Letter 13 - Utility NFTs

When you're looking for more than an animal jpeg

Something I am getting asked about more and more lately is suggestions for NFT projects that focus on utility, and so this Newsletter will focus on those. I’ll give a brief overview of the projects and perhaps share some of my thoughts and opinions on them. There are several categories that I have broken down these utility projects into, and I am aware that this list is not exhaustive. It is simply the ones that I think are most prominent + that I am aware of.

Let’s dive right in.

Gaming NFTs

One of the best use cases for NFTs, to my mind, is in the gaming space. There is a lot of money spent on games every year and that number is only going up. From buying games, to buying assets or ‘skins’ within the games, to earning money while playing games - gaming will literally be a multi-trillion dollar industry in the future and it is already well on its way there.

Image Credit: Newzoo

To put these numbers in perspective, the revenue generated by gaming is already significantly more than movies and music combined.

Source: Statista

It is incredible the amount of money that people will currently spend on assets that they do not own in any real sense. If you buy a skin on Fortnite or Call of Duty then you have no true ownership over the digital asset. With NFTs, this all changes.

There have been literally dozens of new projects that have launched over the last few weeks - I have chosen not to focus on them (with one fun exception), and instead to focus on those that have proven themselves already.

Zed Run

You buy horses as NFTs and you can race them for real money as well as breed them to create new valuable NFTs. Many of the upsides of traditional horse racing with far fewer of the downsides. For the 90s gaming nerds out there, think Final Fantasy VII Chocobo Racing on the Blockchain.

The concept is fantastic and having been around for 2-3 years Zed is at a significant advantage to most other gaming NFT platforms. Instead of buying your NFT now and having a promise of a future game in 2022+ like some of the other projects I will get to, with Zed you can race right away.

The complexity to their ecosystem is already quite established and they have extensive plans to expand their universe going forward and are building to be around in 100 years from now.

They have gone through a lot of, to be generous, growing pains, over the last few months. Naturally some of this is to be expected when the demand for your product goes up 50x in a short time frame but I and many other community members are extremely fed up with the platform. The site is riddled with bugs, racing frequently doesn’t work, and the communication from the team could be a lot better.

They’re trying to do what they need to do to scale and succeed and have significant backing to build the platform of their dreams. It’s not there yet - but I am pretty bullish in the long term, especially given how early we still are. One of the prices to pay for being early is putting up with products that haven’t been fully fleshed out yet - and to be fair - their site does still say Beta.

There’s near infinite information out there on Zed and a good place to start is their own guide and introduction page. My favourite go-to resource for digging deeper into the stats and analytics behind specific horses is the site Know Your Horses - there are also others doing similar things.

I intended to do an entire post dedicated to Zed, and may still at some point, but for now I’ll leave it at this - if you’re looking for a “blue chip” NFT project to invest some money into, part of your portfolio should probably include at least one Zed genesis horse.

Axie Infinity

I am embarrassingly ignorant on all things Axie Infinity, but there is absolutely no denying the market share and power behind this behemoth of an NFT platform. It wouldn’t be understating it at all to say that it is the largest and most popular NFT project in the world by far. Take a look at these figures to wrap your head around the scale of Axie:

Source: CryptoSlam

It literally has more than double the total sales volume of the next 9 largest projects combined. So, what is Axie Infinity? In their own words:

Axie Infinity is a digital pet universe where players battle, raise, and trade fantasy creatures called Axies!

It has an enormous following in the Philippines and is essentially a play-to-earn game where players can earn real money by playing. Many people flocked to Axie as a way to earn part of or the entirety of their income and they have over 250,000 daily active users.

As I am the furthest thing from an expert I am going to direct you to a couple of resources where you can learn more, and when I have time I intend to learn more myself. Here is the Getting Started page of the Axie website, and here is a post by Packy McCormic where he does a deep dive into Axie.

