The Rise Of NFTs And dApps That Are Building A Home Away From Ethereum
The birth of Ethereum introduced the concept of smart contracts to the cryptocurrency world for the first time and with it, decentralized applications (dApps), the applications that operate automatically without the top-down oversight by any one company or individual.
But what dApps brought to the table in terms of innovation was initially balanced by a plethora of speculative use cases which could be described as opportunistically hopeful at best and cynical at worst.
Readers may remember the explosion of ICOs in 2017 which came bearing promises of dApps aimed at a range of disparate industries, few of which ever came to fruition. Among these were projects that aimed to tokenize the global dental industry (Dentacoin); a venture devised to pay people to tend to the graves of dead relatives (TombCare), and one devoted, quite simply, to garlic bread (Garlicoin).
Even those with seemingly more pertinent use-cases failed, such as GetGemz (GEMZ), a social messaging app that allowed people to send and receive Bitcoin. Ultimately, very few projects emerged from the heady days of the ICO craze with their reputation intact although some did buck that trend, and continue to thrive now, four years on.
A prime example is Kyber Network, a decentralized exchange (DEX) protocol that facilitates direct swaps of one crypto token to another. Kyber Network’s KNC token exploded to the tune of 800 percent since late 2019, and solidified its spot as one of the top DEX protocols even amid the precarious days of 2020’s Covid-19 pandemic when it more than tripled in value.
Helping to clear away some less than useful projects was the seismic market pull back in the crypt winter of 2018, when more than 87 percent was wiped from the global market cap in just under a year, with many junk projects losing as much as 99 percent of their value, largely delivered by the SEC’s Howie Test on (utility) tokens.
In the eyes of the general public, this was a sign that the tokenization of the cryptocurrency world had failed.
Behind the scenes developers continued to build. That building process has only accelerated in the years since, and the dApps market that was worth $10.5 billion in 2019 is now expected to exceed $368 billion by 2027. Users and investors have now been exposed to the inherent benefits provided by decentralized applications, such as transparency, autonomy, and reliability, and the demand for faster, more accessible versions of these is stimulating the global dApps market as I write this.
By 2020, the cryptocurrency market had begun to rebound in earnest, and its rising fortunes attracted the attention of well-known institutional players such as MicroStrategy’s Michael Saylor, Twitter’s Jack Dorsey, and Tesla’s Elon Musk. As these high-profile figures began to invest in Bitcoin and other cryptocurrencies, the global market continued to rise and more eyes were drawn to the space, culminating in new all-time price highs for bitcoin, Ethereum, and a host of other coins.
According to Bas Roos, CEO of peer-to-peer food and beverage marketplace Bistroo, Ethereum will continue to dominate the DeFi landscape in the short term, “With the EVM (Ethereum Virtual Machine) becoming more and more the standard within dApp and smart contract development, Solidity-based applications will take the stage, paving the way for future Web 3.0 business models.
“In this ecosystem there is continuous development on key aspects like decentralization, security and scalability, with tremendous developments happening on the layer-1 level but definitely also in the areas of layer-2 solutions. These developments allow for more accessibility and real-world adoption while layer-1 is still undergoing its complex improvement process, which creates more opportunities for further applications to be built on the EVM and disrupt traditional business models across multiple industries in the coming years.”
NFTs Crash the Crypto Party
By last summer, a new phenomenon began to emerge in the cryptosphere, the non-fungible token (NFT) market. Spurred on by a host of celebrity endorsements and collaborations, the NFT space emerged as the hottest new phase of the cryptocurrency experiment, and its combined global value went on to exceed that of the ICO craze from a few years earlier.
The global NFT market value is currently estimated to stand at around $43 billion, with a daily trading volume of over $3 billion. The meteoric rise of the NFT industry has been such that the term ‘NFT’ has become synonymous with the cryptocurrency space at large, leaving no doubt that we now find ourselves smack bang in the middle of the “era of the NFT.”
GFT Exchange (GFTX), is the company that brought to market the first NFT movie promotion in May 2018, with 20th Century Fox and Atom Tickets, releasing a limited-edition Deadpool 2 digital posters to promote the film. The NFT’s were available on Opensea.io via the GFT exchange. GFTX will soon announce the launch of a new exchange, aspiring to set new standardization and best practices in KYC, AML and counter party risk.
“This NFT phenomenon is just a glimpse of what’s yet to come”, says Mitch Chait co-founder GFTX, “NFT art and collectibles represent one aspect of value creation. It’s also the simplest for investors and consumers to get their heads around.
“The bigger opportunity is in leveraging NFT’s unique and agnostic attributes to reimagineer business as we know it. We will begin to see the emergence of new investment products made accessible to wider audiences, disintermediation of value chains, removing opaque, time consuming and costly middlemen, and eliminating the need for what we today deem “critical services” to open, close and settle transactions. This new paradigm is here and for those that can embrace it today and act, they will certainly gain competitive advantages and capture benefits.”
Waves continue to be made in this nascent space, exemplified by the recent launch of MekaVerse – an NFT gaming project centred around ‘mecha’ robots made popular by prominent Japanese anime shows and manga comics. In just two weeks since MekaVerse launched, the project has racked up over $139 million in trading volume, making it the 13th most traded NFT collection to date.
