NIFTSY NFT Digest#11

NIFTSY NFT Digest

As ENVELOP is developing the Protocol, the Oracle and the Index for NFT markets and related industries, we decided that it was foolish to simply hoard the material collected and partly analyzed: much better to share it. So here is Digest #11, as it should be in the IT systems report, where you will find everything about the prospects for NFTs, and much more. Enjoy reading!

Content

Main study |News&Updates | Special Review | Security | Analysis |
Market keys

Main study

Virtual Beings: A New Internet-Native Medium for Shared Storytelling

Virtual Beings Ecosystem Map

Virtual beings are entities or characters that exist entirely in the digital domain, crossing over to our world via social media interaction, shared mediums like games and Internet-native spaces, and hologram technology. They range in scope from human-controlled avatars manipulated with motion capture technology to fully-sentient anthropomorphic AI.

Virtual beings (VBs) come in many forms and vary in complexity.

  • VTubers are virtual beings who stream their life on popular video platforms. VTubers are humans using a spectrum of consumer-ready motion capture technologies and character creation softwares, commonly in the anime aesthetic and streamed on Twitch or YouTube. — virtualhumans.org. Today, there are more than 16,000 VTubers (up from just 1,000 in March of 2018) with millions of fans across social media platforms. Popular VTubers include Gawr Gura, Inugami Korone, Nyanners, Ironmouse, and others. Some VTubers have begun to experiment with NFT technology, with Kizuna AI being the primary example after announcing a hiatus () beginning in February 2022 to take time to further explore NFTs. The most obvious use case for VTuber NFTs is the creation of token-gated content and Discords, along with digital collectibles. But two other possibilities stand out: rights management and avatar markets. Fully rigged character models could be created by third-parties and distributed in the form of NFTs. This is an upgrade to the current marketplace and commissioning system in place since creators could better track the use of their models while receiving secondary sale revenue flows. Anata is one such project experimenting with this, launching 1,000 male and 1,000 female Live2D VTuber avatar NFTs that are fully functional in streaming apps.
Anata is the first NFT you can literally be
  • A virtual influencer is a digital character created in computer graphics software, then given a personality defined by a first-person view of the world, and made accessible on media platforms for the sake of influence. — virtualhumans.org. Virtual influencers are CGI-generated personas that can be anyone, do anything, and go anywhere in the digital world. They are not limited by physical constraints, so can be in two places at once, never tire, and never go off-script. Virtual influencers have almost three times the engagement rate of their IRL counterparts, and brands love them for the control they enable over their identity
19-year-old Robot living in LA

Virtual influencer culture has recently begun merging with web3: Dapper Labs acquired Brud — the studio behind Lil Miquela, multiple virtual influencers have launched NFTs including Lil Miquela, LV4, Rae, Shudu, FNMeka, and Yameii, and major web3 studios such as RTFKT have collaborated with virtual influencers to promote their NFTs. It is especially exciting to think about the future of web3 and virtual influencers, such as rental contracts to use in events or ads and fractionalization of the influencer to form DAOs around them that curate their stories and receive revenue flows to a community-owned treasury.

  • Separate from virtual influencers although similar in nature is the category of distributed personas. These are characters who are broadly managed by an open and permissionless community, as opposed to virtual influencers which have one authority or studio managing them. One of the best examples of this today is Hatsune Miku, a Japanese Vocaloid software voicebank released by Crypton Future Media in 2007. Vocaloid software allows users to synthesize the sound of singing by typing lyrics and inputting a melody. Because each vocaloid has its own characteristics and are effectively separate ‘singers’, they are typically released with moe anthropomorphic characters, the most successful of which is Hatsune Miku herself. Hatsune Miku is a highly successful distributed software that has a decentralized community of creators making new songs and animations for the virtual being, earning over $120M in total revenue through music, merchandise, hologram concerts, and shareable media in the first five years alone. This model lends itself well to DAOs — human creators release new music and dances, vote on content canon, and collect revenues to a community-owned treasury. Some distributed personas have begun experimenting with this idea. For example, Botto is a decentralized autonomous AI artist controlled by holders of $BOTTO, the native governance token. Token holders stake $BOTTO to earn non-transferable Voting Power (VP), which is used to vote on 350 AI-generated art works each week. At the end of each period, the piece with the most votes is auctioned on SuperRare as an NFT with proceeds used to buyback and burn $BOTTO tokens. To date, Botto is one of the highest grossing artists of all time on the marketplace with over $2M in total sales. Since creative AIs have the ability to infinitely create new works, human curation will play an important role in the new economy. DAOs that manage the curation, distribution, promotion, and governance of distributed personas while benefiting from value creation will likely spawn a new age of AI-enabled and/or human-generated digital character productions.
Botto is a decentralized autonomous AI
  • Autonomous Entities. The simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. The term may also be applied to any machine that exhibits traits associated with a human mind such as learning and problem-solving. — virtualhumans.org The first three types of virtual beings were broadly human-controlled in one fashion or another. Our final type, however, is not. Autonomous entities use artificial intelligence and other tools to simulate life. They can run the gamut from chatbots and virtual world non-playable characters to AI companions and digital reincarnations of the deceased. One of the simplest forms of autonomous entities are AI companions. The rise in trust and embrace of AI among younger generations seems to entail a future where humans form close bonds with AI entities. Entire business models have formed around this idea, with companies like Replika providing friendly chatbots that interact with their humans throughout the day and Hybri providing custom 3D model bots to simulate romantic partnership. The growth of the AI companion market is evident already: Xiaoice, an AI companion spinoff from Microsoft, was recently valued at $1b, and the conversational AI market is expected to grow to $13.9b by 2024 on the back of the Loneliness Pandemic — a noted uptick in loneliness experienced by 61% of polled adults. One project in web3 focused on AI companions is Petaverse Network, which draws on a long tradition of virtual pets, from Tamagotchi to Nintendogs. Petaverse Network seeks to create an interoperable digital standard for virtual pets, hashing their personality on-chain so that it exists forever. This personality represents a data layer for the pet that updates over time as you interact with it across games, AR, and VR. Other projects will be able to build on this data layer, reinterpreting the pet for their own virtual worlds and games. Extending AI companionship further, an AI could be trained on the digital footprints of an individual to replicate their behaviors after they die in what is known as digital reincarnation. With enough text messages, social media posts, and videos used as training data, a neural network could learn to simulate the speech and mannerisms of the deceased while presenting themselves in a photorealistic CGI model of their likeness or as a chatbot. In fact, it was recently reported that Joshua Barbeau used a software to create a hyper-realistic chatbot backed by GPT-3 to recreate the experience of talking with his deceased fiance by training it on her text messages. Because of the sensitive nature of digital reincarnation, rights management will be crucial, and encrypted NFTs that require staking to access might be the best solution to ensure these digital replicas are not used elsewhere on the Internet. Autonomous entities could also be virtual world agents. A glaring issue with many virtual worlds today is the emptiness felt when exploring. Populating virtual worlds with highly intelligent NPCs is one method of giving life to these environments. Imagine:
  • Decentral Games’ virtual casinos stocked with highly sophisticated chatbots
  • Cryptovoxels stores inhabited with AI NPCs selling digital goods 24/7
  • Anthropomorphised trading bots with distinct personalities
  • On-chain creatures that live and adapt to external variables using oracle data feeds
  • Game characters that morally evolve over time based on the actions of a user across multiple games

