The shift from gas wars to whitelisting, static PFPs to dynamic music and AI-based projects are all proof that the NFT sector is rapidly evolving in 2022.
In 2020, newly launched NFTs projects experienced costly gas wars that are gas priority auctions where buyers battle to secure their spot on the next block, potentially losing ETH to failed transactions. In 2021 digital scarcity and utility drove the NFT hype in the constantly surging markets and toward the end of the year, how much attention any collection received seemed to be at the mercy of influencers’ opinion.
I feel you. It’s frustrating especially when tons of good projects with actual value and hardworking teams that don’t just disappear on their community are still so undervalued. Influencer culture invading the NFT space has had a horrible impact for the community.— Satvik Sethi (@sxtvik) October 5, 2021
Transitions have slowly emerged and have driven new entrants in with new sets of values that not only impact how projects are minted, but what is minted. In 2022, it seems the NFT ecosystem will emphasize “strong communities,” and exclusive collector utility.
Strong communities are what makes an NFT project succeed!— HOUNDS OF ZEUS - MINT IS LIVE! (@HoundsOfZeusNFT) January 27, 2022
We admire projects like @SOLgods_ @peskypenguins @SolanaCatCartel & @SolPatrolNFT
Whichever project gets the most votes will be swept post our mint and airdropped to random minters!
Let the games begin
There is no doubt that some shifts in trends have benefited some investors and communities, but there are investors who are meeting these changes with resistance.
Let’s take a look at some of the new trends that are driving the pulse of the market and how these transitions could impact NFT investors in 2022.
A change in minting strategy
Whitelists emerged as a shift in minting strategy after persistent gas wars left many collectors disgruntled and in search of alternatives. Whitelists are structured and modeled to benefit members who are active in the project’s mission and initiatives and holders of particular collections willing to play the game.
The pros to this model are that it attempts to distinguish potential community members who will add value in the long-term, while granting them a mint. For collectors, a spot on the whitelist is not only a ticket for early-access on a potential blue chip, but a method to mitigate having to compete with whales who can sweep the collection.
However, getting a spot on a whitelist may be good in theory, but it’s not as effective in practice. Whitelisting schemes make it easy for investors and collectors to get lost in the community created hype and the blackhole of “copy-pasta” engagement farming. Some NFT collectors have commented that whitelists are a “double-edge sword” implying that while they provide collectors with early access, it comes at the price of time.
Whitelisting processes should (and will) change for upcoming NFT collections— 2070 (@Punk_2070) January 22, 2022
These stupid engagement farming ten-step schemes are childish and are a waste of time I (and most people) dont have
Curate a community without over hyping, whitelist discord members at 5 or 10k, launch
NFT collectors are avoiding projects that implement the process entirely, noticing an interesting pattern. NFT gamer and collector, TravisAxie.eth said that some projects’ whitelist spots “were given out far before the launch and kinda been pushing me away from them.”
Other NFT collectors highlight issues regarding cracks within the whitelist system. Not only are there an increasing number of bots spamming and detracting community members who cannot be plugged in all day, but it seems projects are relying on these models to avoid public mints.
Projects are also strategically partnering with other NFT collections in efforts to become a known name in the ecosystem and also increase the chance of a sellout mint.
While whitelists can prevent transaction failures, it seems the community is in search for a more optimal, value-driven way to allocate access. As such, collectors are also diversifying the contents of their respective collections.
Music NFTs are ready to break more records
Static proof-of-profile (PFPs) were the rage in 2021, but in 2022, communities, companies and entities are searching for NFTs with in-real-life (IRL) functionality and utility. Despite notable PFP collections rising quicker in volume than their music-based counterparts, there’s potential for that to change.
Give it a try…Music NFTs won’t bite pic.twitter.com/1v2p57qxG5— Dyl (@famous_dyl) January 21, 2022
On January 21, 2022, crypto pundit and DJ, 3LAU sold his UltraViolet NFT album for $11,684,101 in just 24-hours, breaking the record for the first ever music NFT album release.