Voxies

Now we already start to get to projects where you buy the NFT and the game comes later. Voxies is one of the better ones in this regard, in my opinion, in that they have significant brainpower on their team with plenty of experience working in the gaming space.

What are Voxies? From their website:

Voxies are cute, lovable and collectible 3d voxel buddies, that live and play on the Ethereum blockchain. There are only 10,000 Voxies in existence and no two Voxies are identical. Lots of random properties and fun traits make each Voxie cute, unique and sometimes rare!

So far this doesn’t really tell us much or differentiate them from any other 10k generative project, but when you dig in to the game they’re building (Voxie Tactics) a bit you can see their vision:

You can check out their website for some early video footage of the game play. One thing I will say is that their pricing model was based on the “fomo ramp” model that was popular when they launched several months ago. They have understandably struggled to sell out, although have recently seen a lot of attention and sales. Their ramp is far less steep than most other projects and they are not concerned about selling out in the short term since they are building for the long run. This may be one of the extremely rare and few projects which ends up being successful despite a fomo ramp price model.

EmberSword

Ember Sword is a Free-to-Play Massively Multiplayer Online Role-playing Game (MMORPG) taking place in a player-driven dystopian fantasy universe with a classless and fast-paced combat system.

You will be able to create a character, pick a home nation, and venture into the mysterious world with your weapon of choice to prove your worth in the action-packed classless combat system by defeating monsters, bosses, and other players, or explore the world as a peaceful forager of goods and rares, making a name for yourself as a talented refiner and craftsman.

As someone who spent a year of their life engrossed in Runecape in ~2013, this game is exciting to me. It’s worth noting that the game won’t be released until early 2022 at the earliest, and it wouldn’t surprise me to see it pushed back a bit. The NFT aspect of the game comes in via land ownership where the owner of plots of land can earn a share in the revenue that is produced on that plot.

They have only had one land sale so far and it was an absolute disaster to be honest - but many projects have disastrous sales (especially their first ones) and despite it leaving a sour taste in many people’s mouths I don’t think this should be a significant mark against their potential. See: Zed Run failing at drop after drop yet continuing to be a success in this space.

They have an upcoming Community Land Sale where you can fill out a form on their website to apply to get a plot of land in the next sale.

Guild of Guardians*

Guild of Guardians is a mobile RPG where players can turn their gaming passion into assets. It will be a multiplayer, fantasy, action RPG where players build their dream team of ‘Guardians’ and compete in a guild to earn epic, tradable rewards.

Another play-to-earn style game that is mobile only and slated for release in early 2022. They are selling heroes and guilds as NFTs prior to then, and I bought some a couple of months ago. I haven’t been keeping up to date with how things have been progressing with them but I presume they will have another drop at some point.

*the link to this site is an affiliate link because I just noticed that they have those and that it gives a 5% discount to anyone who uses it and 5% to me as well. Just disclosing it up front - I would have linked to them and posted about them regardless.

Blankos Block Party

Blankos Block Party is a vibrant open-world multiplayer game styled like a giant block party, with a focus on custom art and design, building and exploration and curating your collection of unique and rare Blankos.

This game and the Blankos look freaking cool. These two official videos can give you an idea of what this game is all about far better than I can:

I downloaded the game a month or two ago and played around a bit. It was fun but a bit slow/glitchy in places, which is to be expected given it is still in its early days and has maybe already improved a lot since then. The NFT aspect, I think, comes in via the skins you purchase. How valuable these early skins might be a few years from now if/when the game takes off is all highly speculative but the game is cool and you can actually play it right now so it’s worth mentioning.

Riot Racers

Riot Racers is an exciting new play to earn car racing game! Players earn by playing the game or by simply owning parts of it. The ownable parts are all NFTs on the blockchain that can easily be bought or sold.

Basically Zed Run but with cars not horses, and a couple of other minor differences. They are attempting a lot with this project including land ownership and their own token $RIOT. I think it has a lot of potential despite some teething issues with their drops to date. Worth keeping an eye on, at least.

