5.25 NFT closed-door meeting

1. Can NFT blue-chip projects return to their highs or even set new highs? What are the judgment logic and influencing factors? Charlie Hu: NFT blue-chip projects can no longer return to their previous high prices. I have personally participated in all the top ten Ethereum NFT projects and only made a profit on Azuki. There are two core problems with NFT assets. First, there is no new narrative, showing that the positive factors have been exhausted and the market is heavy. In addition, many project teams have lacked motivation. For example, the founder of coolcat has left, and moonbird has basically been in a state of decline after the Kevin incident. Only BAYC still has funds and ideas to continue to develop, and has funds to hire core members of Blizzard to develop games. Ethereum's existing blue-chip NFTs will "die" on a large scale, and the speed of returning to zero is different. Blockchain is very cyclical. After there is no money, no motivation, and the team lacks motivation, the death of NFT projects is also a normal phenomenon in the macro logic. The death of these projects will bring opportunities for new projects and new assets. The new blue chips in the next cycle will be born in the blood of these old projects, through the bloodsucking of assets and funds, witch attacks, etc. Individuals are already participating in NFT projects on the Ordinals protocol. Although they have many limitations due to the lack of smart contracts, they can attract the attention of many Bitcoin network OGs, whales, and Bitcoin Maxiumlists and gain support.

The Ethereum network has tens of billions of assets waiting to be shipped. I doubt whether the secondary market has hundreds of billions of funds to take over. Ethereum is in the process of consensus dilution and fragmentation. Bitcoin will give birth to many new asset categories due to the progress of lightning network, tarpoort, brc20, etc., and the POW and UTXO model networks such as LTC and Doge. These assets will not have many VCs and rat warehouses ambushed in the early stage, and the asset burden is not that large. Therefore, they will be accompanied by the emergence of a new meme-type asset, and new changes may occur in the network, narrative, and issuance methods. In the past, the gameplay of the Ethereum ecosystem, such as community PFP small pictures, and then to the path of issuing coins and games, I personally am not interested in it whether as an institutional or retail investor.

Andy: I ​​agree with Charile's view that blue-chip NFTs lack narratives. I haven't minted any NFTs for two months. I think NFT projects will have different routes in the future. One is to start from digital assets and games. For example, BYAC will not die, but the number of users will be very limited. The second type can be the fat penguin approach, attracting new users through IP-derived peripheral products and distributing the benefits to the original holders. I believe that many companies will adopt this ownership approach in the future and derive new CRM or new user groups. I am more optimistic about the fat penguin route. Although many Web2 companies I have participated in issuing NFTs are currently in a serious loss, they are still paying attention to how to go deeper into the Web3 field.

For the first type of projects, I am looking forward to the gaming route, but it is not the current logic of NFT first and then game, but the method of game first and then NFT.

Leon: I completely agree with the view that the current blue-chip NFTs cannot return to their highs in the next cycle. The obvious feature of the crypto industry is that it hypes new things instead of old things, and there is logic behind it. This is because the technological innovation in the crypto industry is very fast, which leads to this feature. For example, we hyped public chains in the last cycle, but there are fewer public chains in this round, except for some capital-based ones such as Aptos. Even the Layer2 that is hotly discussed in this round, not all Layer2s are concerned, only ZK's Layer2. I think the same is true in the NFT field. Most of the current NFTs are simple and rough pictures. The counterpart of NFT in the traditional field is actually collectibles. We see that the current ways to empower NFTs are actually failures, such as games. Therefore, many teams mentioned by Charlie just now have left the market because they don’t know how to do it and can’t find a direction. Leaving the market at this time is a good choice. The new talents and new products that will appear in the next wave will completely replace them. NFT is now a cultural symbol, and the people’s sense of identity with cultural symbols, your stories, and ideas migrate very quickly. Perhaps we will find that after a period of time, perhaps because of improved aesthetic tastes or because of boredom with this kind of narrative, we will no longer be so fomoously involved in it.

Therefore, I think the next wave will be something new. One problem with current NFTs is that there are no original cultural elements. In essence, Punk is a special case, while other blue chips are not. They are all reflections of traditional fields. BYAC comes from American comics, and Azuki comes from Japanese comics. From a fundamental perspective, it is better for the current NFT to disappear from now on, as it has completed its historical mission. I personally speculate that the art form generated by AIGC can fit the encryption field very well, and NFTs based on this are completely likely to replace the current blue chips. They are brand new and can have brand new cultural symbols and higher cultural attributes.

