The Rise and Fall of NFTs: What's Next? - TOKEN2049 Singapore 2023

we're a man down yes so the last person to Eric is uh I think is he just got on the fourth floor he will be up here uh so when he comes in we should all clap yes um so thank you everyone I think a second day uh you might be a little sleepy after the you know it's at the conference is getting getting uh toward the end uh thanks for your time I hope that through this panel you guys understand where we are sitting at the nft market now what this nft leading uh the companies are working on and how they see the nft market now versus in the future and uh we're gonna explore from now so let's start with the brief intro uh and the what's your role and then also maybe you can share a little bit of what you're doing before the web free career let's start with Alexis yeah sure um my name is Alexi uh prior to variable I built to other companies uh before right before it was a sticker related company like a Marketplace for stickers and mobile apps and then was always involved in crypto and even tried a few Roman before if you're on time so I until then 2019 was the first year where it was infrastructure in place like Wallace started to support nfts just really first year and yeah we start right away started building variable great cool hey I'm Zed I'm co-founder and CEO of magic Eden um yeah how did I get into this so I started out my career in management consulting so I worked at Bain and Company for a number of years and I like to joke that I was doing mining at the time this was in 2013 but it was the wrong kind of mining it was uranium Mining and not Bitcoin mining um but that eventually in a roundabout way LED me down the path of crypto so end up joining um dydx which is a one of the largest decentralized exchanges they do trading for perpetuals I was employee number two there so I spent three years there and then I was a product manager at coinbase where I built institutional trading products for hedge funds asset managers and so on and then we founded magic Eden in 2021 so it's been a pretty wild ride over the last six years in crypto myself so I've been investing in web 3 since 2018. I worked at block tower Capital which is us-based crypto firm nft investing is definitely one of my focus before that I worked at Goldman Sachs Tokyo and Singapore about 10 years as a portfolio manager and Trader so let's before before we uh start the specific question I will give you just brought a picture that how we want to moderate the panel today so we're going to first talk about the current market current empty market and second is we're gonna dive into each Project Specific what they're working on and then after that the gaming is sort of a big agenda in nft space so we're gonna are we great yeah that's uh that's Eric so Eric give us a quick intro about yourself yeah I'm the uh co-founder of Taproot wizard so I've been in the Bitcoin space and ethereum space for about 10 years and yeah happy to be on the stage thanks for waiting for me yes we all waiting for you um so we're gonna specifically talking about the gaming angle a little bit and then after that we're going to talk about other nft use cases even outside of their their current uh the highlight and then we're going to talk about challenge for why Mass adoption is not happening in the industry and then lastly we're gonna share the what they're focusing at the moment so maybe we can start with uh the amazing uh the debut of the Eric so let's start with what how do you see the nft market today and maybe we can start with that uh to be completely Frank I think that one of the reasons that the nft market kicked off in the way they did was the uh uh the low interest rate phenomenon that we had at the excessive monetary Printing and look if if in that kind of environment when no one wants to hold cash and doesn't really know what to invest in it gives the basis for New Economic uh instruments to grow so this is why you'd see like 300K uh Ford pictures getting very popular among investors but I think that underpinning that there is something real there I think that there is some kind of after when people get out of college in the modern era it's difficult to make friends it's different difficult to find communities some people go into like pick up artists circles like Andrew Tate stuff some people go into gaming but the nft space gave a way for people to congregate on uh in digital communities where they could Define their own purposes so I think that underpinning that you know bullish Market that was a lot about speculation there is something real there great uh let me twist the question a little bit so Alexis so everyone knows that nft market is a little bit you know discouraging and then volume is decreasing how maybe you and Jed you can try to navigate in current bearish market to your own business yeah sure so the only Williams goes down people less trade in these days but we just almost like even before that um we've always been like an infrastructure and we always had apis and protocol we just started to work with different projects empowering their communities and their projects with nfts so to say uh we have a number of Enterprise clients that power in their own like First Steps in web free it was our help such as work with Mattel it's everyone