Headhunters and recruiters in the blockchain space are now becoming overloaded with clients looking to hire specialists in the decentralized finance (defi) and NFT arena, as yet more money and interest flows into the industry.
“Fundamentally, NFTs enable real ownership over digital assets and can be used and moved freely in ways that were not possible before,” says Darius Kozlovskis, whose platform Drops enables users to borrow funds against their NFT and defi portfolios. “NFTs enable the creation of play-to-earn games, and entertainment and sports industries increasingly see them as a new medium of interaction with fans. A whole ecosystem is being built around these tokens, and with the rise of metaverses we are only likely to see wider adoption in the years ahead.”
Jonas Hudson, co-founder of GFTX adds, “Mobility will take the lead to democratize crypto and blockchain by allowing everyone to own an NFT or participate in DeFi. Telcos and handset manufacturers won’t have to make the decision of what blockchain to use as asset exchange will all be portable. The DNA of blockchain isn’t built on a single solution leader but rather a nimble and decentralized suite of platforms that work harmoniously.”
Here Comes the Ethereum Killers
Etheruem’s innovative smart contracts kick-started the dApp phenomenon, but today more and more projects are starting to fill gaps left in the market by Ethereum’s limitations. On numerous occasions since 2017, the cost of doing business on Ethereum has exceeded the reach of even the most well-meaning dApp creators, as rising gas fees excluded many users from interacting with dApps on the most basic level.
One of the first NFT projects to exist emerged years before the boom of 2020, but never lived long enough to witness the rise of the trend it sought to create. CryptoKitties was an NFT-based trading game that launched in early 2017, and established many of the core features we now see in popular NFT releases. But by winter of that same year, excessive gas prices on Ethereum made it difficult to perform simple transactions on the dApp, and effectively doomed the project to failure. Following the collapse of CryptoKitties, little was heard of the phrase ‘NFT’ for the next few years.
The technical shortcomings that affected CryptoKitties have now, for the most part, been overcome. New projects have arisen from the primordial soup of the crypto space to fill the gaps left in the wake of Ethereum’s pioneering efforts, and even Ethereum has since sought to address its own failings with a range of technical upgrades.
Foremost among these is Cardano (ADA), a project which was carefully incubated for years by some of the same team members who contributed to the creation of Ethereum, and which has now begun to deliver on its promise.
Cardano’s sub-cent fees and intuitive user framework has seen it become a viable home for dApps in recent times, as exemplified by some of the new projects taking the Cardano blockchain as their base of decentralized operations. Projects like stablecoin hub and DEX Ardana, which was the first dApp to launch on the network.
“Not only can existing and tested DeFi use cases be implemented, but Cardano’s novelties allow new DeFi use cases to be created,” says Ardana’s CEO and Founder Ryan Matovu.
“For example, Cardano users interacting with ADA, the network’s native token, will be able to interact with smart contracts without unstacking their ADA, thus continuing to earn native staking rewards. We have taken full advantage of that with our vaults, so now Ardana users who have a CDP of ADA with stablecoins generated against it will continue earning staking rewards while their collateral is locked. Meaning they essentially benefit from the staking rewards as a form of loan subsidy.
“I think that similar developments in the future will cement Cardano as not only one of the most secure and decentralized blockchains out there, but also as one that has many influential and nuanced use cases, which will surely lead to the creation of defi products that few could have foreseen,” adds Motovu.
Which isn’t to say that Cardano is the only potential Ethereum-killer vying for the latter’s crown: there’s also sharded network Polkadot, is the brainchild of Dr. Gavin Wood, one of the original co-founders of Ethereum and the author of the Solidity programming language. The interoperable blockchain is made up of tentacle-like ‘parachains’ that bolt onto its Relay Chain, and a series of auctions will determine which projects come to dominate its DeFi playground.
Hudson is ultimately focused on the utility of NFTs and dApps with a high degree of utility for consumers and offers a sobering perspective stating, “What’s often overlooked when billions of humans around the world have never been exposed to the blockchain, or an NFT for that matter, and when they first take a step into blockchain technology they won’t care if Ethereum, Cardano or whatever new blockchain is managing the underlying technology.
“All a user cares about is ease of use and functionality, so, at the end of the day, the fight for layer 1 and 2 protocols are going to be buried under the technological rug in the eyes of the average consumer and these protocols will feel more like Azure, Google and AWS hosting services. If you ask the average user if they care who hosts their content or online activity today they probably won’t even know or care, as long as the it works and offers a fulfilling experience.”
We have come a long way since the heady era of the ICO boom of 2017. Quality protocols have shipped, volumes have surged, and networks have by and large improved, and this has been achieved without government policy makers and traditional financial services incumbents or the capital markets, to the tune of $3 billion.
Institutional engagement in the crypto and digital assets sector from Wall Street banks to global consumer brands and supply chains will drive both the standards and a wider accelerated consumer adoption of these new digital products and solutions – all of which are being integrated into Web 3.0. This all for a sector that is a little over a decade old. The future is bright for all things digital.