Chase: I observe NFT from a financial perspective. In the short term, it is difficult for risky asset classes (ETH, NFT, etc.) to explode. During an economic recession, people's demand for daily low-consumption entertainment will increase dramatically, so the gaming industry will usher in a wave of opportunities. In my opinion, PFP is based on the same logic as shoe speculation and tulip speculation. It is a wave of emotions with certain cultural values ​​behind it. However, the formation of cultural value requires super long-term and super high-density information accumulation, and neither BYAC nor Azuki has accumulated enough at present. Without this accumulation, it is impossible to become a long-term blue chip. 99% of blue chips will die. They do not have the cash flow to support their survival. Most Web3 teams do not have the ability to obtain cash flow. NFTs other than PFP are worth paying attention to. On the one hand, there is the virtual asset effect related to games, such as YugaLabs' related game NFTs. You can refer to the fact that after Web2 games become popular, the benefits will come from the peripheral services of this game, such as gold farming, physical peripherals, etc. Physical peripherals, etc.

The use of NFT is crucial. It is a business model that Old Money can understand, and it is an important breakthrough for us to open up the outside world. The issuance of stablecoins in the industry is only 120 billion US dollars, and it has been in a downward trend. After AI has taken away the attention of funds, the Web3 industry needs to regain the attention of funds. I am very optimistic about game NFTs and very pessimistic about PFP. PFP needs too much accumulation to form a culture, and games are the outlet.

2. What did PFP do right and what needs to be continued? Andy: It may be more practical to learn from mistakes. After Clonex was acquired by Nike, it treated Holder as a consumer. Although it was very strong in technology, it did not expand the circle, but instead dug out the value of Holder. I personally invested a lot in Clonex, and the mistakes of the team made me very sad.

3. Is NFT a luxury or a consumer product? How much influence does Blur have in this round of decline? Chase: In my opinion, NFTs are all risky assets. They can be understood as antiques. Buy antiques in prosperous times and buy gold in troubled times. Before the prosperous times, it was easy to lose money to buy antiques. The current choice to buy blue chips at the bottom and bet on their recovery is not logically sound. Blur has enhanced liquidity and made NFT more like FT, which is not a good thing for the industry. Blur has brought more trading volume to NFT, but the transaction fees charged are actually bleeding the industry.

Blur has enhanced the volatility of NFT, but the essence of the decline of NFT is that there is no incremental capital, and AI has stolen the limelight from web3. Web3 should have been able to create something to fight against AI. For example, the current AIGC is infringing, and the rights of the creators of the learning materials in the learning process are not respected, and traditional methods cannot punish these AIs because the creators have no ownership. Crypto can help creators confirm the ownership of their works.

Charlie Hu: Opensea allows artists and creations to reach new users and new buyers. Its logic is a consumption logic, which is the original and earliest driving force of NFT. For example, artists such as Beebop have brought new users to the industry, which is something that our entire industry should welcome. Blur's trading mining logic allows some sickles to be shipped better, turning the collection-based NFT into a financial PFP. Everyone believes that Blur has accelerated the NFT bear market. In 2022, NFT entered the bull-to-bear process. After the release of Otherside, NFT projects with community culture and private domain traffic, such as Digigas, began to fall, and Blur accelerated the decline and smashed the remaining traffic. The entire NFT atmosphere was transformed by Blur, from NFT to FT, from personal preferences and collections to financial zero-sum games. This is my personal opinion as an art lover. It is a pity when everyone is pursuing profits and ignoring the artistic value. This atmosphere is also reflected in the meme season, as long as you care about making money. Personally, I think if there is a bull climax this year

, then the possibility of the meme sector is higher than infura such as ZK, although this may make many people feel uncomfortable. The lack of new liquidity has a great impact not only on NFT, but also on DeFi. Without new liquidity, no matter how to improve the utilization rate of funds, new gameplay, etc., in my opinion, it is like a good cook cannot cook without rice. Factors such as unclear signals, compliance, and too complicated entry procedures have restricted the entry of new funds.

