A utility NFT is a token that provides some utility or function. For example, a digital art file stored on an NFT could be used as wallpaper or sold as part of a collection. In gaming, utility NFTs might be used to represent in-game items like weapons, vehicles, or even player avatars. And in the world of finance, utility NFTs could be used to represent things like bonds or shares in a company. The sky is really the limit when it comes to utility NFTs.
Ownership can also give rights and benefits to holders—APY and rewards, discounts, access to events, etc. Some categories of utility NFTS include:
- Social NFTs
- Community NFTs
- In-game NFTs
- Fantasy sport NFTs
Out of the blue-chip originals, Bored Ape Yacht Club is the quintessential model for a utility NFT project, granting owners various utility benefits from the Yuga Labs universe. On the other hand, CryptoPunks is a classic example of a pure PFP project.
The team has not added any utility since being bought out by Yuga Labs in March as it has for its other utility-based projects.
Where do PFP NFTs stand?
One would think that the bear market would entirely eradicate non-utility NFTs from the industry, as they are an utterly speculative purchase with no function outside status.
However, symbolizing status and in-group belonging is arguably the only proven utility of NFTs, creating a paradox.
Out of the 10 top collections last month, 3 were PFP projects with secondary focus on utility.
Source: Footprint Analytics-Top Collections(30D)
Furthermore, CryptoPunks, one of the largest collections by volume, has retained 50-60% of its floor price since March, when the bear cycle seemed to stabilize.
Source: Footprint Analytics-Cryptopunks ETH Daily Floorprice
5 Popular non-utility NFT collections in the last month
- CryptoPunks
- Art Blocks Curated
- Rare Apepes
- Art Blocks
- DigiDaiGaku
Utility or buzzword?
Many projects that are primarily successful because of their rapid growth as interesting PFP pics now inject some utility into their projects. At the most basic, creating a members-only Discord for holders is a logical step to improve the project. Does merely having a Discord qualify your project as utility-based.
On the other hand, some projects claim to be founded on utility, yet the majority of these utilities are still a promise. One example is the Moonbirds NFT collection.
On its homepage, it proclaims itself as “A collection built with utility & community at the foundation.”
“Every Moonbird is also your key to our private PROOF Discord – where you’ll have admittance to our gated Parliament channels. Once inside, you will have exclusive access to Moonbird-related drops, Parliament meetups and IRL events, and access to upcoming PROOF projects; including the PROOF metaverse, codenamed Highrise.”
And while some utility-free projects still pop up, e.g. Art Blocks and Goblintown, the potential for utility in the future still dramatically affects the price action.
For example, DigiDaiGaku is an anime-themed PFP collection, which was relatively sleepy until mid-August. But on Aug. 29, it was announced that Limit Break, the studio behind the collection, closed a $200M round to build out its own game and metaverse. Presumably, their flagship collection would be a key part of that. The floor price of the PFP NFTs skyrocketed from 4.3 ETH on Aug. 27 to 16 ETH on the 29th.
Conclusion
NFT projects used to be a fast way to make a buck in the bull market, with hundreds of collections churned out that amounted to nothing more than repetitive, code-generated JPGs.
Since then, the crypto and NFT community has demanded more from projects, and studios have answered by putting “utility” at the forefront of the industry.
While projects continue to emerge that offer nothing more than the visual art piece itself, VC investment and volume continue shifting to projects which promise to provide exclusive communities for their members, not just PFPs.
This piece is contributed by Footprint Analytics community.
The Footprint Community is a place where data and crypto enthusiasts worldwide help each other understand and gain insights about Web3, the metaverse, DeFi, GameFi, or any other area of the fledgling world of blockchain. Here you’ll find active, diverse voices supporting each other and driving the community forward.
Sept. 2022, Daniel@footprint.network
Data Source: Footprint Analytics – Non-Utility NFT Projects
Footprint Website: https://www.footprint.network
Discord: https://discord.gg/3HYaR6USM7
Twitter: https://twitter.com/Footprint_Data
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.