Innovation in the NFT space moves about as fast as the prices. Here’s a rundown of the most recent developments.
Volatility continues to be the name of the game for nonfungible tokens (NFT) amid the rollercoaster valuations and volume surges, but a new trend appears to be emerging in the sector.
Aesthetic appeal aside, for many investors, buying an NFT is akin to casting a bait-laden hook into an opaque body of water and hoping that a fish bites. Sure, when the Bored Ape Yacht Club was listed, some buyers thought “They look cool” and “The community is really strong and dedicated,” but these aren’t really hard valuation metrics that can be backtested and applied across most assets in the NFT market.
Community activism and holder stats are important features to look for when purchasing an NFT, but aside from that, the initial purchase and hope that one will eventually turn a profit is nothing more than speculation.
In the last month or so, a handful of projects have realized that “more” needs to be offered to holders or “agreed” upon via the roadmap or a decentralized autonomous organization (DAO) in order to help with retention, diversify the ranks of holders (rather than just whales owning a majority of the project) and incentivize future buyers. So, a number of projects have rolled out airdrops, metaverse utility, DAOs and token issuance features meant to address these demands.
One example of a utility-equipped NFT is CyberKongz, a great ape-themed project where the NFTs issue BANANA tokens, which currently trade for $63.70 on SushiSwap and OpenSea. Each Genesis CyberKong issues 10 BANANA per day for a period of 10 years, and at the current valuation, this means Genesis holders bring in $637 per day.
In addition to selling the token on the available markets, holders of two Genesis CyberKongz can also breed them to create a Baby CyberKongz NFT that can be minted by spending BANANAs.
Other “blue chip” NFT projects that are embracing the “added utility” model are Cool Cats, which plan to issue a “MILK” token, and Winter Bears, which offers staking in an NFTX vault and has a partnership with PieDAO. The Bored Ape Yacht Club also offers real-life perks such as exclusive gear from streetwear brand The Hundreds, airdrops to holders and planned utility within the metaverse.
As shown in the chart above, data from BrokerChooser shows that six of the 10 most lucrative NFT projects for investors currently offer either a token, airdrops or planned utility in the metaverse.
Roughly one month ago, Cool Cats were trading for 1.5 to 3 Ether (ETH), but after the project announced plans to conduct airdrops, issue a token and develop metaverse utility, the NFTs went on to establish a new all-time high average price at 25.75 Ether. Currently, the floor price for Cool Cats is 9.6 Ether, according to data from OpenSea.
Similar outcomes are seen in the Bored Ape Yacht Club project, where Sotheby’s auctions, the Mutant Ape Yacht Club-related airdrops and the release of the roadmap have aligned with spikes in the NFTs’ price.
No Token, But There Are DAOs, CCOs And Sanctioned Airdrops
There are some concerns about projects issuing tokens looking quite similar to an unregistered securities issuance. And with the United States Securities and Exchange Commission, the Senate and the White House constantly threatening regulation of the crypto sector, not every project is rushing to add utility tokens to their NFTs.
In fact, in the last week, a few projects have gone so far as to clarify their position that these tokens are to facilitate the project’s “utility” and are not assets that are meant to reflect value and be traded on the open market.
In addition to offering use in the metaverse and issuing tokens, some of the more recent projects such as CrypToadz have either established DAOs to give the community more interaction with the direction of the project or have presented the project under the Creative Commons “CCO 1.0 Universal” designation, which means it exists in the public domain and the creator has “waived all copyright and related or neighboring rights” to the project.
By doing this, CrypToadz holders and admirers are able to create, mint and sell derivatives of the original project that can be sold on the open market or allocated for sale to CrypToadz NFT holders.
Within the last week, two CrypToadz sold for more than $1 million, and the project quickly hit a 21-Ether floor, which will have priced out many collectors hoping to acquire one of the NFTs. The CCO status of the project allows holders to benefit from exclusive derivative offerings, while also bringing more publicity to the original project. Following the success of CrypToadz, a handful of other projects such as CryptoZilla and Pixelglyphs have embraced the DAO/CCO model.
