NFT tokens – they are the future of tokenization

Maciej Zieliński

23 Mar 2021
NFT tokens – they are the future of tokenization

Among the many ways to distinguish tokens, the most basic is the division into convertible and non-exchangeable tokens - fungible, non-fungible (NFT tokens). Until now, first and foremost, tokens of the first category have enjoyed the greatest popularity and recognition in the Blockchain environment. However, this may change dramatically soon.

Although cryptographic tokens are made of just a few lines of code, their potential is enormous. We already use them today, among others creating digital equivalents of real assets such as stocks and real estate, or creating innovative systems for tracking products in the supply chain. And with the increasing digitization, the list of their applications is constantly growing.

NFT tokens use Blockchain technology to connect to a unique digital asset that cannot be replicated. Recently, they have found more and more applications in such key areas as IoT or supply chains. In 2020 alone, their total value has tripled to over $ 315 million.

NFT tokens - how they differ from others

Non-fungibility in the case of NFT tokens means that each token in a given system is unique. Such tokens are not of a standard value and often do not allow for the equivalent exchange of one for another. Each token represents distinct, unique ownership or identity information

NFT tokens basic advantages:

  • They are impossible to counterfeit
  • They can be moved
  • They keep property rights

NFT tokens

NFT Tokens - Key Applications

Certification

We can use NFT tokens to prove the origin of a document, piece of data or basically any physical object in the real world. And because such tokens cannot be duplicated, and the information contained in them cannot be manipulated, we are sure that such a token - a certificate of authenticity, will never be forged.

Securing the authenticity of works of art, luxury fashion or exotic cars - the possibilities of such tokens go much further. If the land records were transferred to the blockchain, ownership would only be a matter of having the token corresponding to the property. The same applies to the rights to extract raw materials or the rights to water. Non-exchangeable tokens have countless potential applications wherever ownership certification is important. Already today, NFT tokens are used to sell digital works of art. An example is the American artist Mike Winkelmann (known as Beeple), who auctions NFT tokens equivalent to the ownership rights of his works. The most expensive of them - The Complete MF Collection was sold this way for nearly eight hundred thousand dollars. It was thanks to the American that Christies became the first large auction house to auction the NFT token - Everydays: The First 5000 Days.

The identity of things

Like people, products, machines and raw materials can also have their own digital identity. IDoT is a key element of blockchain-based supply chains and IoT applications. For example, by granting unique tokens to products, it becomes possible to trace their entire path in the supply chain - from raw material extraction, through production to sale to retail customers. This not only allows you to secure their origin, but also to control the conditions of transport, especially important in industries such as food. If a broken chicken comes to the supermarket, thanks to the tokens, it is easy to determine at which stage the deficiencies occurred and which entity is responsible for them.

ERC-721 tokens

Currently, the most popular standard in which NFTs are created is ERC-721 running on Ethereum. Introduced in 2018, it gained popularity thanks to the online collector game Crypto Kitties. Apart from the ease of creating immutable tokens, its greatest advantage is its compatibility with other Blockchain networks. In addition to Ethereum, such tokens will work, among others on Blockchains such as EOS or NEO.

The most popular is does not mean the only one. NFT tokens have already been a pain of interest for among others Binance cryptocurrency exchange, which plans to release its own standard of NFT tokens in 2021 - BEP-721.

NFT tokens
cryptozink.io

Largest NFT projects

OpenSea - NFT's leading art and other collector's items market.

Async.Art - to kolejny rynek stokenizowanej sztuki, pozwalający użytkownikom nie tylko na sprzedaż i zakup, ale również stworzenie swojego własnego tokenowego dzieła. 

Axie Infinity - a platform for purchasing virtual land. It was through it that one of the users purchased land worth over $ 1.5 million, which is the largest NFT purchase ever.

Decentraland - a leading NFT project focusing on a distributed virtual world. The users buy virtual land here too.

NFT tokens - summary

It is worth noting that NFT tokens are still a very new area. Therefore, it can be expected that the most interesting solutions are yet to be developed. Therefore, at Nextrope, we have placed NFT tokens among the hottest tokenization trends for 2021.

Would you like to use tokenization in your project? Contact our specialists who can give you a free consultation.

Most viewed


Never miss a story

Stay updated about Nextrope news as it happens.

You are subscribed

Aethir Tokenomics – Case Study

Kajetan Olas

22 Nov 2024
Aethir Tokenomics – Case Study

Authors of the contents are not affiliated to the reviewed project in any way and none of the information presented should be taken as financial advice.

In this article we analyze tokenomics of Aethir - a project providing on-demand cloud compute resources for the AI, Gaming, and virtualized compute sectors.
Aethir aims to aggregate enterprise-grade GPUs from multiple providers into a DePIN (Decentralized Physical Infrastructure Network). Its competitive edge comes from utlizing the GPUs for very specific use-cases, such as low-latency rendering for online games.
Due to decentralized nature of its infrastructure Aethir can meet the demands of online-gaming in any region. This is especially important for some gamer-abundant regions in Asia with underdeveloped cloud infrastructure that causes high latency ("lags").
We will analyze Aethir's tokenomics, give our opinion on what was done well, and provide specific recommendations on how to improve it.

