Beyond JPG, the infinite possibilities of avatar NFT

Over the past year, NFT has risen rapidly and has become the most eye-catching presence in the crypto market. Recently, avatar NFTs have ushered in a new year in the midst of the overall market's winter, constantly breaking their own records. Social media giants such as Twitter, Mata, TikTok and other companies have also made their moves, and the competitive landscape has begun to take shape.

At the same time, we have seen that many use cases of avatar-type NFTs are being implemented and the ecosystem is gradually taking shape. Driven by the Metaverse and Web3 waves, "NFT avatars are more than just pictures" is no longer a slogan, it is giving us more room for imagination.

So, why are social media giants incorporating NFT avatars into their ecosystems? What is its value? What is the role and status of NFT in the Crypto world?

NFT avatars perform well

Since January, against the backdrop of the sluggish overall crypto market, avatar NFTs, or PFP (profile picture) NFTs, have recently achieved very impressive results.

According to data from NFTGo.io, the 24-hour trading volume of the Cryptopunks series of NFTs reached $20.998 million on January 26, with a 24-hour increase of 654.51%. On January 25, the 24-hour trading volume of the BAYC (Bored Ape Club) series of NFTs reached $8.65 million, and the project's parent company Yuga Labs is raising funds at a valuation of $5 billion. In addition, the performance of female-oriented NFTs is also very eye-catching. For example, the Crypto Coven series of NFTs has recently received support from many well-known people in the circle. The founders of Uniswap, Aave, Synthetix, and Compound, as well as Kat Dennings, the star of "2 Broke Girls", have all changed their Twitter avatars to Crypto Coven NFTs.

As early as January 17, OpenSea (Ethereum)'s monthly transaction volume exceeded US$3.48 billion, breaking the monthly transaction volume of US$3.42 billion set in August last year. As of January 24, the monthly transaction volume was close to US$5 billion.

In addition to the hot secondary market, the whitelist mints of some high-quality avatar NFT protocols have also caused many people to go crazy in the Discord channel. People racked their brains to get whitelist qualifications, learning painting, English, programming, modeling...

As the market is hot, social media giants are also continuing to make efforts. Twitter announced a new feature on January 20 that allows users to set NFTs as personal avatars and verify ownership, and Reddit is also testing this feature. Meta also plans to allow users to display NFTs on Facebook and Instagram platforms, and will also allow users to create and sell NFTs; in addition, Facebook's wallet application Novi will also provide support for NFT functions. It can be seen that the use value of NFT avatars in social aspects has been recognized by the market and capital. It has long broken through the scope of small jpg pictures and is moving towards a broader future.

Identity, narrative, and the value expansion of NFT avatars

Why are social media giants incorporating NFT avatars into their own ecosystems? Because these NFT avatars can outline the identity characteristics of their holders, which is also a major foundation of social interaction in the Crypto world.

NFT avatars are often released in the thousands at a time, and are all composed of a fixed set of data through algorithms. In this way, they can be seen as a whole series, and each NFT is related to each other, rather than existing as a one-time digital art work like most NFTs. This also lays the foundation for the gathering of communities.

Long before Twitter launched the new NFT avatar feature, NFT avatars had already formed the default rule of "following each other with avatars from the same series" on Twitter. Using a popular NFT as an avatar can attract a large number of fans for this social account, and it also accelerates the rapid spread of the series of avatars on social platforms. In this context, the NFT avatar itself can be understood as a totem or "ritual vessel", creating identity and distinction.

A Twitter spokesperson said in an interview: "We are now seeing people using NFTs as a form of identity and as a way to join the thriving crypto community." This was also confirmed by a user's statement on the social platform, who said: "If you don't plan to actually use X Rabbits (NFTs launched by Cold Rabbit) as an avatar, don't mint X Rabbits NFT..." This is a highly cohesive and exclusive community, and avatar NFTs are the most intuitive and important access credentials. This feature also makes avatar NFTs part of the DAO infrastructure. It can be a POAP (Proof-Of-Attendance Protocol) used as a unique badge for entering and participating in community co-construction.

Within the NFT community, members share the same identity. For example, early NFTs such as CryptoPunks and EtherRock brought their holders the imagination of "crypto pioneers". The buying and selling of avatars allows the identity it represents to flow, constantly attracting some powerful latecomers to join, so this series of works will continue to appreciate, become more and more influential, and become more and more a symbol of status.

In addition to the identity recognition given to members by the community, NFT itself can also shape personal identity. Some people believe that, just like we post photos on social platforms now, more and more online behaviors and achievements will be presented in the form of NFTs in the future. They are not only tools for recording digital assets, but also tools for recording digital behaviors, tools for "self-presentation in daily life" and "impression management". Of course, at this stage, the identity carried by NFT is still relatively one-sided, and more often it is just a symbol of wealth, but it is conceivable that in the future, when all aspects of real life are mapped to the Web3 world, NFT will become a window for establishing and displaying oneself in social interaction to a greater extent.

Of course, this is inseparable from the construction of the IP of the NFT avatar itself. In fact, these avatars very cleverly create a semi-open narrative space, allowing each user to fill it with their own story. This is a process of interaction and co-construction that can expand infinite possibilities.

