It feels like yesterday that the NFT boom captured the attention of the crypto community, making waves even outside the web3 world. But a year or so down the line, the NFT hype has somewhat died down. But that isn’t stopping some in the crypto world from staying optimistic about non-fungible tokens.
While much industry focus and effort has centered around profile picture NFTs like Bored Ape Yacht Club or CryptoPunks, NFTs that offer utility beyond just images have been growing in popularity.
“I think within NFTs, everything is just really scratching the surface,” Raj Gokal, co-founder of Solana, told TechCrunch this week. “I think NFTs have 50 different use cases that seem to be lumped into one. I think we expect the majority of the [crypto] projects to make use of NFTs.”
New NFT use cases stretch from gaming to music, and Gokal is seeing enough startup activity focused on those areas to feel optimistic about the digital assets more generally.
“There’s a kind of wave of new NFT products [coming] that could onboard millions of users in Q3 and Q4,” Gokal said. Rather than just thinking about growing the Solana ecosystem, it’s more exciting to watch it grow through developers and creators, he added.
“We built Solana and launched it a little over two years ago, and NFTs only really started existing on Solana a year ago. It’s just been a constant series of surprises about how users make use of this kind of nerdy new technology,” Gokal said.
Although NFT volumes have been lackluster in recent months, the marketplaces hosting NFTs have continued to raise capital at attractive prices.
Even amid bearish market conditions, Magic Eden, a Solana-based NFT marketplace, raised $130 million in late June, hitting a $1.6 billion valuation after launching just nine months prior. Its platform has an average of 22 million unique sessions per month and $1.9 billion in secondary trading volume, according to Magic Eden’s website. Magic Eden’s monthly volume hit new highs in May but has since fallen month over month, according to data from Dune Analytics user derekw23.
On the (mainly) Ethereum-focused NFT marketplace OpenSea, which announced a $13 billion valuation in January, monthly volume has fallen every month since April, according to data from Richard Chen on Dune Analytics.
Despite dropping volumes, a number of use cases for NFTs have emerged in areas of technology apart from profile pics. One of the hottest NFT segments today? NFT-driven blockchain gaming, Gokal said.
“The biggest breakout [web3] game of 2021 and 2022 was StepN, and that’s built on Solana,” Gokal said. “That’s really the only big breakout game we’ve seen besides Axie Infinity. I think the games industry is very fast to pivot once they see a couple of successes that validate things.”
A number of massive web3 gaming-focused funds and capital raises transpired this year, like Immutable’s $500 million fund focused on boosting crypto gaming adoption.
Even though capital is entering the space, the majority of big game studios are taking a while to get into NFT-based titles because it takes a few quarters to ship new games — and it’s expensive, Gokal noted.
“They want to get things right. So I think Q3, Q4 is where we expect to see most of the sort of Triple A-quality games come out.”
As crypto games trickle (or flood) into the digital asset economy, other NFT-integrated sectors are also gaining traction.
Audius, which is one of Solana’s biggest applications with about 6 million users, has NFTs that artists can present and sell to fans, Gokal said. “We see a lot of interest in music; there’s a growing movement of a bunch of stealth startups that are trying to make use of music NFTs in different ways.”
This also dives into the idea of content creators monetizing themselves, Gokal said. “Most of the young creators from Instagram and TikTok that didn’t really make it are looking for the next opportunity to build their audience and monetize, and they’re looking at web3.”
“There’s probably 10 to 15 well-funded super awesome track record entrepreneurs that are trying to build the next TikTok or Instagram NFTs on Solana,” he added. “None of them I’ve gotten permission to announce yet, but it’s really exciting.”
Gokal also said it’s fairly likely that there will be an emergence of social media intertwined with NFTs. Earlier this week, Meta announced plans to do just that. The media giant, formerly known as Facebook, shared in a news brief plans to release digital collectibles to over 100 countries so users could “showcase NFTs on Instagram.” Meta is also launching crypto wallet integrations with Coinbase Wallet and Dapper Labs and will support the ability to post NFTs minted on the layer-1 blockchain Flow.
The adoption of NFTs in social media makes sense and will continue to grow, Gokal said. “Nobody knows exactly when it’s going to take off and it’s probably not going to be exactly what we’re envisioning.”
Unlike Meta’s plans to integrate NFTs, Gokal expects there to be a greater emergence of revenue ownership opportunities for content creators.
“NFTs just give that the ability to get as close to 100% revenue share to creators,” Gokal said. “You don’t even have to call it revenue share anymore the way that YouTube does, and it’s not discretionary or lumpy or secretive, the way the creator funds are at places like TikTok.”
In the crypto world, Gokal sees content creators similar to software developers. “They’re a powerful force and you have to watch where they go.”
Because creators have a “consensus-driven look at web3,” it’s just a matter of building the right products that enhance their energy and allow them to interact with users in a “sticky way,” Gokal said.
As the crypto economy grows, it seems like the main thing users want is to have fun and connect, Gokal said.
“It feels a lot like the early days of the internet, when everyone was sharing a dancing baby GIF and that was just the hottest news of the day — that there’s this video of a dancing baby,” Gokal joked. “It’s a time when everyone’s kind of connecting over something completely new. And it’s exciting to keep seeing the new ways that we get surprised — that’s the best part.”
At a high level, Gokal expects blockchains and NFTs to be as transformative to the world economy and the way people live as the internet was the first time around and during the mobile adoption boom the second time around.
“In terms of magnitude, I think until you see that kind of transformative change to humanity, the job is not done and the technology hasn’t fulfilled its purpose,” Gokal said.