Blazing through the frontier, 3LAU launched Royal.io, a music NFT platform where users can own a piece of their favorite tunes, earning royalty streams and additional perks.
Led by Founders Fund and Paradigm, 3LAU’s platform closed out an impressive $16 million seed round and has since gained the attention of popular musicians. Nas, a well known American rapper, launched the platform’s first music NFTs on January 11, 2022 for two of his songs “Rare” and “Ultra Black.” Fans quickly took to Twitter to show support for the platform and many called it a “revolution.”
Rising musicians and independent artists are also making waves. Known on Twitter as Latasha.eth, the artist sold a music video NFT to her song “Gogo Wyne” for 13.4207 Ether ($51,623.97 at the value of Ether at the time.)
Other platforms such as SoundMint, allow artists to mint generative music NFTs that bridge the audio and visual relationship based on generative qualities. Giving creators agency over their work seems to be a valuable bet.
NFTs seem to not only be evolving and becoming more dynamic, but they are also getting smarter.
Train-to-earn: Intelligent NFTs make a splash
The next evolution of NFTs is the integration of artificial intelligence (AI.) This seems to be a move aligned with the burgeoning market of the metaverse as many PFP projects, such as Sup Ducks and CyberKongz, are already creating 3D pixelated versions that exist in digital worlds.
Getting closer... pic.twitter.com/1Dd8wx3mck— Sup Ducks (@RealSupDucks) January 22, 2022
It seems collections are upping the ante and are integrating intelligent nonfungible tokens (iNFTs) as another layer to reward its users with a new model “train-to-earn.”
Notably, the world’s first intelligent collectibles, Revenants by Alethea AI, are the rebirth of historical and cultural icons. Contrary to most PFP projects with 10,000 items, this collection only has 100 items and 70% of the collection is already owned.
However, its partnering collection, iNFT Personality Pod consists of 9,800 items and has a floor of 0.47 Ether, yet approximately only 18.37% of them are owned.
Users can earn ALI tokens after successfully training their iNFT in their pods to upgrade its intelligence and also contribute to the Noah Ark’s (Alethea’s metaverse) AI engine.
Currently, the collection sits at a thin 32 Ether floor ($81,360.64) and has generated over 2,707 Ether (valued at $6.9 million) since its launch on October 14, 2021. The Revenants have not had a sale since December 20, 2021 suggesting the price point is the biggest barrier, however other projects are emerging right behind it.
ASM Artificial Intelligence Football Association (AIFA) is a decentralized blockchain game developed by Altered State Mind, with 40,000 intelligent NFTs as its genesis collection. The in-game NFTs, powered by the ASM genesis brains are known as the AI agents/all-stars.
Users had the opportunity to purchase AIFA genesis collection boxes that included 4 AI all-stars and 1 AI ASM genesis brain. Each all-star needs a brain, meaning despite purchasing a genesis box, players must purchase 3 more ASM brains whose floor has increased by nearly 13% in the last seven days and sits at a thin 4.5 Ether floor with 37% of all brains already owned.
In total, this collection has generated over 7,073 Ether, valued at nearly $20 million at the current price of Ether.
It seems the integration of AI is not only gamifying the model of train-to-earn, but also enables users to unlock another layer of value. This layer suggests the better the iNFT performs, the more valuable it becomes.
In the last 30 days, the top three marketplaces: LooksRare, OpenSea, and Solana’s Magic Eden, have generated approximately $14.3 billion according to data from Dune Analytics. All marketplaces have seen an increase in the number of traders on their respective platforms, suggesting new entrants, new influences and new trends.
As trends come and go, it is beneficial for potential investors to keep a pulse of the transitions and the projects that are savvy enough to focus on strong fundamentals and evolution when the paradigms begin to shift.