Like cryptocurrencies, the prices of NFTs are incredibly volatile and driven by various trends, sentiment, paid and unpaid influencers, and a range of other intangible factors. The highly experimental nature of the sector means that projects are constantly testing new methods for bringing in investors, building a community and staying relevant.
The token-bearing NFTs might be a fad that loses its allure once every project on the block embraces the model. The same could happen to the airdrops-to-holders tactic, and there’s really no way of knowing whether the current “Form a DAO and buy up all the rares” approach will work either.
What’s important is that the space is constantly in a state of innovation, and the most successful investors and collectors are the ones who stay abreast of the emerging trends.
Olympus DAO Chases A New ATH After Fresh Bond Offerings And Partnerships
OHM price is on the verge of a new high after a series of cross platform integrations, fresh bond offerings and the launch of Olympus Pro prove that the project has strong fundamentals.
The rapidly evolving world of blockchain technology offers a wide range of approaches and tokenomic models aimed at solving the blockchain trilemma of creating a decentralized, stable and secure network.
One tokenomic model that has seen several variants over the past year is the ‘rebase’ model, which is designed in a way so that token balances can fluctuate over time depending on changes in the token price and the supply in circulation.
Olympus (OHM) is a rebase project that has caught the attention of many in the crypto space over the past six months — in large part thanks to the high yield offered to OHM stakers, which is currently above 7,000%.
What sets Olympus apart from other protocols in the market, including other rebase projects like Ampleforth (AMPL), is that rather than having its main token fluctuate around the stablecoin price of $1 USD, each OHM is an algorithmic reserve currency backed by a basket of assets, such as DAI or FRAX, that are held in the Olympus treasury and give OHM an intrinsic value below which it cannot fall.
Staking And Bonding Game Theory
The main way Olympus users increase the value of their portfolios is through staking OHM on the protocol to earn rebase rewards.
Rebase rewards are paid for by the proceeds from bond sales on the network and can fluctuate depending on the number of bonds sold, the reward rate set by monetary policy and the number of OHM staked.
The long term strategy behind staking on the network involves locking OHM on the protocol long enough so that even if the market price of the token drops below the initial purchase price, the increase in the balance of staked OHM should eventually outpace the fall in price and could potentially lead to an increase in total value.
Bonding on Olympus is essentially a cross between a fixed income product, a futures contract and an option. Bonders are quoted with terms for a trade at a future date, which include a predefined amount of OHM that the bonder will receive once vesting is complete.
These bonding capabilities make it possible for the Olympus DAO to accumulate its own liquidity, referred to as POL, which is an important part of its overall design as more POL ensures that there is always locked exit liquidity in trading pools that helps to facilitate market operations and protect token holders.
Initially, the project launched via a $500 initial Discord offering (IDO) and within a month of listing, the price quickly rose to $1,487 before the market-wide crash in the second week of April pushed the price back to its listing price near $163. Even with the price scrapping a swing low, OHM stakers continued to stack coins over the following month.
The $OHM presale is now worth $2.5m if you held it
Recently, members of the Olympus DAO team pointed out that IDO participants who never unstaked their initial holdings would be sitting on a OHM war chest with a value of over $1 million.
Growing Treasury And Future Plans
As the Olympus market grows, the protocol also accrues revenue from liquidity provider rewards, which are deposited into the project’s treasury.
According to data provided by the protocol, the Olympus DAO treasury now holds more than $100 million in treasury assets and is the second-largest treasury in DeFi behind Uniswap.
Olympus has also shown that it is keeping up with the latest developments in the crypto space as it recently hosted office hours to discuss two of the proposals facing the community: the prospect of adding LUSD to the treasury and whether Olympus should deploy to the recently released Ethereum (ETH) layer-two solution Arbitrum. Recently, members of the TokeMAK community voted to include Olympus DAO in its reactor network and within the next month, an OHM/TOKE staking pool is expected to launch.
