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COINCHELLA

The world’s biggest NFT party signals confidence amid crypto winter woes

Despite widespread recognition that a crypto winter is having a chilling effect on everything from Bitcoin (down roughly 60% for the year) to GPUs (graphics chips used for crypto mining saw a 15% price drop in May), last week’s NFT.NYC conference turned Times Square into a hotbed of crypto enthusiasm as 15,000 artists, fans, creators, and collectors gathered to celebrate the long-term prospects of NFT tech despite the sector’s nearly 40% drop in market cap since April. While big-name NFT collections like Bored Ape Yacht Club (BAYC) and celebrity crypto boosters like Snoop Dogg produced some of the buzziest headlines of the week, plenty of promising NFT news emerged from different corners of the market as well. Let’s take a closer look.

• Amid crypto’s downturn, NFT.NYC signaled enthusiasm about the current “build market,” as one panel host put it. From a company called Danvas that is building “museum-quality” displays for digital art, to panels about how artists can use NFT smart contracts to automatically receive royalty payments each time their work is resold, to major brands like Samsung and Nickelodeon exploring metaverse marketing — the conference teemed with optimism for what the CEO of the Doodles NFT project called the “incredibly bright” future of the industry.

• Of course, the digital art clubs behind blue-chip NFTs like BAYC and upstarts like Goblintown continued to lead the hype train. BAYC threw its second annual ApeFest party, a Hudson River-adjacent bash featuring a giant inflatable ape and performances from The Roots and LCD Soundsystem; World of Women co-hosted a party with Madonna; and Goblintown — which skyrocketed into the zeitgeist this month — had a meme-worthy event with gibberish-speaking actors dressed as goblins. (Goblintown saw trading volumes more than triple in a single day last week.)

• Among the event’s most notable attendees were Snoop Dogg, Pharrell, and Spike Lee. Snoop, an avid NFT collector and entrepreneur with a new Bored Ape music video, told CNBC that the market downturn “weeded out … all the people that were abusing the opportunities” (like the event’s Snoop Dogg impersonator?) and that the market will emerge stronger. Pharrell unveiled his new role as the chief brand officer for the popular Doodles collection, and Do The Right Thing director Spike Lee said using NFTs to fund films is “bringing more democracy to filmmaking.” 

• At the same time, crypto and e-commerce companies alike are strategically acquiring NFT marketplaces. A year after eBay first enabled NFT sales, the e-commerce giant purchased KnownOrigin, which currently ranks twelfth for all-time, ETH-based NFT trading volume at $7.8 million. Meanwhile, the company behind Uniswap (a leading decentralized exchange with over $1 trillion in trading volume) acquired NFT marketplace aggregator Genie, which lets users trade NFTs across most marketplaces.

• And NFTs continue to attract venture capital during a bear market. NFT marketplace Magic Eden was valued this month at $1.6 billion following a Series B round that raised $130 million. And 1confirmation, a venture firm backed by Peter Thiel, Marc Andreessen, and Mark Cuban recently announced the creation of a new $100 million NFT-focused fund. Explaining the firm’s move, 1confirmation founder Nick Tomaino addressed some of the criticism lobbed at NFTs: “NFTs look like a speculative casino on the surface, but the truth is they offer a better business model for creators and empower consumers to become owners.”

Why it matters… While NFT.NYC provided the splashiest headlines in the non-fungible hemisphere of the crypto world last week, all kinds of encouraging developments continue to defy the FUD-iest crypto winter narratives. Compared to this time last year, trading volume for top NFT marketplace OpenSea has more than doubled; the amount of people holding NFTs is at an all-time high; and major financial firms like Goldman Sachs and Mastercard are exploring NFT integrations. And even though much of the NFT art showcased at NFT.NYC has lost significant dollar value this year, optimism about the future of the tech permeated the event. As the conference’s co-founder Jodee Rich put it, “NFTs are going to disrupt most industries—identity, ticketing, brands, music, fashion, real estate … We are still at a very early stage. This is the beginning of a long-term trend.”

