The Future of NFT Marketplaces - Vanessa Grellet (mod), Alex Sanikov (Rarible)

hi everyone um waking up from the paws we're super excited to have a fireside chat today with alex from rariml my name is vanessa i'm the head of portfolio growth at coin fund i've been in the space for a while and uh have the pleasure of working very closely with alex uh as we were precede and seen investors in uh in variable and a as well and a as well and maybe b we'll see um so today i just want to start with um sort of your story alex and how you got to create wearable which is now a huge marketplace and just want to go through the journal the founders journey around that yeah thank you that's a great question so uh i'm actually have pretty long history in crypto i joined the space early in 2012 and you couldn't do much back then like like trade bitcoin right let's trade bitcoin and we created all sorts of like financial stuff and then like assembled assembled the team experience there was like a long journey and i think the important moment was in 2018 after this like ico crash and everyone was down i started to like research this space and there was a realization that finally blockchain is probably a little bit more ready for consumers to it's not just like crazy hard anymore you don't need to download mist and like wait until the node will synchronize there is like metamask fortmatic that allows you to create a wallet or on-ramp solutions and every wallet already had this like collectibles tab in it and it was kind of empty no nftes but the infrastructure was there so um we started to look for for what what would be the coolest things to build in this space and what our consumers want uh it's usually something like uh fun and visual and engaging that's what that's why nft is so we everybody knew about nft so we obviously in the space cryptokitties but not much was done and so we came to the market with this thesis okay nfts are cool but we don't really know what will be the use case of that so we created the tool that allows you to create your nft just like simple white clean stuff no permission just connect your wallet upload the picture a name and description and literally hit the create button so and and then like let the users experiment what will happen what will what will take off and kryptor took off that's that's basically the story how are we here and uh what do you attribute the success of variable 2. um you and your co-founder you know came in early but what is you know what make it took off um well maybe a lot luck but if if i try to decompose probably like the fact that we spent some time in the space before uh definitely helped we're familiar with all wallets and infrastructure and all sorts of things like that ui is one of the like super important things uh especially for the consumer markets it's not like you have a defy where the the main factor would be like the effectiveness of the platform it's like how cool is it to use so we put a lot of resources to create it like it's fun and clean and simple basically like we're doing like pixel perfect ui for a first in time and that was very important and timing yes we were there before the nft market took off and everything that you build everything you just go on twitter you put oh we created this tool and everybody wow there's no things like that and you put something else like a leaderboard everybody's like wow there is a leader right now so the community helps when when there's like less things built right now everybody's like building marketplaces and stuff a lot of noise it's much harder to to do new stuff and that we're still doing so there are a lot of new marketplaces that are coming up um coinbase kraken or launching nft marketplaces you know incumbents like openc are still still have staying power here um how do you see these new players coming in and how is that going to affect sort of consumer behavior uh or access yes that's everyone is doing enough to marketplace now like everyone all the old companies have nft strategies and they they've seen the success of the marketplaces it's a super appealing model for investors as well it has network effects once you're there uh it's a very good position on the market so a lot of people doing marketplaces and most of the new marketplaces right now are differentiating because of their niche so they're like either go to specific chain let's say like it's a solana marketplace or it is flow tesla's marketplace or they are differentiating by the vertical of the assets the best for sports in terms of in case of flow for example best for games in on solana some of the marketplaces somebody is like making celebrity on the marketplace so the the it's a standard thing in marketplace theory right the verticalization uh over time at first we had like one on craigslist and then we have all sorts of like vertical marketplaces that that span out of that and uh interesting mechanics like luxor came with the interesting mechanic uh with the token uh which is sort of like a differentiating point in terms of community aligning there is some some issues with that but it still it was one of the like most probably notable things that came out latest so wearable is a marketplace but it's also a protocol so given the the you know the multiplication of marketplaces and various protocols how are you thinking about engaging cross chain and and what's your vision for the protocol yes uh thank you for that uh again as as we