Leon: Regarding MEME season, I think it is a regular performance in the asset shortage period. The market always needs a hype target. When the previous round of narrative has ended and the new round of narrative has not yet appeared, meme season is essentially to fill the market gap. The next bull market engine is an issue that we need to pay more attention to. I don’t think Blur is the final form. It is currently like a variant of FCoin, old wine in a new bottle. Blur is not an innovation at the infrastructure level. It is essentially the process of NFT asset price discovery. Liquidity is one of the basic elements of assets. Blur provides value in this regard, which is a good thing. I think the current situation is the difference between long-term and short-term pain. It is inevitable that the NFT track has been held back to today. Blur has accelerated this process. High-priced blue-chip NFTs should not be positioned as consumer goods. When the price reaches a certain level, they all have asset attributes, such as watches.

Andy: Blur is an accelerator that accelerates growth or death. The direction of the project itself is not determined by Blur. Blur makes some dead projects look alive.

4. What other promising directions are there for NFT? How do you view art and music NFT?

Charlie Hu: Previously, I thought that art didn’t need to be put on the blockchain, but I’ve changed my mind after communicating with artists recently. They believe that PFP is infinitely over-issued, mass-produced, and wholesaled on a large scale, while crypto art has a certain scarcity, specifically referring to works with high artistic value, even if the artist himself can only create a limited number of works. These NFTs have market value and social recognition, and people will be willing to collect them for a long time after purchasing them. There have been many related projects in this direction before, and Dragonfly and others have also invested in this field, but I feel that these energies are not enough at the moment, partly because these users are not used to the use of blockchain, and secondly because there are no good creators, buyers, and collectors in the industry to lead.

People collect and consume this type of NFT. As these people increase, it will bring growth points for NFT usage scenarios. They are different from speculative behavior.

Andy: I ​​personally like Gamefi-related NFTs. It has just started, and many native game teams are entering the blockchain game industry. This is the key to the success of this industry, rather than the current way of issuing a PFP and then saying I want to make a game. Basically, everyone dies on the road. I am looking forward to breaking the circle, making the game first, and then entering the Web 3 field. Many projects are doing the opposite now. Now WEB 3 issues tokens and NFTs, and then develops games. Only those who hold tokens can play games. This logic is wrong. The correct logic should be that everyone can play games. During the game, all assets are NFTized. Players can go to mint and get some buffs, etc. I look forward to more and more game projects being carried out in this way. The quality of games produced by the previous web3 game project is too poor, even Ape's sewer game is the same, and it is not even considered a game. Of course, APE's sewer game proves one point, that is, the combination of Tokenomic and tokengate is something that someone is willing to consume. The confirmation of this logic is very important for the future of blockchain games.

Charlie Hu:

It is true that the game is of poor playability and quality, but from the perspective of the supply side, this was the right decision made by YugaLasb at the time. If they decided to make a 3A game, they would have been stuck from then on. The team did not have the R&D funds and technical capabilities for 3A. In addition, in the market at the time, only simple games could allow players to participate. On the contrary, 3A games were not played by everyone, and their owners were not hardcore gamers. Making a simple game with social functions was the most correct choice for them under the conditions at the time. It was also this success that made them determined to hire Blizzard backbones at a high price, making people feel that the narrative of the game is worth looking forward to.

Andy: I ​​totally agree. The same type of game is Imaginary Rides. Their game is very good. The price reached more than 0.1E at the mint time, but because the market work in the later stage did not keep up, it has fallen now.

Leon: The biggest difficulty facing WEB 3 games right now is that they cannot be released on platforms such as the Apple Store and Steam, and are subject to many restrictions.

Chase:

Games can either break through from Web3 to WEB2, or switch from WEB 2 to Web 3. As for the latter, Web2 actually does not have enough motivation to try Web 3. This requires our industry to build infrastructure and attract them. The Web 2 industry will not build infrastructure for Web 3. I think that the native industry teams only have a two-year window. After the supervision in Hong Kong and other places is clear, giant companies such as Meta will be able to enter the Web 3 field with lower risks. At this time, they will seriously consider Web 3 games as a strategic direction. Once they enter, their competitiveness will surpass that of the original Web 3 native team. Infura and IP of games are currently very good directions for native teams, and they will be able to take on the markets of both Web2 and Web3 in the future.

The model that best fits Web 3 games is the Disney model. Once you have an IP, as long as there is enough time and layout, you can make it very big. Web 3 is still very early and there is no such process, but this may be the simplest and longest way to achieve large-scale adoption in the future.