Virtual beings run on a variety of technical and creative infrastructures in order to operate.

  • Artificial Intelligence. Virtual beings vary in their degree of autonomy, ranging from fully human-controlled (e.g. vtubers, most virtual influencers) to increasingly intelligent AI enabled by Natural Language Processing (NLP), Computer Vision, and a cognitive development layer for memory storage, emotion, motivation, and more. Some of the most common tools in this domain is OpenAI’s GPT-3, a large language model that is scarily accurate in depicting conversation with an actual entity, or machine learning algorithms that update base datasets over time as interactions occur. While many autonomous virtual beings today run on centralized AI infrastructure, two prominent projects within web3 have taken different approaches to recreating AI on-chain. Alethea AI, originators of the “iNFT standard”, made waves last year when they sold Alice at Sotheby’s for $478,800. iNFTs hash a GPT-3 personality prompt into the metadata of the NFT that is subsequently decrypted on the Noah Ark platform and used to generate a GPT-3 response to user inputs. These iNFTs can be trained over multiple engagements with the user, progressing through various levels of intelligence over time. Users can create iNFT versions of their favorite digital assets by pairing any NFT with a personality pod and training it using a combination of user interaction and $ALI token staking. Altered State Machine takes a different approach to accomplish a similar goal. Agents in ASM begin with a form (the image or model of the agent) and a brain (a base NFT with a ‘genome’ matrix — a randomized set of base values — and a memory tree which logs state changes). GPU cloud compute providers use their hardware to run training algorithms for specific ASM applications (e.g. a popular game or a DeFi trading bot), similar to how mining works with PoW blockchains. The outputs from these training sessions are called memories and are logged in the memory tree in ONNX format, modifying the value matrix to improve the skill set in that specific application. The first proof of concept for ASM is AIFA, an AI Football game, which uses a combination of Unity, IPFS, and a sample Training Gym. ASM hopes to extend the applications of their agents beyond this, however. Some conceptualized ideas in the whitepaper include DeFi trading agents, game character agents, chatbots, and digital assistants. The shift from proof of work to proof of stake means large amounts of GPUs will be looking for alternative uses, so decentralized AI models using GPU mining could be the next frontier.
  • 3D Modeling and Animation. Central to all iterations of virtual beings is the use of 3D modeling, animation, or motion capture technology. While virtual beings take a variety of graphical aesthetics and forms, all require base models that are rigged for animation or movement. Marketplaces and repositories for these models already exist, and NFTs could provide an additional avenue for financialization. A high fidelity facial render requires a mesh 3D model with sufficient detail and deformation control. 3D meshes are rigged to skeletons that can then be animated via code or user action. Experiments with combining animation and gestures with NFTs have already begun with HEAT representing the forefront of this movement, hoping to craft a marketplace for animations that can be applied to 3D models. By retargeting .glb and .gltf files to the bone structure of a 3D model, HEAT is able to create interoperable movement files for any standardized avatar file in virtual worlds.
  • VB Studios. The DAO model works very effectively as a means of organizing content, creating fan experiences, and engineering beings (Hatsune Miku, although not currently a DAO, being a prime example of the power of decentralized community management). I anticipate that entire decentralized studios dedicated to virtual beings will form over time, whether that entails DAOs managing individual and collective personas or operating as service DAOs for those wishing to integrate virtual beings into their projects. CULTUR DAO is the most prominent decentralized studio for virtual being creation, billing itself as the Web3 Pixar. Via a token-gated Discord, a group of artists, technicians, and evangelists use shared financial incentives to drive innovation in the field. Committees are formed around avatars, artificial intelligence, speech synthesis, story creation, and experimentation with existing AI NFT infrastructure such as ASM’s brains and Alethea AI’s personality pods. Their recent hackathon produced a myriad of interesting projects including Decentraland AI Chatbots, a VB ballet, talking Cryptopunks, AI character memory tests, and Kittygotchi — a tamagotchi-like virtual cat.
  • The Synthetic Media Social Layer Synthetic media — AI-generated, personalized media content — is proliferating, and virtual beings are a further extension of this social media layer. While virtual beings may feel foreign now, it isn’t hard to fathom that within a generation or two they will be commonplace and socially accepted. Web3 technology provides an additional access point for the creation and management of these synthetic media experiences. Ownership layers enabled by NFTs, decentralized governance across a myriad of stakeholders over the Internet, revenue models not possible in previous iterations of the web, the permanence of the blockchain, and more all open up a new frontier in synthetic media.