Q&A

DJ 3LAU thinks NFTs are all about the power of community

Last week at NFT.NYC, Coinbase caught up with DJ, electronic music producer, and long-time crypto enthusiast Justin Blau — better known by his stage name 3LAU — to discuss the latest happenings in the world of NFTs. In addition to being an accomplished musician, Blau is also the co-founder of Royal, an NFT music rights startup that counts Andreessen Horowitz among its investors. Here’s what he had to say.

Coinbase: How did you get into the crypto space?

3LAU: I actually met Tyler and Cameron Winklevoss [founders of crypto exchange Gemini] in Mexico on spring break, and they told me a little bit about Bitcoin. I was excited by the idea of banking the unbanked in developing countries and frictionless value transfer across the world. And I bought some of my first Bitcoin in 2014.

What role would you say community plays within the NFT space?

I think the whole beauty of any NFT-specific project is building a connection between an artist and a fan. And it's not even just an artist and a fan. It's also fan to fan where you've got all of these different people that have mutual appreciation for a piece of art, or for a community. So community is kind of essential to any project’s success.

You’ve spoken about collective ownership and how that helps support the artist. Do you think that's something unique to the NFT space?

When you go online and you look at your favorite artist's work on Instagram, or you listen to your favorite musician's song on Spotify, the relationship you have with that artist is purely consumption in that you're just looking at the image and you're just listening to the song. The beauty of NFTs is it creates this digital authenticity surrounding the idea of digital ownership.

And now you can show that support for the artist and prove it on-chain. So if you find a new artist that isn't that big yet, and you buy one of their pieces of art, or you engage with that community — you have proof on the blockchain that you were there from the beginning. And that is such an incredibly powerful concept. People love being first to creators that are really powerful, and this technology enables and unlocks an entirely new value chain around that.

For somebody who's very new to the space, how should they get started? 

If I was advising someone in buying their first NFT, I would honestly say, find something you like at a reasonable price, buy it, and see how it makes you feel. Because until you do that, until you take that first step, it's almost impossible to know. Maybe that artist doesn't resonate with you. Maybe they do and you want to collect more from that artist. And so it's really all about how it makes you feel. If you have a painting in your house or a framed photo in your house, it's a part of your identity. I think that NFTs should represent who you are in a digital identity format. 

This interview has been edited and condensed. 

NUMBERS TO KNOW

$100 million

The amount that hackers stole from Horizon, a cross-chain bridge hosted by the Harmony blockchain network (a bridge makes it possible to send crypto between two blockchains). Blockchain bridges have been frequent targets for attacks in recent months, including the theft of more than $600 million from Axie Infinity’s Ronin network in March. 

$25,000

The amount luxury fashion house Gucci shelled out for RARE tokens in order to become part of NFT marketplace SuperRare’s DAO. The Italian brand made the move with plans to launch a virtual art gallery space — “Vault Art Space” — that will feature works by NFT artists, in partnership with SuperRare. Gucci’s latest foray into NFTs builds on its SUPERGUCCI drop from earlier this year. 

1,000

The number of NFTs included in the “Bill Murray 1000” — an NFT project that highlights stories from the Ghostbusters star’s five decade-long career, during which he’s become a cult icon for his colorful off-screen antics in addition to his beloved film roles.

51%

The percentage of Latin American consumers who have experience transacting with crypto, according to a survey conducted by Mastercard, which also reported that more than 33% of respondents in the region had paid for an everyday purchase using a stablecoin. The survey, conducted in March and April, found that more than half of consumers in the region are optimistic about digital assets as an investment.

TUNE IN

What is Ethereum’s ‘Merge’ and when will it happen?

Ethereum’s “Merge” is one of the most highly anticipated and consequential changes in the entire crypto industry, and it has been rolling out — ever so gradually, with multiple deadline extensions — for the better part of two years. But what is it exactly? In addition to transitioning the Ethereum blockchain from its energy-intensive proof-of-work system to a more eco-friendly proof-of-stake system, the Merge will also see an upgrade to ETH’s underlying economics. 

In the latest episode of Around the Block, host Justin Mart sits down with the Ethereum Foundation’s Justin Drake to break down each component of the blockchain’s upgrade and explain what it means for the future of the second-biggest cryptocurrency.

TOKEN TRIVIA

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