Redefining NFTs by 10 Emerging Utilities
Fifteen years ago, it was hard to picture how brick-and-mortar retail could be compatible with ecommerce. The two industries seemed to be moving in conflicting directions. Now retail brands marry the flexibility of shopping online with the convenience of stopping by a favorite local store. Today, multi-location brands may see NFTs in much the same way retailers saw ecommerce back then: an incompatible way of doing business. But as some forward-thinking brands have already found, the unexpected utilities of NFTs makes them good for much more than digital art.
In the context of NFTs, utility is a term used to describe an NFT’s purpose or function, such as the transferring of real estate ownership, accessing a virtual world like the Metaverse, or even unlocking access to exclusive in-person meetups. These are just a few of the NFT utilities that are driving interest among collectors, investors, and creators today. But we’re just beginning to discover and understand the widespread value that NFTs can bring to the real-world, both physically and digitally.
As NFTs continue to grow beyond their public perception as merely expensive JPGs, it’s important to evaluate how the most common utilities have changed since the technology’s inception. To interpret this evolution, we evaluated the 100 most successful NFTs projects on OpenSea and uncovered the 10 most common types of utility for NFTs within two categories: those that provide both digital and real-world benefits as well as those that provide digital benefits only. Here, I will break those down:
NFTs that provide digital and real-world benefits can do so via utilities such as:
- Members can redeem their NFT for a physical object of desire (e.g. trading cards)
- Members access exclusive events in real life (e.g. concerts)
- Members receive exclusive merchandise (e.g. sneakers)
- Members acquire real estate using a digital deed
NFTs that provide digital-only benefits can do so via utilities including:
- Members have access to content specifically designed for them
- Members own a unique piece of art that can be displayed digitally
- Members have a unique picture that can be used on Twitter, Instagram, and more (e.g. Crypto Punks)
- Members can vote in decentralized autonomous organizations
- Members use skins and other custom items to enhance their gaming experience
- Members receive digital rewards, tokens, NFTs, and more
Identifying these top ten utility types is important to understanding the future of the NFT market for brands. That said, it’s equally significant to have a pulse on the sentiment around NFTs overall, particularly as their cultural purpose is debated. To understand sentiment – which is particularly challenging given the nature of NFT ownership – we recently tapped Dibbs’ marketplace to secure and analyze sentiment data. We found that more than half of NFT enthusiasts want more utility from the NFTs they invest in. Similarly, 52 percent want collections to be usable in future digital innovations like the Metaverse and video games.
The data collected from OpenSea supports that NFT utilities are evolving, making the market for them larger and more committed over time. In fact, we found that the most in-demand utility was for content (21% of trading volume in the last 30 days) followed by gaming, events, and rewards distribution. Contrary to what you may see in the media, NFTs are becoming stickier, more usable, and more interesting opportunities for IP holders and brands to leverage. Their possibilities for local commerce are only beginning to be tapped now.
OpenSea’s data indicates that an NFT’s discrete utilities play a big role in trading and sales activity. For instance: collections with multiple types of utilities (64%) traded at faster rates and higher values than collections with only one utility (35%); collections with two or more types of utility made up 73% of all trading volume; and sales volumes increased for collections that had both physical and digital utilities. Combined, these findings show a clear mindset shift around NFTs today; their usability is continuing to grow, and businesses are finding more paths than ever before to spread their growth into the blockchain — and to use the unique benefits of blockchain business to grow their brand even beyond the reach of early adopters.
As an avid NFT enthusiast who sees the growing usefulness for these assets in both physical and digital worlds, I believe we’re approaching a tipping point in the market. Many people think of NFTs as a one-hit-wonder, with value only having been present in PFPs or other digital content-related opportunities, but in fact the NFT market is dynamic and fascinating in terms of the utilities that are possible and emerging. It’s more essential than ever to fully understand the key drivers and trends that are having the most impact on NFT sales. Emerging Web3 strategies for multi-location brands are giving customers what they want: more value and greater utility over time from the businesses they know and trust.
Ben Plomion is Chief Marketing Officer at Dibbs.