Projects news and updates

In this section we will very briefly talk about the projects we have encountered over the previous month. Maybe you will want to get involved in some of them; maybe you will want to tell us about some of them; maybe you will find some overlaps with ENVELOP and let us know about them. We do not publish in the order of appearance or alphabetical order, but as the projects came across to us:

  1. A generative art library for NFT avatar and collectible projects. The generative-art-nft repository is a library for creating generative art. It was developed for the purpose of creating NFT avatar & collectible projects.

Generate over a million distinct images with less than 60 traits. The library allows you to generate images every distinct possible combination of your traits. For context, if you had trait art for a project like Bored Apes, the library could generate upwards of 1.2 billion distinct apes. The library also allows you to configure the image generation process in such a way that you have complete control over how rare each and every trait is. There is now an added functionality to generate JSON metadata for your NFTs that are in compliance with OpenSea metadata requirements (and by extension, the general NFT metadata standard). You can use this library even if you do not know how to program (in Python or otherwise). Do check out the Tutorial for more details on how to use (non-technical) and extend (technical) the library.

2. NFT ART GENERATOR. This tool generates generative NFT art, based on all available traits. It was made with the intention to make the generative art field more accessible to anyone. With this tool you don’t need to be a programmer to create generative art. Features:

  • Generate Images of an infinite amount of traits
  • Weight traits for different rarities
  • Remove duplicate combinations
  • Generate metadata for direct use on OpenSea

3. XLS-20 update. rippled 1.9.0 was released with key contributions from RippleX, including XLS-20, on Devnet. While the team is excited to contribute additional NFT functionality to the XRPL, stability and scalability remain key priorities for the XRPL community. As with any new feature to a public blockchain, NFT functionality will bring considerable additional transaction volume to the XRP Ledger. As such, the Ripple-managed validators on the XRPL voted against bringing XLS-20 to XRPL Mainnet at this time, as Ripple believes additional performance testing should be conducted to better understand NFTs’ impact on the XRP Ledger at a large scale. Enabling a native NFT object on the XRPL requires 80% of validators to vote in favor of XLS-20. As one contributor to this growing XRPL community, Ripple is not in a position to determine the outcome of enabling XLS-20 alone — that will be up to the collective XRPL community. Currently, Ripple operates only 4 of 144 known validators on the XRP Ledger (less than 3% of the total).

4. After passing community vote, v0.9.19 has been enacted on Polkadot. This upgrade included a batch call upgrading Polkadot’s runtime to enable parachain-to-parachain messaging over XCM and upgrading Statemint to include minting assets (like NFTs) and teleports. Polkadot’s XCM format means the network’s objective to be a fully interoperable multichain ecosystem has been fulfilled. XCM allows communication not just between the parachains themselves, but also smart contracts, dApps, and @Substrate_io pallets. Polkadot’s common good parachain #Statemint was also upgraded allowing users to mint assets (like NFTs), and teleport DOT with the Relay Chain. This marks the true launch of #Statemint and its functionality.

5. Theta NFT DRM technology launches, featuring debut partnership with OpenTheta. NFT DRM represents a new way to return power to the content creators, by allowing them to direct control over their own content distribution. Unlike the DRM most people are familiar with, where a content publisher may arbitrarily revoke your access to content you already purchase, NFT DRM means your access to the content is verifiable and irrevocable on-chain in the form of an immutable NFT. It also means more protection for content creators, since they can verify that only people that acquired the appropriate NFT have access to the content represented by that NFT. In this initial example Theta sets the price at 1 TFUEL so that anyone can afford to try out NFT DRM, but it’s easy to see how another creator could use this technology for virtual ticket sales, selling NFTs for $10 each as tickets to a livestream concert, or a promoter selling $100 NFTs to watch a heavyweight boxing match instead of traditional Pay Per View.

6. Co-founder & CEO @Sorare Nicolas Julia @ni2las announced a long term, exclusive deal with the @mlb & @mlbpa 🔥 (Major League Baseball & The Major League Baseball Players Association)

Our game will be live this summer alongside a major push in the US.

7. API3 and the ANU Quantum Optics Group bring the first Quantum Random Numbers to blockchain, offering a truly random, secure, and free public random number utility to dApps and Web3. API3 QRNG, based on the ANU Quantum Numbers (AQN) API from the Australian National University (ANU) Quantum Optics Group, is now live, allowing smart contracts to access truly random (unpredictable) numbers that are highly secure and freely available. API3 QRNG is the first “true” random number generator for smart contracts, a more secure alternative to existing pseudo random number generators. API3 QRNG is available now on: Arbitrum, Avalanche, BNB Chain, Ethereum, Fantom, Gnosis Chain, Metis, Milkomeda-Cardano, Moonbeam, Moonriver, Optimism, Polygon, and RSK. API3 will not charge users to utilize API3 QRNG. Consumers will only pay the gas fees needed to call the API and receive a response, and will not face any additional premium payments for random number generation. This low-cost, high-security solution will disrupt a number of current and future Web3 operations, such as:

  • Gaming: Metaverse, play-to-earn, and community-building games on the blockchain heavily rely on continuous random number generation to keep operations unpredictable and exciting for players.
  • Gambling: For games of chance, where financial incentives serve as a reward for correct wagers, players will only partake if they trust developers are utilizing a tamper-proof generation to maintain fair odds.
    NFTs and Generative Art: Randomly distributing assets comes to life in an artistic format when developing generative NFTs — resulting in a collection of dynamic digital assets developed through the organically unpredictable quantum process, compared to the manufactured nature of pseudorandom computer algorithms. For those working on numerous collections, turning to a free randomness generator unconstrains creativity.
    Participatory Processes: Web3 applications that involve public participation, such as random token distribution or drawn winners, can leverage a random number generator to ensure a truly fair assignment process of high demand items without bias.