knows that Barbie company they issue now digital Collectibles digital versions of Barbies and you you would be surprised but it's over 1 million transactions for the last three three months so people actually trade in this and the prices are super low is like almost around one dollar same goes to some other Enterprises like toy companies are really successful I would say people and prices are super low like it's like ten dollars thirty dollars or like really really low prices and Retail audience people usually don't have wallet and this is the first time they interact with blockchain so this is what's happening and we just moved to um to cater for a new audience like bring more people to the space not just fight for the small crowd of ultra Rich birthday colors that everyone is trying to fight for uh yeah we're just expanding our offering working with different projects and bringing new use cases new projects and new people in the space yeah I have two thoughts on this one is um let me contextualize I'll give you guys a bit of a mental model and where we are because I think yeah it is somewhat like rise fall but there is a rise part of this again that we should get to um but it's very similar to actually where 2018 well what 2018 felt like everyone 2018 thought tokens were dead no one was launching a token in 2018. I mean I know because I was there and a dydx were like absolutely not going to launch a token in 2018. and that was after what happened in 2017 where a whole bunch of people were launching a lot of random stuff and nfts in their pfp form 10K format feels a lot like that right it was sort of that what was the big rush that led a lot of people into the industry and our view is that the next you know set of innovation that happens in nfts it's not going to look the same the form factor is going to be different and that's actually what played out as well if you look at defy right Financial protocols governance Dows no one really thought about that stuff that that was going to be the thing when looking back from 2018's perspective right um so that's the macro thought and then the other thought was that how does that impact what we do as a business so magic Eden is a Marketplace that's on four chains so we support Solana ethereum polygon and most recently Bitcoin ordinals and the reason we did Bitcoin ordinals was because we want to lean into whether Innovation is happening in this kind of Market you want to rely on those who are at the Grassroots and trying to push the boundaries guys like yeah traffic Wizards you look at the people who are building on bitcoin that it's a really interesting space so for us we think about the Grassroots as one area where we want to essentially spend a lot more time and then the other way we think about it is also from a Creator perspective where are the creators what are they doing what are they launching how can they use nfts that may be different or analogous to how they currently engage their audiences today and then after that when you look at it through that lens it's basically a what segments look interesting right is it gaming as Steve was mentioning is it content creators is it music that all of that starts to become the the kind of work that we want to do as a Marketplace over the next couple of years great um I think we can step up a little bit so in nft Marketplace there's a biggest debate around loyalty so if you give a little bit more uh exam uh the colors for those who are not familiar with so the opens the nft marketplace the loyalty is the money that the Creator gets when the the their RPS nftr pieces traded second time third time fourth time the original Creator gets a fee which is a very meaningful that blockchain can offer to this industry which they could non-blockchain couldn't do it however because of the nft marketplace such as a blur which the depressed the fee because they are going to focus on nft Trader not the nft creators because they they depress the fees uh the basically a lot of users move from openc to blur because if they're an empty Trader but so I think this is goes to Alexis and that good question so both nft marketplaces uh raise uh they raise a hand for NFD Creator which means that they want to keep loyalty rather than many other nft marketplaces that depress the to get the more users and they're focusing on nft Trader they are focusing a little bit and if the creators rather than Traders I'm not saying we choose it right but I wanna I wanna hear a little bit of your decision to to maintain the Loyalty for NFD creators very briefly so whichever do you want to whichever starts first Europe let's start yeah go ahead all right uh a colleague was still talking about royalties it feels like a never-ending kind of topic but it is very important because I think the market has generally spoken that that royalties are really important with nfts um not only from like an adoption perspective but I also think it's just a very very good narrative if we want to grow nfts and that's always been true so the context with magic Eden and royalties um all of the stuff that we've been seeing on ethereum about royalties being dropped by openc and blur that all played out actually on Solano about a year ago so we've been like dealing with this for for quite a while what happened there and this