The world of Web3 and crypto is rapidly evolving, with new technologies, trends and narratives emerging every day. In this article, we explore the potential breakout trends of 2023 and what you should watch as an investor.
Non-Fungible Tokens (NFTs)
2022 was the year of feeless NFT marketplaces. Once marketplaces realized they could circumvent royalties to undercut OpenSea, the leading NFT marketplace, they did. This is a brilliant strategy to capture market share – low to no fees are attractive to high volume traders and degen traders who sometimes flip for only a few dollars profit, or who operate bots to automate NFT trading.
In some cases these feeless exchanges offer additional rewards, like airdrops, to incentivize trading there. These are an easy way to make “free” money, leading some to even wash trade or fake trading volume by trading the same thing to themselves repeatedly.
Looking for NFT themes that offer decent risk/reward, watch the legacy web2 brands and venture-capital (VC) backed projects. More brands and businesses are exploring the NFT space, it offers a new and easy on-ramp to the digital and social media space, ie. the “metaverse.”
Also many web2 brands view NFTs as an easy cash injection, very few seem sincere about building a genuine web3 community and if you can mint NFTs from a VC or web2-backed project, do your research and be prepared to immediately flip or risk a drop below mint price in the weeks the follow.
Gaming and Metaverse
The first generation of gaming and metaverse leave a lot to be desired. From funky graphics to flawed tokenomics that eventually collapse from endless sell pressure. The 2nd generation is leading to more meaningful games and metaverses that resemble or plug into existing intellectual property (IP). For example the Otherside metaverse being developed by Yuga Labs looks very similar to Fortnite.
- Watch the existing IP and gaming companies. If Pokemon, Minecraft or Fortnite make a formal entry into metaverse or web3 gaming with NFT backed cosmetics or DLC, that will impede web3 native projects like Sandbox or Otherside. Gaming companies are making major investment into the space, with some like Epic, Square-Enix, Microsoft, all declaring some form of gaming or metaverse investment.
- The NFT use case in gaming is insanely meaningful and profitable. Some compare it to microtransactions but its quite different and once gamers acknowledge they can “play to earn” .. for example: 2,000 hours of gameplay earns you a very rare cosmetic NFT – you will see a sentiment shift. Monitor upcoming games, it only takes one hit to change people’s mind.
Console and PC integration with NFTs is inevitable, but which chain and other partnerships (Solana and Ethereum layer-2 (L2) are promising, and Tezos with it’s “green” environmentally friendly focus may help navigate the general public’s criticisms and confusion around proof of work chains.
Otherside is not a strong value proposition at this stage. Its a high supply token (100,000 collection) with rumored plans for another 100,000 mint later. Otherside already fell approximately 70% from it’s first week post-mint, and delivery of the final game is tentatively planned for 2024. You may consider an entry after the next 100,000 are either released or confirmed that they won’t release.
NFT Worlds was another metaverse darling of 2021 and 2022, before Microsoft updated it’s policies to block integration with Minecraft. The team continue development of a new metaverse platform called Metafab, that uses some of their underlying feeless metaverse technology and tooling. It may be worth monitoring but its not a clear investment at this stage.
Sandbox is arguably the market leader in metaverses next to Decentraland. Sandbox maintains a great deal of corporate and celebrity endorsement, and a graphic styled after Minecraft or Roblox, giving them a aesthetic that resonates with many gamers. Out of the establish metaverse brands, this is the one most likely to breakout when metaverses rotate back into popularity.
Decentraland is considered the stalwart of the web3 metaverse. It’s primitive graphics are misleading, as it’s host to many projects and social events. It’s native token Decentraland was a strong performer in the past, and rallied nearly 100% already in 2022. Its not a token I recommend large allocation in, but its easy and cheap exposure to metaverse without investing in less liquid NFTs.
APE coin is the biggest entrant to the meme coin space in the past year. It already saw an 80% decline from launch into the peak bear market. It may see continued price appreciation, but its also a highly inflationary token and in March of 2023 the Yuga and investor tokens will unlock, adding additional sell pressure to the market. The lower risk proposition on APE is to monitor performance through the year and look for a potentially lower entry due to investors dumping staking rewards.
Historic NFTs also offer a sometimes outsized reward if found. Even in 2022 we are still discovering NFTs and similar protocols from early days of smart contracts. For example, recently one of the oldest contract on ETH was rediscovered, the Linagee name register predating ENS.
There are communities and people in the space who spend time searching for these gems, you can follow them and give a shot yourself. If crypto sees widespread adoption one day, some of these historic NFTs could be worth a LOT. Many historic NFTs are quite affordable still. Think about this:
- 2015-2016: Less than 10 collectible NFT projects
- 2017: Less than 20 collectible NFT projects
- 2018: 100+ collectible NFT projects
- 2019-present: thousands upon thousands of NFT projects
Courtesy of Leonidas.eth, below is a timeline of notable historic projects you can explore. His original post here https://twitter.com/LeonidasNFT/status/1470397114169630726:
If you enjoyed this, you can follow Papi on Twitter: https://twitter.com/1MrPapi and on CryptoQuant: https://cryptoquant.com/profile/u/MrPapi?tab=quicktake. To read Part 1, click here: https://crownanalysis.com/cryptocurrency/web3-and-crypto-trends-for-2023-part-1/