8. The Global Esports Federation, whose goal is to become officially recognized as the governing body for the esports ecosystem, has formed a metaverse council to “focus on shaping tangible metaverse development initiatives for our global community.” The council is to be made up of blockchain experts, NFT developers, and social media influencers. Hugo Philion, CEO of blockchain interoperability project, Flare, will chair the council. According to its whitepaper, Flare claims to offer a “scaling method for smart contract networks without relying on economic safety mechanisms.”

9. Enevti: Redeemable NFT with Decentralized Creator Finance Protocol. Enevti is a decentralized social media NFT platform to help fans get an authentic relationship with their favorite influencers. The Enevti protocol builds upon four novel components:

  • Redeemable NFT: They model a smart assets implementation where NFT can have more intrinsic value for the owner to buy and redeem the NFT through unique social utility and bring more intrinsic motivation for the owner to collect and trade the NFT through social gamification. NFT Utility can be extended using third-party apps. Existing NFT from another chain can apply redeemable abstraction using Enevti Bridge.
  • Creator Finance (CreaFi) Protocol: Combination of Creator Economy + DeFi + NFT. They model a fair and open financial instrument between fans and content creators — without intermediaries — that aligns token staking and NFT royalty distribution as financial incentives driven by social perceptions, such as popularity, creativity, supportability, and authenticity
  • Self-Sustaining Governance: We model a fair ownership economy structure using creator-centric decentralized autonomous organization within Enevti Ecosystem, where token holders can vote on treasury proposals based on their stake-power. Qualified creators can become delegates to secure networks and empower the community by curating the best NFT.
  • ENVT Utility Token: We model a native utility token that serves a purpose to incentivize every stakeholder in the Enevti Protocol mechanism.

The concept of Redeemable NFT is generally identical to some previous explorations, such as Smart Collectibles , Semi Fungible Tokens , etc. However, Redeemable NFT focuses on increasing intrinsic value and intrinsic motivation and its extensibility and interoperability. They implement Redeemable NFT in the blockchain layer to become part of the protocol design on the Enevti blockchain. Layer-One hosts an immutable append-only chain of blocks that accumulates transactions from parties in a network for public verifiability. NFTs then can be used for blockchain-based OAuth 2.0 Authorization to access specific resources. An attributes are the main building blocks for Redeemable NFT and will also affect the visual design of NFT in the Enevti ecosystem as a whole. NFT Visuals can be distinguished from one another, showing the different attributes. The rendering version does not combine all the attributes into NFT but composes the existing attributes, so the attribute itself is NFT. In this way, the authenticity of the ‘data’ attribute can be reserved immutably but still demonstrate its visual characteristics. In addition, it should be noted that the background is also designed to change according to its ‘utility’ attributes.

10. Stargaze launched a decentralized marketplace. It’s interoperable via Cosmos IBC and Ethereum interoperability via Gravity Bridge. Stargaze is the first interoperable layer 1 for NFTs with @CosmWasm smart contracts.

11. Leading NFT news website, NFT Plazas, has announced the launch of its innovative new booking system which allows users to upload and pay for customized billboard advertisements in the Metaverse using an automated book-and-pay system. This is the first-of-its-kind solution for advertising in the Metaverse, helping onboard thousands of new brands to Decentraland through a simple and efficient user interface. With the use of a simple five-click booking system, brands, projects and potential clients can be seen on a global scale and plug directly into the Decentraland community. There are two ad types with different sized billboards to choose from, and users can upload their own design customized to their vision. There is also access to a unique reporting dashboard for clients to monitor the progress of their campaign on a daily basis. Reporting includes information such as total number of views so far, views by location in the Metaverse, geo-location of visitors, and language of visitors. The automated booking system works on a pay-per-view basis. You can choose the amount of views you want to receive for your Decentraland billboard advertising campaign, with pricing varying on a sliding scale in line with the amount of views you want to book for your campaign. There are already plans to expand this system into Voxels, Somnium Space and other virtual worlds in the coming weeks.

12. Opensea announced Seaport, a brand new web3 marketplace protocol for safely and efficiently buying and selling NFTs.

We’re incredibly excited to be building on top of it, and while we’ve created the first iteration of Seaport, this protocol is not just for OpenSea — but for all builders, creators and collectors of NFTs. The core smart contract is open source and inherently decentralized, with no contract owner, upgradeability, or other special privileges.

Most current NFT marketplaces only allow for listings where one party agrees to supply an NFT and the other agrees to supply a payment token. Seaport takes a different approach: offerers can agree to supply a number of ETH / ERC20 / ERC721 / ERC1155 items — this is the “offer.” In order for that offer to be accepted, a number of items must be received by the recipients indicated by the offerer — this is the “consideration.” OpenSea does not control or operate the Seaport protocol — we will be just one, among many, building on top of this shared protocol.