Hash Garage

This is another car racing game that has a play to earn feature as well as a collectibles element. They have an interesting perpetual royalties mechanism which sounds very cool but I must caution people who buy into the project for this reason alone as I think the legal area around such mechanics is incredibly murky, at best. Another project promised perpetual royalties to minters (voxodeus) and a few months later spoke to some lawyers and were like “uhh guys sorry about that we can’t do that any more” and it left an incredibly sour taste in many people’s mouths, myself included.

I’m not sure if the Hash Garage team has figured all this out but I felt this was worth mentioning - the project looks pretty cool otherwise, but do your own research, as usual.

Chicken Derby

This is by far the most speculative and least fleshed out gaming NFT on this list. They released last week and from what I can gather it’s basically Zed Run but with Chickens.. but.. also Mario Kart. It sounds freaking cool, but whether they can deliver is another story. There’s 33,333 total chickens which they’ve sold 20,000 of so far at a price of 0.033 - 0.035.

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Membership Tokens

These memberships are a relatively new and extremely fascinating way to provide utility and value to NFTs. The crux of it is that you buy an NFT which acts as a membership to a club or project and in return they promise certain valuable things. It’s risky because you are obviously placing your trust in the team and not immediately getting any tangible benefit, but this is not different than many other projects and these teams at least have a distinct focus on providing continued value to their holders.

Veefriends

Of all the membership tokens by far the largest and most prominent is Gary Vaynerchuk’s Veefriends. Always ahead of the curve tech-wise, Gary got into NFTs early and started building his own project while many were still figuring out what an NFT was (and, to be fair, 99.99% of the world still has no real idea). Here’s what their website says Veefriends is:

The main ambition of this project is to create meaningful intellectual property and create an extraordinary community.

All tokens are a three-year admission token to VeeCon, an annual super-conference. We know a lot of you are new to the NFT world, so before you do anything, get acquainted with the FAQs.

These were sold in a dutch-auction sale with the average price, I believe, being ~1.7 eth. Many were able to be bought for 0.5 eth, though. The current price on secondary is 4.2 eth and has been hovering around this point for weeks. Clearly people value this membership, and it’s not hard to see why. The value in admission to a conference run by Gary V alone could be worth the value of the membership.

I suspect we see a lot more celebrities and entrepreneurs create memberships to their own communities. Many will fail, but the use case is fantastic and those that don’t fail will thrive and be win-win-win scenarios for all involved.

House of Kibaa

Another one of the first and most prominent memberships is HOK.

House of Kibaa is a digital studio powerhouse specializing in the creation of exclusive NFTs for Xtended Reality (AR/VR/MR).

Our studio will enable holders the opportunity to express their own individual styles within the blockchain, while providing an array of utilities to use throughout the metaverses.

They were listed for sale for several weeks at $500 USD with a max supply of 10,000 and a cut off date after which any unsold would be burned. They only sold ~800 tokens and burned the rest. Almost immediately after they sold out the price on the secondary market shot up and peaked around 4.5 eth. Pretty insane considering how long they were sitting there available for purchase at $500. The current price is around 1.5.

They offer lifetime airdrops of NFTs to their holders and are collaborating with other projects to offer other rewards and discounts to members.

Metakey

Another great use case of membership tokens is the Metakey:

The Metakey is ONE token that can be used accross multiple platforms to transform into avatars, game items, exclusive game perks, course material, virtual land access, activate discounts, and much more!

There is power in numbers and the Metakey aims to leverage their community size into securing deals with various platforms, artists and collaborators to create win-win situations and provide value to holders. Once again, like with all of these, you are investing in the promise that the team will provide future value. From what I can tell with the partnerships already secured, the Metakey team is well on their way to fulfilling their promise(s).

