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Not every token associated with NFTs is non-fungible. For each ERC-721 used to denote virtual land, PFPs, armor, or other in-game items, a fungible ERC-20 or SPL is used alongside it. Whether for governance, in-game currency, covering trading fees, or denominating P2P marketplace sales, fungible tokens are essential.
Over the past 12 months, a number of existing NFT projects have launched a native token, while others have been launched with a fungible token from day one. This is especially true for NFT marketplaces, which form a main artery at the heart of this rapidly evolving industry.
While OpenSea has yet to take the tokenization route, many of its competitors – both on Ethereum and other chains – have had no qualms about deploying a native asset. And at first glance, there are many arguments in favor of issuing a native marketplace token. When properly implemented, a proprietary token can:
- fund development
- Bootstrap a new platform
- amplify network effects
- Create incentives for trade and increase customer loyalty
- Support complementary products like NFT launchpads, staking and drops
However, not all NFT platforms have a well-designed token model. No matter how smooth the interface is or how low the fees, a subpar token can create friction rather than solve problems. The following six NFT marketplaces vary significantly in terms of their audience, network, maturity, features, and roadmap. But they all have one thing in common: a cleverly designed token that has the potential to add value and create powerful network effects.
Loop financing (LOOP)
Loop is an NFT marketplace, DEX and Launchpad in one. One of the newest features is the ability for projects to issue native fungible tokens to users deploying DeFi NFTs, creating an effective and flexible fundraising mechanism. This turns the usual IDO into an initial NFT offering, or INO, while reducing token velocity as issuance correlates with staking duration.
Located at the heart of the Cosmos ecosystem on the Juno network, Loop is on a mission to create economic opportunity, shared experiences, strong community bonds, and all the other positive effects that NFTs can create. To support these goals there is LOOP, the platform’s native asset, which fulfills a number of useful roles.
Because Loop Finance has an integrated AMM that aggregates liquidity from across the Juno network, one of LOOP’s first roles was as a reward token. This solves the problem of issuance by gradually paying out tokens to the community over time, and it also provides a reward mechanism to increase liquidity.
Then there is a feature called Loop Power that multiplies the DEX swap fees and NFT marketplace fees distributed to LOOP players. To qualify for Loop Power, community members must either stake tokens or mint and hold NFTs. It’s a smart way to keep value within the ecosystem while encouraging community members to stick around for the long haul as Loop and the accelerating Cosmos universe reach critical speed.
Looks rare (LOOKS)
LooksRare is a no-nonsense NFT marketplace with a native token attached. The focus is on helping shoppers discover new top collections as they appear – no easy feat in an industry where 10,000 mints cost 10 a cent. Features like Discord notification of new mints allow shoppers to stay informed, while the minimalist marketplace keeps clutter to a minimum and makes it easy to see what’s trending at a glance.
The LOOKS token works similar to X2Y2 and gives players 100% of all platform fees. You can also earn LOOKS Rewards for buying or selling NFTs on LooksRare. An APY of up to 58% is currently being promised for LOOKS Staker. And with rewards for buyers and sellers distributed daily, you don’t have to hang around to claim what’s yours.
X2Y2
X2Y2 is an NFT marketplace launched on Ethereum as a direct competitor to OpenSea and LooksRare. And thanks to lower fees and juicy token incentives from day one, it managed to capture significant market share right from launch. So much could have been predicted. What surprised many, however, is the fact that eight months later, X2Y2 is still here.
Both the platform itself and its eponymous token are heavily used, with around 10,000 ETH per day of NFT volume on the marketplace and nearly $2 million in X2Y2 trading volume. X2Y2 stakers receive 100% of all earnings, which is currently a respectable 50% APY. Not only has the marketplace innovatively launched with a token from the start, but they have consistently implemented useful new features such as analytics that show traders’ share of profit or loss for a given collection.
super rare (rare)
SuperRare is an artist-first marketplace. In other words, the focus is on serving the needs of NFT creators, including supporting royalty streams on an ongoing basis. Home to exclusive collections from some of the world’s top digital artists, it’s the place to discover NFTs that have genuine aesthetic appeal beyond the base world of PFPs and pixelated anthropomorphic collections.
The RARE token is very heavily governance based, using a dedicated DAO to cluster the community around eligible artists, causes and galleries that deserve a spotlight. Membership in SuperRare DAO allows holders to curate the platform and control marketplace parameters. SuperRare is a very different beast from OpenSea and its ilk. Expect new use cases for the RARE token to be implemented as the platform matures, which will strengthen the bond between creators and collectors.
Rare (RGT)
Rarible isn’t exactly new to the NFT business; His platform was responsible for the mass movement of PFPs long before non-fungibles became the hottest token type in town. It has since been expanded by Ethereum to support five networks. You can now buy NFTs on Rarible aggregated from chains like Polygon, Immutable X, Tezos and Flow. The ability to make multiple NFT purchases in a single transaction is just one way Rarible is cutting gas fees.
Rarible’s native token has long been a cornerstone of the platform, but its role has evolved recently. That’s because the token that was once known as RARI has changed to Rarible Governance Token (RGT), giving it a greater focus on facilitating – that’s right – governance. Given the team’s focus on expanding the Rari protocol, it appears that RGT is being used to incentivize Web3 teams to build on its infrastructure. Expect to hear a lot more about RGT as the protocol begins to be adopted, with projects likely to get the green light whose business model returns value to RGT holders.
Nftfy
Who says you have to sell an entire NFT? Nftfy believes it should be easy to sell just a portion of an NFT, allowing its holder to free up liquidity without having to leave with the appraised asset itself. His fractional NFT trading platform has reached the product market and is now routinely used by individuals looking to sell or buy a portion of an NFT. In addition to its marketplace, Nftfy offers a crowdpad for NFT issuance, while RockPool is the place to purchase fractional blue-chip NFTs.
The NFTFY token will be used as collateral for new fractions placed in liquidity pools. Each pool must have NFTFY as part of its composition in order to be eligible for reward mechanisms and recognized as an official Nftfy pool. Additionally, NFTFY is the primary reward mechanism that encourages holders to place their floor NFTs in pools, which are essential to ensure there is sufficient liquidity for buyers.
The evolution of NFT platforms
As a technology, NFTs are not particularly new – at least in crypto terms. But as an industry, space has turned into a multi-billion dollar juggernaut in less than two years. In that short time we have seen a number of new platforms emerge across multiple chains to support the trading, staking, issuance, lending and fractional selling of NFTs.
Many of these platforms emerged with a native token built in, while others added one retrospectively. Some have even gone back to the drawing board, ripping up their token model and issuing an entirely new one. If you are considering buying NFT platform tokens, you should carefully review the project to determine the weekly fees, users, and other metrics that indicate steady growth.
In addition, however, you must take into account that many of these platforms are very new, often on networks that are themselves still fresh. In such cases, empirical data can only tell you so much, as their best years are yet to come. Pay close attention to the projects that are now being further built and innovated. They are the ones whose hard work will be rewarded when the market cycle flips again and NFTs break records and make headlines again.
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