 in the near future

• Difficult to become a mainstream brand with only 10,000 NFTs

  • Has original Doodles collection (10,000 NFTs) and launching new collection for more mainstream adoption

• Project appeals to a wide audience of users (children, teenagers, adults, seniors)

 

Crypto Punks (38:11 - 39:25)

• Sees them as historical relics in the crypto space

• One of the original PFPs

• Unique brand and historical prominence

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DigiDaigaku (39:26 - 41:07)

• Factory NFTs - will continue to airdrop more NFTs

• Game in development (raised around $200 million)

• NFL Super Bowl advertisement

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Views on Web3 Reputation / Identity 👥 (41:16 - 48:10)

• Must continue to strive towards decentralized identity (core feature of Web3)

  • User owns identity - can be taken anywhere with them (between platforms)

  • Open / permissionless (anyone can build on top of these applications)

Future Applications

• Credit score - combination of on-chain transactions and some offline data can allow users to get loans from DeFi protocols

• Gaming - many gamers are driven to keep playing a game by their in-game reputation and competitive leaderboards / comparison against other players

• Currently a very fragmented space with lots of time before mainstream adoption

  • No set industry standards

  • Majority of protocols still in testing phases

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POAPs (45:26 - 48:10)

• “Proof-of-Attendance” - collect NFTs to show you were at an event

• Majority of NFTs are not soulbound - leads to users farming NFTs and selling them (no one knows who the original owner was)

• Needs to create system with verifiable credentials (although, soulbound tokens may lead to issues around lost wallet keys)

Fashion in the Metaverse 🥻 (48:11 - 55:18)

• Under the radar vs. other NFT verticals

• Multiple vibrant communities forming around fashion

  • Fully digital fashion - most of our time will be spent in “the metaverse”, so clothes will be used to differentiate ourselves from other users

  • “Phygital” - intersection between physical and digital clothing - you purchase a physical outfit and it comes with an NFT for token-gated experience or in-game wearables

• Unlocks creativity amongst designers

  • Designers no longer need to be bounded by physical laws to create their clothing

 

RTFKT (51:43 - 53:00)

• Most prominent NFT fashion project

• Multiple “phygital” items

• Working with digital designers and prominent brands to create new pieces

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Speed Round 💨 (55:19 - 1:00:10)

What do you hope Web3 will look like in 10 years? (55:25 - 56:02)

• Technology will be so integrated into the entire system that we no longer view it as Web3

Favorite person to talk with about NFTs? (56:03 - 56:57)

• Piers Kicks - all things blockchain gaming (history of gaming, potential future trends)

• Vincent Van Dough - VC investor, insights around NFT space,

How is an NFT analyst different from a fungible token analyst? (56:58 - 58:35)

• A lot of fungible token research comes down to traditional economics modeling

• NFTs take into account the social aspect of collecting and history of art / trends

• NFT space is filled with unconventional people and understanding this will help you with research / trends

Biggest crypto pet peeve? (58:36 - 59:34)

• Lack of transparency, especially in NFT projects

• Many prominent projects have been rug-pulled after launch (hurts the entire space)

• Everyone has to do their part to prove to the outside world that crypto / NFTs is not a big circus

Favorite meme? (59:35 - 1:00:02)

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