They have released various Keys (edition 1, 2 and 3 so far) priced at 0.20 eth each and have plans to continue to release keys at the same price point. Early adopters will get additional benefits and rewards and this explains why the keys are trading at a significant premium to mint price at the moment.

Mitzsuki Key

There’s a whole swath of projects that blur the line between Art and Utility, the most famous likely being the Ghxsts project where the artist behind it rewards collectors of his pieces with new artworks. Those projects are outside the scope of this Letter and might warrant a Letter of their own. Mitzsuki key incorporates some of the Art/Storytelling side of things but also has real utility in the form of NFTs airdropped to holders of the key and other rewards.

The Land Vault

Another interesting membership token with a focus on Metaverse land and games:

The LandVault was founded by a group of friends with a passion for gaming, blockchain and real estate.

Together, we are crafting the games we've been dreaming of building for years. And we don't want to build them alone. Our games are for all of us - all of our community. Our games are for you. The LandVault is more than a game company - we are a community.

Our land exists not only to host our games, but to provide a home for our community members. A home where we can all come together and explore our passion projects. And as our games require a significant amount of space in the Metaverse, we've got plenty or room. Our land allows our players to create exceptional games, art and music in the Metaverse, right alongside us.

The team behind the project has a lot of experience in a wide variety of fields including game development, real estate, and marketing. They are taking a very professional approach to their project and it seems likely to me to have long term success.

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Metaverse Land

A lot of this category could fall under the Gaming umbrella, but there are use cases for metaverse land outside of games (ie Art Galleries) and the size of some of these projects alone warrants that they have a category of their own. Metaverse ‘land’ is exactly what it sounds like - you buy an NFT which gives you exclusive ownership and rights to a piece of land in a larger online world. The value of the land lies in the scarcity of it, the location of it, and the future ability to monetize it.

A common argument against valuing digital land is “well can’t they just add more pixels later?” - yes, they can, although some of them have set a hard cap on how much land there will ever be. But consider the value of real land. There’s not currently any real worldwide scarcity of land - you could probably buy a plot in the middle of nowhere in a rural part of a third world country for almost nothing. Yet people will pay millions for an apartment in San Francisco or London. It’s all about location, location, location. The plots of land that have been sold and that are currently being sold are going to be ground zero for the metaverse. It is where all the building is happening, it is where many people will first ‘spawn’ or begin their adventures when they enter the metaverse. We live in a world where the younger generation are spending more and more of their time in virtual worlds. There is real, tangible value to owning metaverse land.

Don’t sleep on it.

Sandbox

The Sandbox is a virtual world where players can play, build, own, and monetize their virtual experiences. We empower artists, creators, and players to build the platform they always envisioned, providing the means to unleash your creativity.

The Sandbox is working towards being an enormous metaverse. They have been selling land and people have been building their projects for months/years. To get an idea of what it will look like (the game/world isn’t released yet, but the game/world ‘builder’ is) you can take a look at this video from a month ago:

They have their own ERC-20 token $SAND which their whole ecosystem runs on. You can buy/sell it on exchanges like Binance and Uniswap. Their land sales and the sale of wearables are all conducted in $SAND and you can read more about that here.

Cryptovoxels

Cryptovoxels is a virtual world powered by the Ethereum blockchain. Players can buy land and build stores and art galleries. Editing tools, avatars and text chat are built in.

Cryptovoxels is extremely easy to get started with - just click here and you are already in the metaverse. The main use case for CV so far has been for art galleries and for people to host gatherings/parties with music and friends. They have a lot of OG value due to how long they’ve been around in the space and any land on the main island, appropriately called Origin City, is likely going to be extremely valuable in the future. Prices are already high if you want to buy a plot there.

They release plots on other islands that offer a much more affordable entry point for anyone looking to get involved.

Somnium Space

While some of the other projects are building some Virtual Reality components as an afterthought or secondary aspect, it is the focus for Somnium Space. I’ll admit that my knowledge of SS is less than the other metaverses - not for any reason other than I haven’t had a particular personal interest in VR yet. Everything about what they’re building and what I have heard about them is pretty great, and I wouldn’t be surprised if they are the “end game” for metaverses in the future.