is a really important point is that you need the entire ecosystem to come together to basically make that happen for royalties to actually work and let me explain why that is it's not only a technical solution but it's also a social consensus problem and the the way we approached it was basically working with creators who wanted to bring this back uh working with those who were building standards which partly that was us and then obviously us adopting those standards to to to create a new nft standard that everyone could use and that is the world that I think is most optimal because it's not uh as a Marketplace or as an nft ecosystem there are three key players one is the trader we cannot Escape that fact right that's just they are there nft collectors those that will follow their creators anywhere they go right the the fans so to speak and then the last one is creators themselves they have to be part of the picture if there isn't new content good content coming to the nft space then what are we all doing here right so in my view is that in our house View at Magic Eden is that we have to try and make this work and we have been working very hard with creators to try and make that work and that's the view we take on any chain where there is Creator appetite to do so the exception you know ordinals I I don't think there's really been that strong of an appetite to introduce some kind of royalties there maybe has been a little bit in the art world because that's something that they're used to but by and large is not quite the same on ordinals as it is on say ethereum and Solana for example and you know we we're happy to respect that from a community social consensus standpoint actually let's move on a little bit I think he gives a pretty great color some loyalty so maybe I'll go to Eric so a little bit Project Specific maybe those maybe for audience who don't understand maybe Bitcoin ordiners so maybe you can share what it is a little bit and then second is what's up you guys you are obviously very unique the project you're leading to so how do you want to navigate this nft marketplace with that the Bitcoin basis maybe there's a two points for audience and and the Project Specific yeah so I I think that the philosophy of the ordinal space is that uh Bitcoin ordinal nfts are real nfts and all the other nfts or coins and the reason that we're saying that is like okay so what is an nft it's like it's an image on a blockchain but most of the nfts on like ethereum are not even images on a blockchain they're like links to a web 2 uh you know a web 2 Link on a blockchain and sometimes those links break down sometimes they are ipfs links but they're not they don't and even in the case of ipfs you don't have like a guarantee that that data is going to be stored there forever right so the reason why Bitcoin and nfts are specialist because we take this scarce block space that is the Bitcoin blockchain and we mold it into pictures and because Bitcoin is the only chain that actually focuses on making sure that every user in the world can download the entire blockchain like if you think if you compare it with ethereum for example ethereum is moving towards a history expiring so history expiry means that nodes regular full nodes default full nodes in ethereum will not have their default setting to actually store the the data after one year only Bitcoin is the chain that focuses on making sure that that data is stored at forever and it does that by putting artificial constraints on how much data you can enter into the blockchain that is why when you make a Bitcoin ordinal like you're taking a very scarce resource it's almost like you're working with materials that are scarce in the world almost in the sense that when you're making a jewelry out of gold the reason that it's special is because you took a scarce precious metal and you molded it into something the rest of the nft space doesn't really have that and then there's a bunch of other values that goes into the Bitcoin ordinal space which is that you mentioned royalties for example so yeah in the Bitcoin world like if you own something ownership means I have the ability to give it away to whoever I want there shouldn't be a royalty on that otherwise it's not true ownership I personally um don't necessarily agree with that notion because I think that what is the definition of a free market it's a definition of a free market where you're allowed to or you must have royalty-free nfts where it's a truly free market a market that incorporates both royalties and non-royalty based projects and it gives the Creator and the community to particip to choose what to participate on and I would say that in my opinion the freest Market is the one that allows both however there's a technical challenge with actually making sure that you can't enforce these royalties and that's the reason why we're having all these discussions right anyone in the audience who owns uh Bitcoin ordiners oh there you go okay um so we're gonna move uh to the gaming a little bit uh I think uh especially nft Marketplace or nft related you can really separate from the gaming so let's say maybe dig into the gaming with Alex's first So based on my knowledge I think available is doing a lot of a collaboration integration such as integration with the immutable