It remains to be seen how rebase projects like Olympus and Ampleforth will perform over time, but a quick glance at the daily chart shows that OHM price is trading at $1,286 and on the verge of attaining a new all-time high.
While the concept is one of the newer models to emerge in the crypto ecosystem, it is a development that is garnering attention as the global financial system appears to be in the process of shifting to a new currency standard.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Aussie Senate Committee Proposes Overhaul Of Crypto Taxes, DAOs And Exchange Licenses
The committee recommended more clarity for DAOs, new capital gains tax provisions and tax breaks for green miners.
The Senate Committee on Australia as a Technology and Financial Center (ATFC) has just tabled its third and final report in parliament, which has 12 far-reaching recommendations for the regulation of the digital asset and fintech industry down under.
It proposes new licenses for crypto exchanges, new laws to govern decentralized autonomous organizations (DAO), an overhaul of capital gains tax in decentralized finance (DeFi) and a tax discount for crypto miners using renewable energy.
In general, the report found that there is a need for more regulatory clarity and certainty while avoiding stifling innovation with onerous requirements.
A key recommendation is to establish a new DCE Market License for digital currency exchanges, including requirements relating to capital reserves and auditing. The requirements should be scalable so that smaller operators are not squeezed out of the market.
It also recommended the capital gains tax rules should be updated to provide more clarity around the tax treatment for crypto assets and DeFi staking. The committee suggested that unlike in the current system, capital gains tax should only be applied when cryptocurrency transactions “genuinely result in a clearly definable capital gain or loss.”
The committee also recommended that the Treasury lead a policy review of the viability of a central bank digital currency, as well as put forward a proposal for a company tax discount of 10% for crypto miners who use renewable energy.
One world-leading recommendation is to establish a new regulatory structure for DAOs, which refers to decentralized community ownership and governance of a protocol. The report states:
“DAOs do not clearly fall within any of Australia’s existing company structures. […] This regulatory uncertainty is preventing the establishment of projects of significant scale in Australia.”
Asher Tan, CEO of Australian crypto exchange CoinJar, praised committee chair Senator Andrew Bragg and the team for “the forward-thinking approach they’ve taken with this proposed regulatory framework. He said:
“In our view, the AFTC report strikes a commendably optimistic tone that sees blockchain technology as the historic innovation that it is — and one that comes with matching opportunities and risks.”
The committee heard from a range of experts and industry players, including Blockchain Australia, leading exchanges, and firms, such as R3 and Ripple. The latter recommended that any regulatory framework should use a “risk-based approach to identify digital asset services that pose sufficient risk to warrant regulation.”
Steve Vallas, CEO of Blockchain Australia, said the organization was keen to hear from stakeholders for their feedback on the recommendations.
Senator Bragg Said The Proposed Regulations Would Help Australia To Become A Leader In Digital Assets:
“The committee has recommended a comprehensive crypto framework to deliver Australian leadership. We’ll be competitive with Singapore, the U.K. and the U.S.”
The Australian Taxation Office estimated that more than 600,000 taxpayers have invested in digital assets in recent years. Independent research suggests that 17% of Australians currently own cryptocurrency.
The Report Concluded That A Robust Regulatory Framework Was Required In Order To Protect Consumers, Promote Investment In Australia, And Remain Competitive Globally:
“The potential economic opportunities are enormous if Australia is able to create a forward-leaning environment for new and emerging digital asset products.”
PleasrDAO Adds $4M ‘OG NFT’ Wu-Tang Clan Album To Its Collection
‘Once Upon a Time in Shaolin’ has been dubbed the OG NFT, and now PleasrDAO has turned the title deed to the work into a real NFT.
PleasrDAO has revealed itself to be the new owners of Wu-Tang Clan’s one-of-a-kind unreleased album Once Upon a Time in Shaolin.