13. The legendary film director Spike Lee has just announced a collaboration with the democratized content incubator The Visible Project. This exciting partnership consists of the “Gotta Be Mars” NFT collection. This NFT collection, in turn, serves as the key to the “The Visible Project Portal” — a community that supports emerging filmmakers. The “Gotta Be Mars” NFT collection consists of 3,945 generative NFTs; rendered directly from the original 35mm cut of Spike Lee’s debut film “She’s Gotta Have It.” The foundation of each NFT will be the main character of the film, Mars Blackmon.
The main mission of The Visible Project is to create a community of film fans excited about web3-powered film greenlighting. The Gotta Be Mars team will also work with aspiring filmmakers to package digital pitches. These filmmakers, in turn, will pitch their films to the community, who will vote for their favourite pitch. The winning filmmakers who receive the most community support will receive the funding needed to transform their pitch into reality. The token holders who voted on the winning proposals will not only receive products associated with the film, but also a producer credit. At the end of season one, the Gotta Be Mars team will organise the first annual Visible Festival. This will be a multidisciplinary event with live music acts, keynote speakers, digital art and, of course, film. The funded films will also be premiered at this event. Through Visible Festival, both Spike Lee and The Visible Project want to create a new model for web3 communities; one that integrates both online and offline events to celebrate the arts.

14. The World Economic Forum announced today a new initiative, Defining and Building the Metaverse. The initiative brings together key stakeholders to build an economically viable, interoperable, safe and inclusive metaverse. At this early stage, the metaverse can develop in many ways, depending on research, innovation, investment and policy. The new initiative convenes more than 60 leading technology and other sector companies alongside experts, academics and civil society to accelerate the development of governance and policy frameworks for the metaverse and strengthen economic and social value creation opportunities. The initiative will focus on two key areas. The first area of focus is the governance of the metaverse, how the technologies and environments of the metaverse can be developed in safe, secure, interoperable and inclusive ways. The second will focus on value creation and identify the incentives and risks that businesses, individuals and society will encounter as the metaverse comes to life. The initiative will also outline how value chains may be disrupted, industries may be transformed, new assets could be created and rights protected.

15. ‘RNTs’- The New NFT Booking Concept for Hotels. In a ploy to avoid losing money from last minute cancellations, hotels are planning on transforming cancelled bookings into NFTs. Dubbed ‘RNTs’ (room-night tokens), the new concept will mean that those who cancel bookings will have to sell their RNT on a marketplace dedicated to selling unused rooms, instead of putting a business’s cash flow in jeopardy by asking for a refund or to re-book. One of the hotels planning to adopt the new strategy is a resort in the Dominican Republic called Casa de Campo Resort & Villas, which has partnered with Pinktada, a new booking system platform which allows users to buy RNTs for a specific room, time period, or set of nights. According to the platform itself, it is a replacement of the outdated model for securing reservations, as upon a RNT being purchased, the hotel’s revenue is secured and guaranteed, meaning if a customer wishes to cancel or re-book their stay, they can do so through transferring, selling, or swapping their RNT on Pinktada up to two days before check-in. Pinktada will also be rolling out a marketplace which’ll allow people buy RNTs in bulk, which they can then sell on the platform for the price of individual room nights. As with any commodity, RNTs will still be subject to market price fluctuations, however unlike many NFTs, they will come with an expiry date which’ll dictate its value as the check-in date looms.

16. SAFT wNFT — The New tool for Startups and VCs. DAO ENVELOP, cross-chain protocol that allows NFTs to store crypto assets and other NFTs inside. A standard NFT can be turned into a wrapped NFT, extra parameters like time-locks and royalties can also be added to upgrade the Original NFTs functionality. SAFT wNFT is a win/win option for both venture capitalists and businesses. The most significant advantages are token dump protection, obtaining liquidity for the secondary market, and automating the VC-startup connection via smart contracts. When compared to existing investment approaches, such as mechanical sending or “locker” smart contracts, wNFT provides more freedom to the VC fund and lowers operating costs. For example, a SAFT-contract “locker” development can cost between USD 4,000 and USD 7,000, whereas SAFT wNFT is free upon staking $NIFTSY tokens.

Special review

  1. HackMoney 2022, a three-week virtual hackathon that will feature hackers, mentors, enthusiasts, sponsors and speakers who are all gathering online May 6 through May 27th, 2022 to help build the future of finance.

2. May 24th-25th, Scaleup Impact Summit — Are you ready for the Metaverse?

Security

  1. Colin Wu, Crypto Reporter says that the official OpenSea Discord was hacked and posted a link to a phishing site in partnership with youtube.
  2. @ZAGABOND, founder of @AzukiOfficial tell us great story about his path to Azuki Collection but some people in CT considered it as rugged proof. After that, according to @nansen_alpha’s report, within 24 hours, @AzukiOfficial NFT’s Average price decreased by 26%; Floor price decreased by 27% from 21.1 -> 15.3 ETH; Volume increased by 1,329%; Transactions increased by 1,730%. There are around 21 Azuki NFTs listed at floor, with 864 listed above floor. 16 Smart buys vs. 11 Smart Sells
  3. MetaMask Partners with Asset Reality to Help Victims of Scams In Their Efforts to Recover Stolen Digital Assets. This partnership represents an industry-first approach in improving digital asset recovery. Support from Asset Reality to MetaMask’s users who have been victims of scams will be available globally. Asset Reality’s offering allows multiple victims of a scam operation to join forces and build a larger forensic investigation against a scam operation. Asset Reality will be the case handler for MetaMask’s affected users. They will take the heavy lifting off the users to build an investigation into each scam operation, greatly increasing the likelihood of fund recovery and bringing scammers to justice. Asset Reality services will be free to MetaMask users. However, users may need to cover legal costs should they decide that the route of recovery makes economic sense. For victims whose legal costs are too high, MetaMask and Asset Reality will help them join forces with other victims as a group. By providing identifiable information, a person who has been a victim of a lower amount, has the opportunity to recover their funds if larger victims, and ConsenSys pursue these larger scale scam operations. Victims of scams will be able to benefit from the following 5 simple steps:
    1. A user experiences account compromise and/or funds loss typically through a phishing scam
    2. MetaMask support will intake the users and ascertain how they were compromised, if possible, and request any relevant information regarding phishing websites, vectors, and funds lost.
    3. MetaMask support will provide safety tips on next steps for users and pass them to Asset Reality
    4. The MetaMask agent will direct the user to open a case with Asset Reality through a page on MetaMask.io.
    5. Asset Reality will take over communication with the users, and will proactively keep users updated on the status of their cases