X which is the leading players in nft gaming space but also collaborate with the macaren and you can maybe share with the audience a little bit so tell me what the gaming angles the readable is exploring uh as of now yeah yeah sure we support the immutable X so it means that you can trade uh all the immutable X Network assets usually it's games uh it's really really game focused chain on variable um also work with animoka we power in there collection and it's more of the digital identity I guess but it's still heavily around gaming it's like digital idents you can use in games and then other metaverses in the ecosystem of animoka projects so games is one of the major bets I guess everyone believe that they will bring more people into the space and utilize uh crypto blockchains and nfts in the best way so yeah I'm seeing a lot of Traction in this direction although yeah it's still early days and yeah definitely we'll see cool games such as yeah one of the biggest AAA Publishers or joining the space like also yeah work a little bit with uh um Ubisoft but still there is some resistance from Gaming Community I guess so that's the question who will be the early adopters like new audience or all the audience of Gamers who will convert great and Jed I think uh Magic Eden recently or a few months ago uh announced magic Eden game which is I think a big initiative Medicaid and pushing in in the gaming sector can you explain a little bit of background yeah for sure it's basically three things with uh Magic Eden games one is that we directly invest in games so we've invested in about 20 games over the last year or so that's like direct seed stage Investments uh number two is we help them with uh Discovery and what does that what does that mean basically we help actually launch a bunch of games on Magic eating so we have a product called Launchpad and we work with games to basically bring them to Market um and then the last thing we do is we support games from like a back end perspective so you can imagine a world in the future where uh you know you come to Magic Eden not only can you discover um a bunch of content right that exists whether it you know maybe it's like a trailer or something and maybe there's a bunch of like content about how how to actually like optimize certain mechanics in the game and then you can also at the same time bulk buy a bundle or or buy or mint uh an item that lets you get into the game so we're really excited about this space in general it's probably been said to death over over the last couple of days but let me like the reasoning for us is basically that there's already a lot of very uh analogous behavior that we see in gaming communities that the social behavior that exists there that we think is just it's so similar to what people do in nft communities right it's you want to own things you want to flex things um you have you know whales in that Community you have people who casually play the thing it's so similar to what we already observe in um in non-gaming uh like nfts so that's what gets us excited and when we think about what can bring scale to this industry yeah it is what you know we want to work on the things that will create millions and millions of nfts right that's why I think this is a it's a long investment don't get me wrong it's not like a thing that's going to happen tomorrow but it's worth placing a bunch of bets on so uh over the course of the next couple of years we'll be building out magic hidden games as a basically a full stack um platform to help games great so I will share a little bit on gaming and we can move on so for me I'm an investors so I think when I'm making an investment into gaming related deals in the industry I usually categorize a three different basket so one is 100 on chain game which one of the leading uh crypto firm in US is very appraising for everything built on chain but I think uh that's a little bit ideal uh in my personal opinion it's it's eventually it's going to be there but it's it's some one basket the second basket is more hybrid that one chain off chain a little bit of balance so things are some things on chain like nft but things are transaction maybe they can put on the off chain on third angle is the web 2 with the slight touch with the web3 so in this Asia Market which is the biggest potential market for the gaming uh Japan Market as you guys all know out of 10 biggest IP in in Revenue wise seven of them are Japanese and and then Korea also have a big gaming country so I see I talked to many of this gaming uh the participants they are all building the blockchain game with the little slight touch with the nft but the web 3 angle is a little slight so if I have a 10 balls I think I'll put the maybe two on on chain part because you have to support the Innovation as investors but I'll put the maybe three on the hybrid and then for near the bull market of the gaming I wanna still personally I wanna bet on this big kind of uh the the gaming entities getting into F3 so closing up the web gaming let's move on to some other nft use cases in nft starting with the Eric so giving you a little bit of Background by Eric Eric was a Bitcoin columnist he got involved at NASDAQ to acquire some crypto company he also worked as a CIO for crypto fund and he's doing this amazing Bitcoin nft so