Otherside and the Future of NFT Consolidation
This past weekend, the crypto media company Yuga Labs launched the biggest non-fungible token (NFT) collection in the history of the Ethereum blockchain: a sale of virtual land in a forthcoming metaverse space called Otherside. The sale has garnered over $1.5 million USD in aggregate, marking a milestone for the Ethereum ecosystem as well as crypto-collectibles more generally.
The trend toward consolidating non-fungible tokens into “Collection Apps” is an important development given the current state of NFTs on the Ethereum blockchain. As it stands now, there are over two thousand NFT-related smart contracts deployed on Ethereum, and the vast majority of them are either abandoned or have very low levels of activity.
If we zoom out and take a bird’s eye view of the non-fungible token ecosystem on Ethereum, what we see is a situation in which a lot of different projects exist, but most of them are not being utilized. By contrast, the “Collection Apps” model is an attempt to streamline this environment and make it more friendly for both developers and users.
Yuga Labs sold tokens tied to 55,000 distinct parcels of land at around $6,500 each and generated close to $300 million in revenue. The NFTs sold were priced exclusively in ApeCoin. Apecoin is Yuga Labs’ official cryptocurrency. Apecoin is an ERC20 token built on the Ethereum blockchain. It has a circulating supply of 10 Million coins and a max supply of 100 Million coins. The current price of Apecoin is $0.29.
Yuga Labs’ land sale was conducted in partnership with Property Coin, a real estate investment firm that allows accredited investors to pool their money to buy properties. Property Coin plans to use the proceeds from the sale to buy more than $1 billion worth of distressed real estate properties. In return, investors will receive a pro-rata share of the profits generated by the portfolio. Such a deal is significant because it shows that NFTs can be used to represent ownership of real-world assets.
Yuga Labs is the company behind the Bored Ape Yacht Club, which remains the crypto ecosystem’s single most valuable NFT collection. The club’s flagship asset, a yacht named Otherside, has been estimated to be worth as much as $2 million. That price tag reflects the fact that the yacht is not just any NFT, but rather one of the most valuable digital goods ever created.
The sale by Yuga Labs also functioned as a kind of unofficial funding round for a company that raised $450 in blue-chip venture financing earlier this year.
The investment was led by a16z crypto, with participation from investors such as Coinbase Ventures, Polychain Capital, and Andreessen Horowitz.
The sale is also notable for what it says about the future of NFTs. In particular, it highlights the potential for NFTs to serve as a means of consolidating ownership of disparate digital assets. The fact that the yacht is an NFT means that it can be stored in a single location (on the Ethereum blockchain) and traded on secondary markets without the need for a central authority. This opens up the possibility of creating a new class of digital assets that is more easily transferable and more liquid than traditional assets like stocks or bonds.
It also suggests that NFTs could eventually become the basis for a new kind of ownership infrastructure. We’ve already seen some early examples of this with projects like Ascribe, which allows artists to control the distribution and licensing of their digital artwork.