The 74 members of the decentralized autonomous organization (DAO) now share collective ownership of the album. The group purchased the sole copy of the album from the United States federal government for $4 million at the end of July, collected it in September, and moved it to a vault at an undisclosed location in New York. PleasrDAO has minted the ownership deed as a nonfungible token (NFT) with the help of crypto-savvy attorney Peter Scoolidge.
A collective of decentralized finance leaders, early NFT collectors and digital artists, PleasrDAO is well-known for tokenizing the original Doge meme and purchasing Edward Snowden’s “Stay Free” artwork for 2,224 Ether (ETH).
The government came to possess the album in 2018 after seizing the assets of former owner “Pharma Bro” Martin Shkreli on fraud charges. Shkreli, who was widely reviled for jacking up the prices of life-saving drugs by up to 5,000%, had anonymously purchased the album in 2015 for $2 million, making it the most expensive piece of music ever sold at the time.
The lead of the Wu-Tang Clan, RZA, and album producer Cilvaringz originally created the album in response to their concerns that piracy and digital streaming cheapens the value of music.
Cilvaringz said they hoped that the album would “return music to the value of fine art — a mission finally possible in today’s environment, nearly a decade later with NFT technology and the ability to mint this album as a unique 1:1 original.”
For this reason, PleasrDAO’s interest in the album is self-explanatory, wrote “chief pleasing officer” Jamis Johnson in a blog post.
“Once Upon a Time in Shaolin in many ways is the OG NFT before NFT technology had made its way into the zeitgeist.”
As for the future of the album, Johnson said PleasrDAO believes the “next chapter of the incredible story of this album should be Web 3.0 native.”
Should have been an NFT. Ownership and uniqueness would still be preserved even if everyone listened to the album. Instead, the value lies in this being a treasure hidden from the world. This is why NFTs are so powerful. https://t.co/QSvpBAH5ic
PleasrDAO is still bound by a legal agreement underpinning the album, which prevents it from being commercially released until 2103, although listening parties are allowed. Despite this, the group insists they “firmly believe there are ways to share this musical masterpiece with the world.”
DAOs Will Be The Future Of Online Communities In Five Years
A decentralized autonomous organization provides power for users to create an online community with as little friction as possible.
Online communities, those that share a common interest on the internet, can range from social networks, grassroots organizations and customer communities. We, as a society, are naturally communal, so it makes sense to engage in ideas and interests with others online. Whether we build relationships with people directly or indirectly, communities are built. However, how we do so differs.
In 2006, web expert Jakob Nielsen proposed a 90-9-1 rule based on participation inequality in social media and online communities. According to Nielsen, in most online communities, 90% of users are lurkers, i.e., those who observe, but don’t contribute, nine percent of users contribute a little and only one percent account for the most contributions.
But as the influence of online communities continues, their nature is beginning to change. The previous era was dominated by a user, customer and creator relationship. Now, though, we’re starting to see online communities taking ownership of what they want to share.
The Ownership And Creator Economy
With COVID-19 forcing many of us to work from home and socially distance ourselves from loved ones, digital connectivity has played an important role in how we stay connected. For many, this has resulted in a greater reliance on online communities.
According to research by Facebook, in conjunction with The Governance Lab at New York University, 77% of respondents indicated that the most important group they’re part of operates online.
Today, we live in a world where content is readily created and shared. This creator economy, which builds on human creativity, intellectual property and technology, is a concept that continues to grow. And after a year of lockdowns, now more than ever is a time to appreciate the creator economy.
As governments seek to rebuild their economies in the wake of the ongoing global COVID-19 pandemic, creative economies will play an important role. So much so that figures from Deloitte suggest that this sector could grow by 40% by 2030, adding more than eight million jobs.
The next logical step moves away from this sharing economy toward that of an ownership economy. Jesse Walden, the founder of Variant Fund, calls the ownership economy something that is “not only built, operated, and funded by individual users, but owned by users too.” An example of the creator economy and the ownership economy coming together is seen through nonfungible tokens (NFTs).