he has a very broad perspective now I'm gonna mention one more thing here so recently you the Eric uh tokenized his time and service I think putting the some nft package on it and then it was very Innovative so tell us about your this Innovative thinking and share with the audience you're the background of the initiative yeah so um when I got introduced to the concept of nfts my sort of frame of reference or what I was thinking about was World of Warcraft because I remember I was playing World of Warcraft I had all these magic items in my in my magic item bag and I thought about okay so what what's actually like a useful magic item in World of Warcraft like your your Hearthstone that's the thing that teleports you that's useful um so I was thinking like what is something that's like a recurring an item that you can use on a recurring basis that could be like an nft in the real world and so the idea that I come up with will be like what if you had an nft that allowed you to summon a friend like like the helpline of call a friend so uh this nft that I created which was called Eric's orb just allowed you once a week to uh ask me a question and then receive an answer on a I have seven days to to answer the question what if that you failed to answer it in seven days so in the current form it's all about reputation it's all about trust so the what what we say is that um like when you're running a crypto project you can always blame someone else like it was because of this person or that person it was because of the market but if you can't even honor your own promise that you say I'm gonna I'm gonna honor this one nft I'm gonna answer a question once a week then like it destroys your entire reputation as a person we may introduce other economics into it where you have to like post a bond and if you don't respond in time and get it gets slashed but that gets kind of complicated because what if you give really shitty responses then you need a dow to sort of moderate and decide whether or not you were bullshitting or not so it gets complicated anyway so people are starting to compare that orb so we launched one for me there's one from Nick Carter who's also a speaker at this conference you should check it check it out by the way it's nick.orb.

land and you can see he writes literal literal essays once a week to the holder of his orb okay we applied another thing to it which is called Harbor attacks us so it goes into this discussion around royalties like how can the issuer of an nft have like a recurring Revenue stream that's very difficult to enforce with royalties but the harburger attacks I don't know if I'm gonna cannibalize all the time of this panel to explain what it is but it basically puts a tax on the holder of the nft so the per the current person who holds Nick's nft he he has to put a sales price for what he's willing to sell then 54 and then he has to pay a tax based on that amount so the current holder of Nix nft has put a sales price of 7.5 ether a 5 ether sorry five ether and then he pays 7.5 ether per year like it drains each block so you basically you fill your nft up with with money and then it drains over time and that money goes to the Creator that's called the harburger taxes it was invented in the 70s it has been tried to be applied to properties but I think that nfts and digital items especially nfts that have some kind of utility like maybe you don't want to pay for like a painting on your wall it's like a subscription to have a painting on your wall that doesn't make sense but if it is a useful recurring service like being able to ask someone a question each week then maybe that's a service that's like a Netflix subscription that you that you're willing to pay for this is very similar to the model that friendtech is using so this is like I think we're seeing a Resurgence of like social token nfts coming back where the token is like your community or the access to you is token gated that is an aspect of nfts that previously has failed in crypto with bitcloud never really kicked off but I think when you when you make it clear what the utility is so in frontec it's these chat groups with the orbits it's it's the ability to get an answer to a question or some other service then it's more clear like why there exists a token for this great um with the time constraint maybe rather than putting a description maybe quickly Alex is dead what are the other nft utility are you excited as a word not a sentence so digital identities different achievements passes yeah all this uh NF keys zero price nfts cheap nfts there's something that will be big great I mean Collectibles collectible physical Collectibles um I think that link between physical yeah and nft is becoming easier and easier um and yeah that then opens up a Infinite Space got it in my case I think uh the most exciting thing on nfu's case is two things one is uh IP entertainment application which Korea Japan is very big market for the second is a physical redeemable which the Nike is a number one the web 2 company making uh making a lot of money basically if you have uh Air Jordan or Nike Air Force One and virtual Goods let's say if you had one if you go to Soho Soho Nike Store in Manhattan you get a 30 discount with something let's say so I think connection between physical and the