Decentraland

All of the above projects are, despite utilizing Blockchain technology, still controlled/run by centralized entities. The NFTs you purchase will always be your own but the value in them somewhat depends on the platform continuing to survive and thrive. If Sandbox goes under, your plot of Sandbox land might not be worth so much any more. It’s unlikely that would happen with any of the above and well established projects but it is worth keeping in mind. Decentraland is the only fully decentralized metaverse where everything is owned and governed by a DAO - a decentralized autonomous organization.

The first fully decentralized world, Decentraland is controlled via the DAO, which owns the most important smart contracts and assets of Decentraland. Via the DAO, you decide and vote on how the world works.

This is what true ownership looks like. It is still not perfect and you are at the mercy of a DAO instead of at the mercy of a centralized entity - but at least this way you can get a vote and be involved in the business if you so choose.

Beyond that it is still a metaverse like all the others with all the same features and possibilities.

Substrata

Probably the dark horse in this metaverse race - although it’s not so much a competitive race as a collaborative one as I think there is plenty of space for many metaverse projects to succeed. Substrata is relatively new on the scene compared to all the others, and they say as much on their website:

Substrata is a multi-user cyberspace/metaverse. Chat with other users or explore objects and places that other users have created.

Substrata is early in development, please expect rough edges!

Just because they’re new though doesn’t mean they don’t have ambitious goals and the ability to achieve them. You can read more about their vision here but here is a snippet of it:

We are aiming for Substrata to become one of the most important, and maybe the dominant 3D metaverse on the internet - just like the Web is the dominant '2D metaverse' today.

Their land/parcel sales are unique in that you buy via a dutch auction on their website and can pay in fiat as well as crypto. The parcels originally weren’t on-chain but you now have the ability to claim your plot as an NFT on Ethereum and it is incredibly easy to do so - I know because I bought some plots months ago and just went through the process to get them into my MetaMask wallet and it took all of 1 minute.

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What’s on my Radar?

Art Blocks - There is a Curated drop happening tomorrow for the first time in a few weeks, ‘glitch crystal monsters’ by Alida Sun. A description taken from the Art Blocks Community Wiki:

A synthesis of over 777 days of generative artmaking, motion as survival, and coding as transformative ritual. Sky gardens of trustless techno-leviathans crystallize, entangle, and play between dimensions online and AFK, generating new forms altogether. I channel these speculative phenomena to highlight the fluid, transformative possibilities of structures perceived as rigid and immutable. Their intricate geometries move freely beyond limited social media compression that severely reduces the experience of digital art. These formations also embody choreographic elements from collaborative live coding dance performance.

Expect there to be an insane gas war, as usual. Despite 1,000 mints there has been so much new attention on AB over the last few weeks that these are going to go fast.

HOF Goat Lodge - Another cookie cutter generative project, which may or may not be a cut above the rest, and may or may not succeed. They’re on my radar because a lot of people are talking about them and I may or may not mint some.

The Vogu Collective - These look cool. I haven’t done extensive research on them but I am keeping an eye on the project - nice that it’s not an anon team behind it too.

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In the interests of full disclosure, at the time of writing I own NFTs in the following projects: Zed Run, Voxies, EmberSword, Guild of Guardians, Blankos, Riot Racers, Chicken Derby, House of Kibaa, Metakey, Mitzsuki Key (I bought one while doing research today), The Land Vault, Sandbox, Substrata.

I have not and will not be paid by any project to feature them in my Newsletters. Anything I write about is by my choice alone.

We’re still early.

Disclaimer: The content covered in this newsletter is not to be considered as investment advice. I’m not a financial adviser. These are only my own opinions and ideas. You should always consult with a professional/licensed financial adviser before trading or investing in any cryptocurrency related product.