Analysis

  1. @AndrewSteinwold from metaverse-native investment firm sfermion.io

We are about to find out how uncorrelated NFTs truly are
(Looking at All NFT Index — not Blue Chips)

how uncorrelated NFTs truly are

2. A visual discussion of the pricing dynamics of NFT series by founder @coinfund_io Jake Brukhman. Most people follow “floor prices”, and this is a really terrible idea.
- In the first diagram, imagine points on the y-axis to be the sell offers for units in the series, in ascending order. Imagine the points on the x-axis as a snapshot of this ordering at a moment t in time. The idea is to understand the dynamics of supply over time.
- To drive this home, here’s a diagram showing the “floor price” at time t . Note the floor price is not a “price”, it is merely an offer. The floor price gives some information about the series (“what is the minimum price of a unit?”), but a lot less information than is available. The floor price is just a single data point in a whole space of points. Here’s what it doesn’t tell you:
- At what price are people actually transacting
- What the offer/sale prices are for other, more coveted, units
- What the dynamics are of these offers and sales over time

  • One thing we can do is track the floor price over time. This allows us to discern more information, such as the trajectory of available supply over time. This floor price is crashing: sellers keep decreasing their sell offers .
  • Here’s a demonstration of why tracking the floor price is a terrible idea. This actually happened a few days ago in #Anticyclones series: “floor price watchers” were selling into a crashing floor price, while smart money was buying up mid-range units like crazy .

The general principle is this: using metrics that take into account full information about the series will unquestionably lead to more informed decisions.

3. To combat NFT wash trading bias in analytics, @nftgoio is launching a new filter and tag 🔺 to flag wash trades and help investors to make better investment decisions with more accurate data. 📈

4. Authenticity on OpenSea: Updates to Copymint Prevention. Copymints are another problem that can sometimes make it difficult for the OpenSea community to find authentic content with confidence. At the same time, we’ve seen incredible communities come together through substantively additive remixes, and we want to encourage these creative universes to thrive. We’re committed to threading the needle between removing copymints and giving space for those substantively additive remixes to prosper. So today, we’re announcing a two-part system to help with this goal:

  1. Image Recognition Technology — Our new copymint prevention system leverages computer-vision tech to scan all NFTs on OpenSea (including new mints). The system then matches these scans against a set of authentic collections, starting with some of the most copy-minted collections — we’ll look for flips, rotations & other permutations. We’ll expand this set over the coming months and constantly train our models to improve detection.
  2. Dedicated Human Review — Making this image recognition technology work requires dedicated “humans in the loop” who can review removal recommendations and train our models continuously.

With this system, our long-term goal is two-pronged: first, with help from our community, to eliminate all existing copymints on OpenSea; and second, to help prevent new copymints from appearing in the first place.

5. DeviantArt is expanding its tool for detecting ripped-off crypto art, offering it to artists outside the platform. DeviantArt Protect, which launched last year for art posted on the site, will now be available for work that isn’t hosted there as well. Users can upload copies of art to Protect and have it matched against non-fungible token (or NFT) images minted to one of several public blockchains. If an identical or near-identical match is detected, they’ll receive an alert and can send takedown requests to major NFT markets like OpenSea. Protect scans images minted to the Ethereum, Klaytn, Polygon, Arbitrum, Optimism, Palm, Tezos, and Flow blockchains, and if a match is detected, artists can choose to send a pre-filled Digital Millennium Copyright Act (DMCA) request asking markets to remove the offending NFT. All images on DeviantArt are automatically monitored for three months, and Core subscribers have their work monitored by the system indefinitely. (Anyone who subscribes to Core for the off-platform Protect tool will also have access to other DeviantArt Core features as well.) So far, DeviantArt says it’s indexed 345 million NFTs from eight blockchains and sent 245,000 alerts about potentially stolen art.

6. NFT Marketplaces: Blue or Red Ocean? The current space is saturated with different types of marketplaces, some add value to their users, and some are market value imitators. The blue ocean strategy, by Chan Kim & Renée Mauborgne, represents uncontested market spaces where there is little to no competition. Moreover, it creates new markets where none existed in the past. In contrast, a Red Ocean is where everyone is competing and markets have well-defined boundaries. The NFT marketplace sector was once a Blue Ocean. But now the market is starting to see a saturated offer in marketplaces for secondary sales, in other words, a Red Ocean. Crowded markets with some lack of growth, where the margins are constantly eroded, resulting in commoditization. In other words, Red Oceans lead to ferocious battles between companies to take profits. Buyer value and Innovation then become increasingly more important to a project’s success.