virtual Goods maybe I think it's a good potential Market um so it's so we have three more minutes uh so I have two more questions so one one question first is you know everyone is looking for adoption of course right what do you think the major challenges not just for nft but in this industry uh that blocks us from the seeing the major adoption maybe it's short but let's start from that yeah I think um I think it's basic well it's two things one is like obviously it's harder to onboard into web three I think the second thing is basically the form factors and content uh I'll focus on the second one because I think the first one's probably been talked about a lot um so yeah effectively the the only thing that's taken off in nfts is has been profile pictures right so and that cannot really bring in like that many consumers we obviously love it like some group of us maybe some of you in the audience but it is kind of Niche right it's like Niche communities coming together and that are bonded by an image so I think that's why we spend a lot of time and that's why we think the creative side of the business is really important but spend a lot of time finding opportunities with gaming companies musicians artists content creators to see if we can utilize nft as a the technology uh to enable them uh whether it's like monetization engagement things like that right solve some of them problems once we have that good content coming in I think the users and adopters will come uh so we very much think about it as like a content-led sort of strategy that at Magic even yeah yeah so infrastructure is definitely lacking so ux is really bad and this is what we are sewing and this is what the whole industry is solving and we're seeing like l2s and yeah all this um will help a lot in the next cycle I don't know and I I think that's a great thing actually I think that uh not crypto staying unpredictable keeping us on our toes surprising us like I don't think that anyone could predict like two years ago that board a pictures was going to be like a huge deal no one expect D5 summer no one expect the Axia Infinity driven energy market like that yeah so frankly I don't know and if I knew I would be disappointed because not knowing and continuously being surprised with the Innovation that this place brings yeah that's the whole point if I started felt like I was knowing what was ahead then maybe I I stopped being interested in the space so that's how the creative person think uh the way they think the person like me analytical person my answer will be um I think what's lacking in this industry is a fun components it should be the fun rather than technology I think we should focus on fun game fun experience second is you should give a new user experience in this world I think people make uh pay money for the new experience they never had so I think they have to focusing on the new experience that only blockchain can offer and the last thing is I think wallet is always and then it's going to be for a while the major pain point for many the players so wrapping up the last question quickly so there are some audience that listen to your story so maybe after this panel they wanna maybe you want to Target someone who might be helpful to you and you can helpful to to them so my question will be what type of people are you looking to collaborate and want to talk to maybe to the audience maybe starting over starting from Derek uh I want to meet people that are that really care about the things that Bitcoin still has a chance that hasn't given up yet that wants to fight for it um there are a lot of people who think that the game or Bitcoin is over like Bitcoin is not innovating it's going away if you're still out there you think that Bitcoin has a chance you want to make it work you think that lightning is not maybe the best layer 2 solution but you want to push the edges of innovation forward and want to bring Innovation back to bitcoin I want to talk to you uh also if you are very influential and people cherish your word a lot then maybe you want to meet me and discuss potentially creating an orb together either if you're an AI or if you're into nfts or in crypto broadly if you have an area of expertise and you can't really go through your DMs and you're like you can ask my orb instead then I want to talk to you also um yeah every one of his building new projects and nfts showed us a message Partnerships at variable.com we will try to help you with infrastructure apis and marketing and just looking for new use cases new cool projects creative teams so yeah happy to work with you guys yeah anyone who's looking to use nfts as a either an engagement or monetization tool um yeah similar kind of thing down to chat it's like the sentiment I think Eric Express is exactly right like let's do some random cool it's think good things are going to come I'm very very confident about it great so I think this wrap ups our panel so making sure if you fascinate with the average Story please talk to him to get the more creative thinking and then magic Eden and then uh the rebel two leading nft marketplaces but not just trading if you're a Creator if you have projects if you're a company who want to look for the partnership with them please talk to them so thank you for the the panel today thank you thank you