NFTs are enabling creators to deliver a more intimate connection with their followers while removing issues associated with middlemen.
By doing so, and thanks to the blockchain, creators have full ownership of their work and have free rein to copyright their creations while ensuring their authenticity. Delivering a golden opportunity for creators, NFTs are establishing creative ownership.
And it’s the advent of crypto and decentralized finance (DeFi) that is helping to take online communities to the next level. As the sector uses assets that are shared by all shareholders, creating something that aligns with their interests, crypto and DeFi are a natural fit.
Empowered by frictionless finance, the ownership economy enables novel approaches for real-world communities to leverage digital tools to create, capture and exchange value more effectively in virtuous cycles.
The ownership economy has been pioneered by Bitcoin (BTC). Arriving in 2009, Bitcoin proposed a new avenue of economic wealth while using technology on a computer. By doing so, anyone with an internet connection was incentivized while mining for newly minted Bitcoin, thus helping to secure the network while claiming ownership in the network itself.
Since then, the crypto market has grown exponentially and with it, online communities are being seen through new tooling and incentive design which comprises the trend known today as decentralized autonomous organizations (DAOs).
DAO Online Communities
A DAO is essentially a programmable organization of people that form around a shared mission and fosters an emergent online community. They jointly control a crypto multi-signature wallet, ensuring that its objectives — decided by DAO members — are met. The governance of DAOs and their operations are written in smart contracts, consisting of automated if-then statements, making them transparent and auditable.
What’s great about DAOs and their role in online communities is that the way they interact with each other is a wide-open surface area and there is much work being done in the space. Anyone can take part in a DAO regardless of where they are. All that’s required is the staking of funds, which creates a great building block for interacting with a community.
DAOs are not walled gardens and therefore their participants have intrinsic and extrinsic incentives to collaborate with other DAO communities to bolster each other’s capabilities while sharing in the ownership and direction of each project. With no central party standing in the way, everyone is given a right to have a say about how something is or should be done.
DAOs and DAO2DAO collaborations are still very much “a crypto thing,” but real power for positive change lies in them when the methodologies, ownership models and tools created from this movement touch real-world communities, large and small.
DAO’s Allow Crypto Crowdfunding To Go Mainstream
A loosely-organized group of investors made casual and even some long-time observers of the crypto world wonder what’s a DAO, or decentralized autonomous organization, after they mounted a crowdfunding-like campaign to buy a rare copy of the U.S. Constitution.
While the bid from the project known as ConstitutionDAO fell short at a Sotheby’s auction on Thursday, the effort showed the power of the DAO, and how the idea has the potential to change the way people buy things, build companies, share resources and run nonprofits. The Ethereum-based project ended up raising $46.3 million from thousands of donors, one of the largest amounts ever through the process.
Here’s how the community owned blockchain projects work and some of the questions being raised.
In a traditional company, a CEO and management typically make all decisions. In a DAO, thousands or even millions of people can be involved in deciding on product features, strategy and fees. Their votes are counted, and they impact what the project’s funds go toward.
Developers, investors and users first often have to put some money or work into a project to get special digital tokens, with which they can vote, and which are often available for sale on crypto exchanges. A share of the tokens issued is also usually put into the project’s treasury.
That treasury is governed by a smart contract — a piece of software that sits on a blockchain, a digital ledger similar to that underpinning Bitcoin. The smart contract only allocates funds to efforts approved by the token holders. No one can access the treasury without the approval of the group.
The smart contract can also let participants make operational decisions. In the case of ConstitutionDAO, contributors were promised a governance token with which they could have voted on where the constitution would be displayed.
Unsurprisingly, it turns out that users are more loyal to projects that reward them with governance tokens. The tokens often have various additional incentives baked in. Holders of tokens of decentralized exchange dYdX, for example, get discounts on trades. Users can also make the project more agile.