  • Marketplaces’ Offer Value. As new competitors arrive into the market, innovation and value begin to rise, and the marketplaces start to eliminate their costs. The current marketplaces are beginning to define boundaries based on what consumers perceive as their ideal marketplace.
This “Pioneer Migrator” map shows which sites are creating value for buyers, which have improved the customer experience, and which are value imitators.

Even with the fact that there are a lot of places to exchange digital assets, there is an enormous convergence in the marketplace strategic profiles. The market evaluation shows key competing factors; the vertical axis captures the offering level buyers receive or experience for each of the industry’s key competing factors. These factors increase the cost structure, and organization time, and complicate operations. A high score, in the vertical axis, means that the marketplace offers more to buyers and sellers, while a relatively low score means that the marketplace offers less value to its users.

Market Evaluation. (Source: NFTGo.io, Blue Ocean Strategy, Niftsy Digest)
  • Disputing the lead. Offering value is the main key to determining if marketplaces are or will be successful in the long run. Based on the Market Evaluation graph, we see some similarities with Marketplaces Total Sales, the more value that is added to the platform, the more sales the site has. Marketplaces Total Sales shows total sales of the top five markets; LooksRare metrics do not include wash trading.
NFTs Marketplaces Total Sales
NFTs Marketplaces Total Sales Without OpenSea.

Taking OpenSea out of the picture, there is a highly competitive market between Rarible, Foundation, and SuperRare; this is because the three of them offer similar values to their customers.

  • Yuga Labs Becoming a Marketplace? Imagine taking out the sales volume of 6 of the top 20 collections in the marketplace: Bored Ape Kennel Club, Bored Ape Yacht Club, Mutant Ape Yacht Club, Otherdeed, CryptoPunk, Meebits. Yuga Labs is a big contender to create its own marketplace. The studio already has the trust of the public, and perhaps more importantly, it has volume and sales. Yuga Labs’ potential marketplace could be number 2 of all Ethereum marketplaces with a market cap of $4.03B USD.

At the end of the day, customers will win because of this Red Ocean. Devs will have to work harder to gain some market share and volume. Remember that volume is important to investors, it determines the number of flippers/traders that could potentially exist in a determined market. The good thing is that the NFT exchanges are defining frontiers (I don’t agree with that. In the web3 world, it’s up to the user to define the limits), so every marketplace will be for a specific target market. Hopefully, we will see more integration and diversification between blockchains and the arrival of new web3 adopters.

7. Metaversed launches the Web3 Metaverse Index — the first-ever rating system for blockchain-based virtual worlds. There are a lot of platforms in development within this segment (66 at the last count) of the overall Metaverse all promoting themselves as the ‘latest and greatest’. This makes it difficult to determine which companies genuinely have a good product and a higher chance of being successful. There is also a number of different business models being deployed, coupled with varying user experiences and engagement mechanics. Being able to rate each platform against a set of criteria provides greater clarity into the market and enables the stronger projects to stand out from the weaker ones. Furthermore, with so many platforms in development, the Index allows a fairer comparison between active and in-development worlds because it’s geared more toward likelihood of future success as opposed to current performance. It also provides some guidance towards answering questions such as

Marketer: Which virtual worlds are most suitable for my brand?
User: Which virtual world has the best user experience and is free to play?
Investor: Where should I buy virtual land?’

In order to construct the Metaverse Index, they identified eight key criteria to measure virtual worlds against. Using a scale of 5 (Excellent) to 1 (Poor), here are the eight ways we have rated each Web3 VW…

  • Senior Management Experience. Experience in launching virtual worlds/online games, bringing products to market and developing engaging user experiences.
  • Business Model Evaluation. There is a growing trend of ‘Play to Earn/Create/Move/Socialise/Collaborate. These business models present issues in the medium-term due to their sustainability and in some cases are being constructed with pay-walls at every turn. We have scored these platforms lower than those that are creating more ‘free to play’ experiences. We know what works and doesn’t work in this market. Platforms that openly support User Generated Content (UGC), encourage socialising and have well-defined user journeys are scored higher.
  • Defined Target Market. Virtual worlds have a higher probability of success when they develop a platform tailored to a specific genre or interest group, such as Art, Music or Sports. Inversely, positioning a virtual world as a place where you can play games, make friends, run a business, build a house, collect NFTs, level up and generally do ‘anything’ is not a recipe for success.
  • Graphics Fidelity. A more realistic and higher fidelity graphical experience gives an advantage over those with lower quality environments.
  • User Experience. Many Web3 virtual worlds are insisting on crypto wallet integration at point of sign-up with no option to enter without it. This is not good practice and ‘out of the gate’ paywalls leads to massive churn and friction. Avatar locomotion is also key to the user experience — the ease of driving the avatar, creating content and navigating around the world. A score of 1 is given to all worlds in development (because there is no way to assess it) unless they have a gameplay demo that demonstrates the user experience. The score will be adjusted as soon as an open-beta version is available.
  • Initial Funding/Sales. The ability of the companies to successfully raise equity funding and/or generate funding income from virtual asset sales and scored them accordingly.
  • Roadmap Strategy. When studying the whitepapers of each of the virtual worlds in the market it’s been worrying to see the final task listed in their roadmap as ‘Launching our Metaverse’ and far too much emphasis on financial transaction led objectives (Phase 1, 2,3 land sales or NFT releases). The launch of a virtual world is the start of the journey, not the end and more of the companies in this sector need to look beyond the launch. Consideration has to be given to the ongoing development of the virtual world, new features, new regions and new reasons to login in. Platforms that have given consideration to VW development post-launch have been scored higher than those taking a more short-term approach.
  • Brand Suitability. Creating a virtual world that is attractive to real-world brands is a critical success factor for companies in the Web3 market. Brands bring followers, fans and an audience that newly launched virtual worlds desperately need in order to scale up. Therefore, the overall positioning of the world becomes a key factor. Worlds tailored to specific genres have a huge advantage in this instance over those positioned as Open-Worlds. Virtual worlds positioned towards these variables are scored higher than those less suitable for real-world brand inclusion.