Franky Aguilar, creator of the Sup Ducks series of NFTs, believes that "this is similar to the way people develop feelings for characters in TV shows or cartoons. They associate a personality with that character that reminds them of themselves or what they want to be." But compared to traditional IPs (characters in TV shows or cartoons), avatar NFTs only have basic settings (such as Boring Ape is "Boring"), but no "work" (storyline), and there is little background added to the personality of a single work other than aesthetic expression.

Avatar NFTs lack personality and depth, but this is by no means a defect. This is similar to the logic of the previously popular Pop Mart blind box, "from delivering goods to delivering emotions, from exporting products to exporting entertainment." Some avatar NFTs take advantage of this and tap into the creativity of users to empower IP. For example, if a user holds the Bored Ape NFT, it also means that he will have all the commercial use rights of this unique monkey, which can be authorized to other parties or re-created. Any member can give new meaning to the Bored Ape Club and its brand in any way. They are combining the image of the ape with everything to create a series of derivatives and the culture of their own community.

The current Bored Ape NFT has formed a unique ecosystem, and has established a number of companies including APE-IN productions, Boring Ape Chronicles, Myth division, and Jenkins The Valet: The Writer's Room. The derivatives involved cover various fields such as music, games, comics, books, trendy brands, and sitcoms. In this process, the image of the apes has continued to grow. For example, BAYC #4593, because of his hip-hop background and familiarity with music and trendy content, has become the first Bored Ape to find a job. He is currently working at the Complex Chinese public account and has given himself a nickname, called lil bubble·aka·小泡泡.

BAYC #4593's inaugural statement

Some NFT avatars have some distinctive features from the beginning of their creation, such as the Crypto Coven series of NFTs mentioned above, which are naturally related to gender issues; and the Philosophical Foxes series, each little fox has a unique image, unique personality, philosophical thinking, and even secrets. These may bring narrative sparks, help us turn static images into stories, and gain greater narrative weight over time.

Philosophical Foxes

In the roadmaps of various avatar NFTs, we can see their rich future use cases. The more common ones include: cooperating with other IPs to launch co-branded products, benefiting more community members through DAO and revenue tokenization mechanisms, becoming an Avatar in the metaverse, purchasing metaverse plots and building a more complex on-chain ecosystem, etc. The core of all of them is to gradually enrich the story core behind the avatar with users and realize value expansion.

NFT, the ticket to a new world

As mentioned above, avatar NFTs can become Avatars in the metaverse, and they can map the real-world self into the metaverse. So, if we extend the timeline and look at NFT avatars from a broader perspective, we will find that its essence is actually the identification and attraction of "power".

Hu Yilin, assistant professor of the Department of History of Science at Tsinghua University, believes that the power of the metaverse will be "decentralized", just like the New World of America in the Age of Discovery, where power and order will be rebuilt. The symbol of power needs to be backed by a "record" that cannot be tampered with at will, and the unique attributes of NFT can just play this role, so it has become a specific symbol of power.

He explained the reason why CryptoPunks became popular: People are not buying the pixelated picture that everyone can download, but an "identity". This identity is still relatively empty at present - it has not been filled with certain rights. However, as long as people always respect "history", these 10,000 "identities" with historical milestone significance will always be respected by future generations, and then they will spontaneously attract certain privileges, even if it is just "bragging rights", which is almost eternal.

Bored Ape, on the other hand, directly reveals the "power" - buying an ape means joining this "privileged club" of 10,000 people, and having the status of exercising specific power. Although the original privilege was just the power to doodle slowly on a doodle board at a speed of one pixel every 15 minutes. How insignificant this power is, but perhaps the power held by the first human ancestor who obtained privilege was nothing more than graffiti on cave paintings? This insignificant power constitutes a starting point.

This logic can explain all types of NFTs other than avatars, such as metaverse land, Axie elves, etc. These NFTs give players the "right to enter" the new world. If the metaverse forms a relatively complete ecosystem in the future, this kind of benefit can be circulated continuously. Moreover, if the metaverse forms a social governance structure, then of course there will be more and more power positions, and of course there will be more and more power rent-seeking space.

However, the colonial metaphor is obvious, and current market participants are just grabbing land in the new world with the wealth of the old world. Ryan Watkins, head of research at Messari, tweeted, "The current state of NFT is terrible. For an industry that promotes democracy and accessibility, it is ironic that the most famous projects are based on exclusivity and luxury." Through the sky-high NFTs, the rich enter the rich club, and the identity it brings is closely related to wealth and power; and the Web3 world has not yet formed a more diverse identity imagination space, so it is difficult to attract non-speculators/ordinary participants to join.

Someone immediately asked in the "Web3 Research Institute" group, if all the current NFT artworks are Hermès, then where is Uniqlo? In fact, it is not that there is no Uniqlo, but due to survivor bias, only very successful projects can be easily found, and there are a large number of projects that are quietly returning to zero.

So, how can we make NFTs like avatars return to the original meaning of Crypto? I think one possible path is to explore more use cases and narrative space, so that NFTs can move out of the speculative market and enter the homes of ordinary people.