NFTs Weekly: 21 May 2021
Forte 'silent' raise, Nifty Gateway controversy & Crypto Twitter philanthropy!
Silent assassins Forte raises at $1bn valuation
Recently Forte announced they raised $185M at $1b valuation. Forte is an infrastructure company that builds technology around blockchain games.
This is another announcement that follows the fundraising frenzy of blockchain games - showing VCs are aggressively targeting this massive industry. Great for everyone.
However, what I found particularly interesting were the traction metrics that Forte quoted. They claim to have:
10 live games using their blockchain
10 million crypto wallets created
5 million NFTs minted in their games
These are pretty impressive numbers if true. However, as someone whose literal job is to learn about blockchain games, I am not aware of what games are actually using them or where these wallets / NFTs are.
It’s a big reminder that most of us live in a bubble of “CryptoTwitter”. We build based on this audience, get feedback (and investment) based on this audience, and don’t take much stock of what else is going on outside.
Forte have pretty much been completely silent within the CT space. I’m not sure whether that is the right strategy. Clearly investors knows something we don’t, as they’ve thrown significant funding behind this project.
Taking guesswork a step further, I suspect that a lot of the funding is actually going towards providing minimum guarantees for a lot of the studios they partner with. So games they work with have guaranteed revenue and are de-risked when introducing new technologies into their game. Would love to learn more if anyone knows!
Nifty Gateway hiatus - top collectors say no!
One of the more controversial topics for the week - allegedly a group of the top 20 NFT collectors have abandoned Nifty Gateway.
This includes 888 & Loopify - OG collectors in the space
No comments have been made publicly on why they have done this. I can only make a speculation on the reasons.
Note: This is not meant to be criticism, just product speculation from an uninformed outsider.
Celebrity Drops: Nifty Gateway have increasingly become a destination for ‘celebrity drops’. Bigger names = more money and growth for NG. Makes sense, but there are two main issues with celebs. First, celebrities just dump (low quality) NFTs, make money and leave. They don’t actually grow the community. Second, traditional crypto artists are likely being pushed down the priority list to make way for ‘bigger’ names. Again something that doesn’t help build the space.
Open Editions: The sale format of “open editions” has gotten a bit out of control. The problem is they are time (not supply) limited, meaning they incentivize scalping. Specifically, you are scalping to those who could not make the 5 minute drop window but who still want to support the artist. This makes it incredibly hard for the art community to grow. My understanding is that scalping got so bad, that these days it’s not even worth it to buy open edition, and instead you should just wait for the market to dump as scalpers compete with each other to sell at a loss.
Drawing Bots: Since the introduction of “drawings”, NG has seen a huge amount of what look like bots. These accounts enter into the drawing, probably win most of them, and then sell to real collectors. Again, not great for the space. Bots are designed to extract, and give nothing to the art.
Withdrawal limits: I believe NG currently also has a withdrawal limit of $5k USD per week via Gemini. This is very small for top-end collectors who may be buying / selling significant amounts. An implication of low withdrawal limits is that money is TRAPPED in the ecosystem. What this results in is people just re-investing money that is locked back into drops (similar to when NBA Top Shot had severe withdrawal constraints and prices skyrocketed). Ultimately the bubble pops. Probably reg constraints here though.
Payment constraints: I may be wrong, but I believe NG requires collectors to deposit ETH or use a credit card before you bid on auctions. Meaning collectors COULD be depositing $100-200k+, AND not getting the artwork (because they lost the bid), AND having a pending credit card transaction. Or maybe credit cards sometimes just get declined and people can’t bid for what they want.
Note: I still think NG has done incredibly well from a user experience and partnership perspective. and these are all solvable issues. Just putting on my product hat. It’s likely just incredible hard in practice to change things (taking into account engineering, stakeholders, regulations, etc), and is even more complicated behind the scenes.
CryptoTwitter donations changing lives (UpOnly)
Earlier this week on UpOnly, a stream hosted by CryptoCobain, had crypto twitter donating $800k+ to J.O., a young boy who beat cancer.
Over 300 donations poured into their address - no doubt lifechanging for their family. This continues the recent phenomenon of ‘CryptoTwitter’ jumping onto a Twitch stream and donating cryptocurrencies to a stranger!
It’s likely been driven by the massive upswing in Crypto since Jan 2021, which has allowed many early investors to now become financial independent, and are able to pass on their massive wealth to help others.
No doubt even “small” donations like $5,000 can be lifechanging for some, and this money culture shines a positive spotlight on the crypto space generally.
Huge props to the big Twitter influencers for leading the charge as well, some of them personally donating $100-200k!
I predict that we’ll see more and more social initiatives come up from Crypto (Not-for-profit DAOs?), which is correlated with the rise of price of BTC and ETH
Tried a new format this week with longer form opinions. 🤷