NFT avatar projects still occupy a relatively small niche in the market, but the demand for them is growing. The trading volume of some of these collections reaches hundreds of thousands in the ETH cryptocurrency, ahead of NFT games and other participants in the non-fungible token market. While some believe that avatar projects will lose their popularity in a year or two, others are willing to give millions to become the owner of one of them. The question is, what is the reason for the popularity of NFT avatars? Do they have real value? And what will the future hold for collectors of such avatars? Bohdan Khomenko, CEO of NFT Stars, told Sostav about this.
What is the reason for the popularity of NFT avatar projects?
Crypto art fans have a new and relatively inexpensive way to demonstrate their loyalty to the NFT fan club – avatar tokens. Users can choose the appropriate avatar based on their preferences in projects such as Bored Ape Yacht Club, World of Women, CryptoPunks and others. Science fiction adepts, for example, can find an avatar in the NFT Hero collection to feel like a real explorer of the blockchain universe. Each hobby and area of interest has its own collection of NFT avatars, which allows users to broadcast to the world exactly what they want to convey to others.
CryptoPunks is the first NFT avatar project launched in mid-2017. The collection includes 10,000 pixel art with randomly generated character elements such as skin color, accessories, and more. What began as an experiment with giving away Punks tokens for free later turned into a non-fungible token phenomenon, selling for $ 1,000 each. So, Covid Alien, or CryptoPunk # 7523 was sold for $ 11.8 million.CryptoPunk # 3100 went for $ 7.58 million, followed by CryptoPunk # 7804, the price of which was $ 7.57 million.
Since CryptoPunks were among the pioneers of the NFT sector, the popularity of the project can be easily attributed to the historical significance of the first collection of its kind. But that doesn’t explain why many other NFT avatar projects are becoming megapopular and gaining significant value. It turns out that there are other reasons for their popularity as well. NFT avatar as an individual in the digital world NFT avatar designs quickly became part of the digital identity of shoppers. When CryptoPunks gained popularity and went on sale for thousands of dollars, the avatar became something of a proof of a special digital status. If the user was able to spend a large amount on the CryptoPunk avatar, he declared an impressive cryptocurrency state and time that he devoted to cryptography and NFT. In contrast, the Bored Ape Yacht Club hosted a more affordable collection to emphasize the openness and hospitality of their club. The rise in popularity of the World of Women collection was partly due to the unique ownership of NFT with different royalty levels, and partly to the special vision of the creators of the project. The authors stated that their mission was to empower women through art. In each of the above cases, avatars served as an indicator of membership in an exclusive club. The fact that many NFT avatar projects also create private chats and communities on social media further enhances the community’s sense of elitism. Market experts believe that the combined investment of money, time and energy in a project enhances the special bond between participants.
Many NFT avatar collections go well beyond a set of images. The projects either already exist or are planning additional functions, such as royalties, farming (one of the types of passive earnings on tokens – approx. Sostav), updates for characters and the ability to use them in the gaming environment. Thus, the avatar becomes a full-fledged crypto asset with real or potential value.
Bored Ape Kennel Club NFTs provide a 2.5% royalty on resale. World of Women avatars come in three different tiers, which determine the percentage of royalties and other perks for the owner. NFT Doge Pound owners get access to the Metaverse and exclusive clothing. It is also planned to add more functions to the project, for example, liquidity pools (the so-called token pools that are fixed in a smart contract and contribute to effective asset trading). Ability to inscribe your name on the NFT history pages Such projects are of interest to all crypto enthusiasts, since NFT can be used as a great opportunity to immortalize your name. Understanding this well, Hashmask smart contracts allow NFT holders to assign a name to a token by literally writing their name in the chain. A more traditional way to become more famous is to purchase a rare token.
Every time a unique token from the collection changes its owner, the media publishes dozens of articles that tell who became the new owner and why he paid such an amount for this particular work of art. Try googling CryptoPunk $ 11m and you will get thousands of search results. The first link will contain the name of the buyer, his comment on the purchase and a photo. Avatar as an investment NFT avatar projects are also considered an investment asset. All collections are represented by a limited number of tokens. The guaranteed shortage of NFTs and likely price increases are what drives digital art collectors to buy NFTs regardless of their characteristics or artistic value. Then the domino effect occurs: when one avatar is bought at a high price, others from the same collection automatically become more expensive. The future of NFT avatar projects The growing interest in NFT avatars and the steady development of existing projects suggest that the collections will remain on the market and continue to evolve. The coming months and years will be dominated by projects that have much more to offer than the features and benefits described above.
There are several new trends in the NFT avatar projects market: An increasing number of avatars are being sold at an affordable price. The market is becoming more and more interesting for newbies and those who are purchasing NFT for the first time. At the same time, experienced cryptocurrency users know how to double their profits with their help. This is why they are willing to spend thousands and beginners are careful and always start small.
Collections are becoming multifunctional and more like an ecosystem than just a set of NFT maps. Opportunities such as royalties and gamification motivate community members to participate in the development of this ecosystem. The key market trend at the moment is the search for NFT tokens with real value embedded in them. Projects that ensure that each NFT in the collection is backed by other assets or has liquidity win in the long run.