Non-fungible tokens (NFTs) have exploded onto the scene in 2021, with cryptocurrency enthusiasts and investors clamouring to get involved in the burgeoning market. So, what are NFTs and what are some of the most interesting NFT crypto projects gaining traction?
What makes NFTs so popular?
NFTs are unique, or non-fungible, digital tokens that run on smart contracts on Ethereum and other blockchains. They can be used to distribute assets and verify their authenticity via the blockchain.
The concept of NFTs originated in 2015 and the first projects were launched in 2017. NFTs are being used to sell exclusive items, such as collectibles, online. As each token is unique and cannot be replicated, using NFTs creates scarcity that makes them valuable to collectors as well as artists and other sellers. They are bought and sold in auctions, with payment made in cryptocurrencies such as Ether (ETH) and Bitcoin (BTC).
The future of NFTs includes applications in the growing area of decentralised finance (DeFi), where they can be used to put up valuable assets such as fine art, rare collectibles or even real estate as collateral for loans or as financial contracts for insurance, stock options or bonds.
Trends in the NFT industry
The cryptocurrency boom has created new millionaires looking for other digital assets that hold value to invest their gains.
The total traded volume for NFTs in December 2020 was around $12m. The figure soared to well over $500m in March 2021, according to data from NFT blockchain developer Enjin.
The best NFT projects in 2021 are involved in selling exclusive and limited-edition items, including digital art, music, trading cards and other collectibles, and attracting eye-watering prices. A series of NFT auctions of digital artworks and music from high-profile artists such as Grimes culminated in a work by the artist Beeple being sold for $69m at Christie's on March 11.
New NFT projects are being touted not only as the future of merchandise sales but also a way for musicians to regain ownership of their work in the era of streaming and file sharing, and for game developers to profit from creating in-game economies.
Now, let’s look at the list of NFT projects you should know about in 2021.
Best NFT projects: 10 projects to keep on your radar
Worldwide Asset eXchange (WAX)
WAX is a decentralised peer-to-peer marketplace for trading NFTs. WAX uses the Delegated Proof of Stake (DPoS) consensus algorithm to maintain security. Developers can build decentralised apps, games and marketplaces on the platform.
The WAX token is based on Ethereum and users can earn rewards for staking their tokens to provide liquidity. The WAX token can also be traded on several exchanges, including Huobi, Bittrex and Bancor Network. The token can be stored in any Ethereum-compatible wallet.
Top-rated NFTs from the likes of deadmau5, William Shatner and Topps have launched on the WAX platform, where the assets continue to trade on the secondary market.
Launched in 2017 by developer Dapper Labs, it was the CryptoKitties protocol that brought NFTs to the mainstream. It was the first to use the ERC-721 standard, which allows for unique digital assets. In the CryptoKitties game, players raise and resell virtual cats for profit on the Ethereum network. CryptoKitties tokens are non-fungible, each representing a different digital cat. The interest in NFTs has seen a resurgence in interest in the game, which at its height in 2018 saw more than 1 million daily transactions.
Enjin was founded in 2009 to develop a gaming network. In 2017, it launched the Enjin Coin (ENJ) and began developing a purpose-build blockchain ecosystem for NFTs. in 2018, Enjin announced one of the world's first gaming multiverses and it now has more than 40 game developers using its platforms to create games.
Enjin has grown into an ecosystem of integrated digital products, for trading and monetising games. Developers can use the Enjin Coin to tokenise in-game items on the Ethereum blockchain. In March 2021, Enjin Coin had the highest market cap of all NFTs.
Trade Enjin Coin to US Dollar - ENJ/USD CFD
More than 1,300 blockchain marketing campaigns have been powered by Enjin’s products, gamifying online engagement for companies such as Binance, CoinMarketCap, Kyber Network and CoinGecko.
On 31 March, Enjin launched Efinity, its next-generation blockchain for NFTs built on the Polkadot protocol.
Launched in February 2020, Decentraland is a decentralised virtual reality world powered by the Ethereum blockchain that enables users to create and monetise content and applications. Users can purchase plots of virtual land, create customised avatars, participate in governance and trade rare digital collectibles.
Users need fungible tokens as well as NFTs to participate in Decentraland. They connect with their crypto wallet through a web browser to set up their avatar, which receives a virtual passport to represent their virtual identity. The Decentraland uses its MANA token, which can be purchased from cryptocurrency exchanges to buy land and in-game assets. Users can also purchase items that are supported on NFT marketplaces.
Rarible is an NFT marketplace for creating and trading rare collectibles that was founded in January 2020. The platform supports a wide variety of digital assets, including art, memes, music, domain names and DeFi insurance policies.
The creation of NFTs, called minting, is straightforward with an Ethereum wallet and allows artists to release teasers for their content. Rarible gained attention for launching its own governance token, RARI, which is more commonly used in the DeFi space, with a goal of becoming a decentralised autonomous organisation.
Rarible is demonstrating ways to integrate NFTs with DeFi, teaming up in September 2020 with Yearn Finance and Nexus Mutual, a blockchain-based insurance platform to provide insurance coverage for NFTs.
NBA Top Shot
Bringing NFTs into the mainstream, the National Basketball Association (NBA) has launched an officially licensed blockchain application for trading collectibles with Dapper Labs. The application is built on the Flow blockchain rather than Ethereum. The Top Shot NFTs contain video clips of memorable game moments and include player statistics as well as information about the NFTs trading history. Limited packs of NFTs are issued weekly, with prices depending on their rarity.
Codex is a decentralised title registry secured by blockchain for the verification of authentic NFTs. NFT creators can create a digital record for a collectible that then travels with it, so that prospective buyers can verify its authenticity by checking its identity and ownership history on the Codex Viewer. That creates confidence that collectors are buying authentic products.
Founded in 2017, OpenSea is the largest decentralised NFT marketplace. It lists more than 50 categories of rare assets for trading, including digital art, CryptoKitties, Decentraland and domain names. The platform enables developers to build marketplaces for their digital assets on Ethereum and interoperable standards such as ERC721 or ERC1155 and earn commission from secondary items. Game developers can build customisable storefronts to automatically trade collectibles.
Ethereum Name Services
The Ethereum Name Services (ENS) domain naming platform was launched in 2017 on the Ethereum blockchain. The domain names are non-fungible and can be integrated into the NFT marketplaces such as Rarible and OpenSea. Users can receive any cryptocurrency, NFT or token to their domain name and launch secure, private and decentralised websites. There are more than 238,000 domain names registered on the platform with more than 71,000 owners.
Concluding our list of the top 10 NFT crypto projects, 0xcert is a blockchain application programming interface (API) gateway that allows developers to build decentralised applications using NFTs as well as fungible tokens. Its framework aims to simplify the process of issuing NFTs on the blockchain to reduce development time.
What are some of the upcoming NFTs that could become the next hit?
The potential for the integration of NFTs with DeFi is driving a number of upcoming NFT projects to look out for in the future. They include Unifty, which is an NFT management hub that will feature copyright management and supports multiple blockchains, including Dai, Binance Smart Chain and Polygon. Upshot is a project that will enable the crowdsourcing of appraisals to establish an NFT’s value. NFTX will enable the creation of community-owned index funds so that investors can gain exposure to several NFTs through the ownership of one token.
Edited by Valerie Medleva