Centralized or traditional organizations “can be slow to change and have difficulty scaling and resolving multiple goals,” said Aaron Brown, a crypto investor who writes for Bloomberg Opinion. “Decentralized organizations can be much more flexible and innovative, self-interested people have more difficulty co-opting them.”
Over the years, DAOs have been created to run venture funds, distribute money to nonprofits, and lend and borrow digital coins while earning interest via decentralized-finance, or DeFi apps. In one of the best-known examples, PleasrDAO paid $4 million in July for a copy of a single-issue Wu-Tang Clan album once owned by Martin Shkreli.
To be sure, investing in a DAO can end up being more expensive than it initially seems. A median donation to ConstitutionDAO was $206.26. To process the donation, many investors likely paid a substantial amount in so-called gas fees to complete the transaction.
With the bid lost, ConstitutionDAO will need to send the funds back, minus gas fees needed to process the reimbursement. As a result, many small investors could end up losing half or more of the funds contributed. That’s why many DAOs are now being set up newer networks such as Solana, in part because the transaction fees are so high on Ethereum.
No matter the ownership structure, DAO projects have to abide by existing laws and regulations — and, in many cases, may need to register with authorities.
ConstitutionDAO Still Has Almost $50 Million After Being Beaten by Ken Griffin
The process of refunding people who contributed to a failed effort to buy a copy of the U.S. Constitution is likely to be a technical and organizational challenge.
What do you do after you crowdfunded more than $40 million to bid on a copy of the U.S. Constitution — and then you don’t win the auction? Asking for a decentralized group of internet frens.
Over the course of a few days, a group of crypto investors operating as ConstitutionDAO raised tens of millions of dollars (or 11,600 ETH worth $49.6 million based on Friday’s prices) to participate in a Sotheby’s auction of a copy of the U.S. Constitution. The artifact ultimately sold for a record breaking price of $43.2 million, to noted crypto skeptic and billionaire Ken Griffin.
While the nominal leaders of ConstitutionDAO declared their intentions to refund supporters through Juicebox.money, a platform built on the Ethereum blockchain that operated as a sort of crypto Kickstarter, that process might prove to be both a technical and an organizational challenge.
“ConstitutionDAO has reached some sort of a coordination moment. There are decisions to be made both technically and socially, and the PEOPLE will have their first opportunity to really use their voice,” a Juicebox.money developer going by the name Jango wrote in a blog post released Friday.
ConstitutionDAO said in a statement posted to Twitter that it had 17,437 donors, with a median donation size of $206.26. Beyond that, and several tweets celebrating their “historic” effort, the group hasn’t given much indication to what will happen with the funds and declined to comment for this story.
Had the group won the auction, investors were supposed to receive a governance token depending on the size of their contribution, which would give them a say on where the copy of the Constitution would be displayed or how it should be exhibited.
We showed the world what crypto and web3, onboarding thousands of people in the process, including museum curators and art directors who are now excited to keep learning.
We were the first DAO @Sothebys has ever worked with, but we’re sure we won’t be the last one.
For his part, Griffin said he will loan the document to billionaire and Walmart heir Alice Walton’s Crystal Bridges Museum of American Art in Bentonville, Arkansas. The hedge fund titan and founder of Citadel is worth $21.9 billion, according to the Bloomberg Billionaires Index, and has an expensive taste for art. About six years ago, he was said to have paid about $500 million for two paintings by Abstract Expressionist masters in one of the largest private art deals ever.
Griffin said earlier this month that the crypto space could be disrupted by Ethereum’s blockchain. But he still has questions about how the digital assets should be valued. And last month, In previous remarks about cryptocurrencies, he has said his firm doesn’t trade the assets because of regulatory uncertainties.
“I wish all this passion and energy that went to crypto was directed toward making the United States stronger,” Griffin told Bloomberg’s Erik Schatzker at the Economic Club of Chicago on Oct. 4. “Let’s face it — it’s a Jihadist call that we don’t believe in the dollar. I mean, what a crazy concept that is.”