Multiplying each variable together therefore produces an overall Index score used to assess, compare and rank the 66 virtual worlds in the market. We’ll be constantly updating the Web3 Metaverse Index as platforms move out of development and into open-beta, launch new features, bring in new personnel, complete land sales and attract brands. Each month we will provide a complete update of the Index. They have analysed, evaluated and rated 66 different blockchain virtual worlds.

The Top 20 Web3 Virtual Worlds

Here are the different genres used to classify the 67 virtual worlds in the web3 market:

Content Creation: Platforms encouraging UGC
Casual Gaming: Short experience gameplay
Education: Learning and knowledge transfer
Open-Worlds: Expansive open-ended experiences
MMO: Massive Multiplayer Online worlds
Music: Entertainment and socialisation
Questing: Progression-based gaming
Virtual Goods: Fashion creation
Misc: Nurturing, Real Estate and Sports
The chart below segment the 67 platforms by genre. The largest web3 genre is Open-Worlds, accounting for 29 VWs, 43% of the total. The second-largest genre representing 13% of the total is Questing, with 9 VWs live or in-development. Third place goes to Content Creation. This genre has 8 VWs and a 12% market share.

Genre Analysis. The chart below shows four of the genres and their respective average scores per variable. The Music category performs the strongest of the four due to a clearly defined target market, a high suitability for brands and partnerships, clearer roadmaps post-launch and better defined business models. The business model is very important here and Musically-themed virtual worlds provide a good basis for both access-driven and decorative virtual goods coupled with in-world events. In contrast, Open-World platforms although on paper seeming to be smart models are in-fact very difficult to scale and he positioning here is counter-intuitive. Open-Worlds present themselves as being all things to all people. This approach causes a dilution in the user experience with too many choices and no clear player pathway. It’s much better to focus harder on a smaller number of game mechanics and a more tightly defined target market.

Web3 virtual Worlds

Content Creation and Virtual Goods are the better scoring genres from this group. Although UGC is a key feature of both genres, there’s a subtle difference between the two. Content Creation is an open-ended play mechanic driven by UGC and covers all types of asset, from buildings and locations through to accessories and skins. The Virtual Goods genre relates primarily to avatar clothing and includes real-world brands making digital apparel as well as pure-play meta designers creating avatar clothing. Both of these genres are highly suitable for brands, have more robust in-world business models (more dynamic economies) and permit better product roadmaps. At the lower end of the scoring is the MMO genre. The worlds we have assessed in this group do not appear to have roadmaps beyond launch and are utilising Play to Earn mechanics that are difficult to scale.

8. Metaversed have recently added 18 new virtual worlds to our Metaverse Universe charts, taking the grand total to 138 (live and in development). From a segmentation perspective, the blockchain browser-based VW sector continues to exhibit the highest growth in terms of worlds in development.

For platforms building on Ethereum, there are 12 active (open beta and live) companies and 17 in development. Non-Ethereum (including Polygon) has 21 (that’s a lot!) platforms currently in development and nine active. All of these companies are building in the browser whereas the next segment of the Universe chart shows platforms being built natively for virtual reality. Typically they rate and rank VR-based virtual worlds slightly higher in their Metaverse Index compared to browser only.

Obviously, there are fewer companies in this segment of the Universe because building for VR requires a different set of development skills compared to browser-based experiences. It’s also important to remember that at present the install-base of HMDs is comparatively low. Taking both of these web3 (built on a blockchain) segments above into account, total MAUs currently only account for 0.9% of the total Metaverse population. 99.1% of users/players currently reside in off-chain web2 platforms. Shown below is the browser-based segment of the Universe chart.

It’s pretty easy to see who the major players are in this segment. As is the case with web3 platforms, the number of native VR companies is lower than browser-based. This group is shown below.

Market keys

Activity in the NFT market decreased in May

NFTs Total Sales Volume, $bln

Let’s take a closer look at what happened in the collections. Otherdeed is immediately taking the top spot. Newcomers in the top 10 are Doodles and a project from Solana, Okay Bears. CloneX loses significantly, and Moonbirds moves from first to tenth place.

NFT Collection Rankings by Sales Volume (30 days)

Sales are down in all chains except Tezos, where we are seeing a 69 % increase and Panini with 5% grow.

Blockchains by NFT Sales Volume (30 days)

You can see below the sales volume trends across chains from September 2021

The number of buyers at Ronin continues to decrease and it is unclear whether they will be able to regain the love of users. From a peak of 519,000 buyers in November, the number dropped to 78,000 in May

Global Indexes by Sales Volume (30 days)
May Top-15 NFTs Marketplaces, https://dappradar.com/

Among fractionalized NFTs, we still see the dominance of Fractional.art. The DOGE NFT is still the leader, and in the other positions we see significant ups and downs

Top Fractional NFTs

The market capitalization of different categories. PFP NFTs are still the most expensive category, and in May we see a dramatic decrease in liquidity of DeFi NFTs and an equally rapid growth of music NFTs

The market capitalization of different categories of NFTs.

Metaverse Analytic. Real time price, volume, and usage statistics for major Ethereum-based Metaverse economies.

Price, volume, and usage statistics for major Ethereum-based Metaverse economies.

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And if you want to get important news even more quickly, you’ll find it on the Telegram channel DeWeb

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