see more and more marketplaces that are coming to the market um it is important for us as well to uh have our own niches and uh the best thing uh that is like um awaiting us in 2022 is the multi-chain of course in the future is multi-chain uh ethereum accounts for 40 of the users on the market right now that's if we count like axi and ronin um so 40 of users and 90 of the volume it's a clear sign like new users are coming to to different chains they're they're picking uh their favorites so multi-chain is the big big thing for us and also the protocol um we are sort of not exactly a marketplace even where a protocol and just a wearable is one of the front-ends that works on top of that protocol uh there are multiple other like front ends that are building on top of the protocol um jirion used protocol when they came up with their nft feature [Music] that's basically where i see the market evolving towards the the sink of the trading activity to the protocol but we can talk about that later uh yeah so if you think about marketplaces you know at least as an investor we think at you know the supply side and then the demand side and so right now we see pfps we see art how do you think that's going to evolve and is there you know all the focus was going to be on pfps how how do you see the market um evolving and how are you approaching this yes so in 2020 the the whole 2020 was about crypto art it was the thing in itself let's upload some pictures to the uh to the blockchain and we will get nfts out of them um like trash art community nifty gateway so like a lot of stuff um and well what the art the art market segment kind of shrank after that um because it sort of has infinite supply if you're an artist and your art sells well uh you you create more art until it stops selling uh that's what basically happened and people on the secondary market they still like prefer to buy from the artist from the first hand rather than from the second and that's why like this this market mechanic didn't really work for for a lot of art projects so we still see individual artists that are successful like uh habibi lyrona uh kid8 and they are doing like rare drops with limited supply always support their secondary market and i think that specifically gave birth to this like pfp trend uh very important part of which is the limited supply you always have 10 000 items and they they have the interesting market dynamics when they get up in price basically uh so the whole 2021 year was about crypt was about pfps and people started from more or less the second part of the year everybody started trading pfps and uh i i i think the 2022 at least the first half of that and maybe the second will be a lot about pfps as well so uh we see the expansion of the buyer community at first that was like sort of like marginal guys that like blockchain first blockchain native and uh the strengths of the culture that they build uh is really appealing so now we see all this like rappers celebrities coming as like late stage sort of uh consumers of board apes and uh now i just like i i was showing vanessa uh my twitter feed like maybe 10 of of people don't have pfps on their avatar in my twitter feed so it's a clear market with twitter that came with this feature that allows you to put nft on the avatar other like only fans too i guess other other social networks would follow um you will be able to put nfts on the avatar so the the pfp market is sort of like a blue chip it reminds me the trading of cryptocurrencies from one hand so there is like there are funds those are like famine that are buying blue chips there are other funds are doing that people are tracking indexes there is portfolio trackers so all the same mechanics but in the same time it shows the cultural relevance when when when you use it as avatar so there is like liquid there is utility for this and as a trend i see this all moving so the the nft is like it's a shell you can attach it to a lot of things and what we see right now is this things that nfts are attached to they increase their utility so like okay put on avatar it's one utility vote in a dial another utility get an airdrop that why everybody is so excited about this like ape token these people are like it adds utility to the ape themselves so people are looking for for nfts that that can be used somewhere and for example in the game so after the pfps we'll probably see a lot of like game assets like like clonex it's a 3d avatar you can use it in the game it makes a ton of sense to me and what do you think about nfts and communities and downs is that something that you think will continue to develop definitely so this is the major major trend that we see uh basically nfts right now are communities what what is the trend strength of board apes and like half of the supply was was minted by the core nft community pranks and his friends and they they like they basically were like the coolest guys in the nft space and that's why board apes are so cool that's why it's so cool to have it that's why it's expensive it's just like a ticket to the social club that all are the if you get on twitter all the like ceos of companies successful creative people have it it's a part of the club and we see the like come compartmentalization of communities you go to the community website you minted your first nft there you stay there for the secondary market you stay in this in their discord it's sort of like this like asylum community in in