Evaluation Summary

Aethir Tokenomics Structure

The total supply of ATH tokens is capped at 42 billion ATH. This fixed cap provides a predictable supply environment, and the complete emissions schedule is listed here. As of November 2024 there are approximately 5.2 Billion ATH in circulation. In a year from now (November 2025), the circulating supply will almost triple, and will amount to approximately 15 Billion ATH. By November 2028, today's circulating supply will be diluted by around 86%.

From an investor standpoint the rational decision would be to stake their tokens and hope for rewards that will balance the inflation. Currently the estimated APR for 3-year staking is 195% and for 4-year staking APR is 261%. The rewards are paid out weekly. Furthermore, stakers can expect to get additional rewards from partnered AI projects.

Staking Incentives

Rewards are calculated based on the staking duration and staked amount. These factors are equally important and they linearly influence weekly rewards. This means that someone who stakes 100 ATH for 2 weeks will have the same weekly rewards as someone who stakes 200 ATH for 1 week. This mechanism greatly emphasizes long-term holding. That's because holding a token makes sense only if you go for long-term staking. E.g. a whale staking $200k with 1 week lockup. will have the same weekly rewards as person staking $1k with 4 year lockup. Furthermore the ATH staking rewards are fixed and divided among stakers. Therefore Increase of user base is likely to come with decrease in rewards.
We believe the main weak-point of Aethirs staking is the lack of equivalency between rewards paid out to the users and value generated for the protocol as a result of staking.

Token Distribution

The token distribution of $ATH is well designed and comes with long vesting time-frames. 18-month cliff and 36-moths subsequent linear vesting is applied to team's allocation. This is higher than industry standard and is a sign of long-term commitment.

  • Checkers and Compute Providers: 50%
  • Ecosystem: 15%
  • Team: 12.5%
  • Investors: 11.5%
  • Airdrop: 6%
  • Advisors: 5%

Aethir's airdrop is divided into 3 phases to ensure that only loyal users get rewarded. This mechanism is very-well thought and we rate it highly. It fosters high community engagement within the first months of the project and sets the ground for potentially giving more-control to the DAO.

Governance and Community-Led Development

Aethir’s governance model promotes community-led decision-making in a very practical way. Instead of rushing with creation of a DAO for PR and marketing purposes Aethir is trying to make it the right way. They support projects building on their infrastructure and regularly share updates with their community in the most professional manner.

We believe Aethir would benefit from implementing reputation boosted voting. An example of such system is described here. The core assumption is to abandon the simplistic: 1 token = 1 vote and go towards: Votes = tokens * reputation_based_multiplication_factor.

In the attached example, reputation_based_multiplication_factor rises exponentially with the number of standard deviations above norm, with regard to user's rating. For compute compute providers at Aethir, user's rating could be replaced by provider's uptime.

Perspectives for the future

While it's important to analyze aspects such as supply-side tokenomics, or governance, we must keep in mind that 95% of project's success depends on demand-side. In this regard the outlook for Aethir may be very bright. The project declares $36M annual reccuring revenue. Revenue like this is very rare in the web3 space. Many projects are not able to generate any revenue after succesfull ICO event, due to lack fo product-market-fit.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.

Nextrope Partners with Hacken to Enhance Blockchain Security

Miłosz

21 Nov 2024
Nextrope Partners with Hacken to Enhance Blockchain Security

Nextrope announces a strategic partnership with Hacken, a renowned blockchain security auditor. It marks a significant step in delivering reliable decentralized solutions. After several successful collaborations resulting in flawless smart contract audits, the alliance solidifies the synergy between Nextrope's innovative blockchain development and Hacken's top-tier security auditing services. Together, we aim to set new benchmarks, ensuring that security is an integral part of blockchain technology.

Strengthening Blockchain Security

The partnership aims to fortify the security protocols within blockchain ecosystems. By integrating Hacken's comprehensive security audits with Nextrope's cutting-edge blockchain solutions, we are poised to offer unparalleled security features in our projects.

"Blockchain security should never be an afterthought"

"Our partnership with Hacken underscores our dedication to embedding security at the core of our blockchain solutions. Together, we're building a safer future for the industry."

said Mateusz Mach, CEO of Nextrope

About Nextrope

Nextrope is a forward-thinking blockchain development house specializing in creating innovative solutions for businesses worldwide. With a team of experienced developers and blockchain experts, Nextrope delivers high-quality, scalable, and secure blockchain applications tailored to meet the unique needs of each client.

About Hacken

Hacken is a leading blockchain security auditor known for its rigorous smart contract audits and security assessments. With a mission to make the industry safer, Hacken provides complex security services that help companies identify and mitigate vulnerabilities in their applications.

Looking Ahead

As a joint mission, both Nextrope and Hacken are committed to continuous innovation. We look forward to the exciting opportunities this partnership will bring and are eager to implement a more secure blockchain environment for all.

For more information, please contact:

Nextrope

Hacken

Join us on our journey to deliver top-notch blockchain tech and a safer future for the industry!