itself and there is like some royalties that go to the treasury you vote with your with your nft how the treasury will be spent it it's exactly the community and i have this even like thesis about that community is probably the only scarcity of things scarce things in the metaverse like there is in real life we have houses lands that somebody can own it's cars assets but when we go digitally what what's cars only people and creativity and how much work you can do you can always have more more land in the net worth so yeah nft's strengths again is the community community scarce the best nfts are the best community and in terms of sort of the demands have you seen a shift in like who is buying nfts and how is that impacting your strategy for variable yeah we briefly covered that already people are right now nfts are bought by all the same people who buy uh the usual cryptses and when when they almost have the quantitative approach to them okay which nfts should they buy that will go up in price that that the floor prices are tracking and there is this consumer part i'm buying an nft because i just want to have it i don't want to flip it i just want to have it in my wallet i want to gift it to somebody i want to use it on my social network i want to be part of the club and here we see the expansion of the user base so if at first it was like crypto native guys now we see uh so one example of that would be you know moonpay uh have considered service you can you can send them like 200 000 in a bank account and they will buy you a board ape that's like a clear sign to me of like how more broad becomes the the community the buying community that purchases nfts um so just yes it's like consumer expansion i would i would name it and so for these consumers or new uh new consumers or existing uh consumers what is important to them for an nft what what for the marketplace sorry in terms of experience in terms of features how are you thinking about to the future about what marketplaces need to offer are they continuing to be marketplaces are they going to be a totally new type of feature is it going to be our new bank you know we start with nfts and then we we add d5 how is that going to plan out yes for i think there is quite so let me let me tell you let's start here uh the consumer that is coming to buy an nft um that they just want to use on their pfp their journey is sort of okay they saw that like a lot of cool guys on on twitter have doodles on the avatar and they go to marketplaces and they probably see doodles in the in just like the top collection list so the the leaderboard is important because that's all the coolest collections then they see the doodles on the leaderboard and then okay they need to buy a doodle that suits their personality so they go to filters and and they filter oh what's the color of the hair uh what's available on sale they sort by prices so this discovery experience of how do i find this particular um pfp that will will suit me in an affordable price range rather than just like um something super expensive that's that's the common journey and then you you probably sometimes you hear and you make a bit if you don't think that you have enough money to buy something that is available on sale and eventually you've got an nft right that's the like the consumer uh path the i think what's the more interesting would be the trader path and the the one the traders that are looking at like okay floor prices what's what's growing what's going to be next sometimes they just want to have any nft and for those guys who specifically created the future like you can make a bid for the whole collection you can just anybody would be able to accept that all these 10 000 people would receive a bid and anybody would be able to accept that on the statistics what is historical floor price the sort of like you know the coin based experience uh for traders uh what what's missing right now i think important things is first marketplaces are taking the role to verify collections so for example if you just like observe the blockchain and you found the cryptopunx collection you don't know if that's a real crypto punks or not and the only way to know that would be okay somebody needs to know the address of that collection and usually like marketplaces have the blue jigs or yellow ticks uh to to confirm that this is exactly this collection i see i see the uh possibility to create something like uni-swap created for year c20 tokens like this registry of of the of important collections um maybe talking created registry because right now it's like a glaring issue the front ends are um responsible for verifying collections this is something that maybe you can guys build um also financialization of nft is okay i have my nft what do i do with that next uh can i take a loan with that nft if i can take a loan with that nft that means that oh i can probably short it if there's a lot of like supply i can buy 7ft i can sell it i can loan someone ft i can sell it and then maybe i need to buy it back so financialization of nfts the bridging the gap between nft and d5 i think it will be the huge like in 2022 2023 so things to do there like purchase finance like uh loans um price discovery uh how much this nft cost the only metric we have is for price it's kind of insane right uh how much this nft cost the sorting by rarity and things like that super important for the market maybe maybe you guys can build something like that