Along with cryptocurrencies, NFTs (non-fungible tokens) are another digital asset that is becoming increasingly popular among investors. NFTs have currently taken the art, collectibles, metaverse, and gaming sectors by storm. Moreover, celebrities like Snoop Dogg and Stephen Curry have joined the bandwagon by creating NFTs to represent their brands.
At the time of writing this article, there are only a handful of NFT projects with use cases. However, as the market grows, these use cases are becoming more diverse. While there are numerous NFT projects that you can invest in, few projects stand out from the crowd and show great potential for the future. This article takes a look at 5 of the top NFT projects and collections.
What is a Non-Fungible Token?
According to The Verge, NFTs are simply unique assets that cannot be traded or swapped with something else. While assets like bitcoin can be traded (fungible) – i.e. one bitcoin for another bitcoin – one NFT can’t replace another. For example, an NBA Top Shot cannot be replaced by another NBA Top Shot. Each Top Shot has unique features that make it non-fungible.
What makes an NFT Top Tier?
NFTs have been around for a while, but it wasn’t until the early months of 2021 that they skyrocketed in popularity due to numerous high-profile sales. Great examples include an NBA top shot clip of Lebron James that sold for $208,000 and an art piece by digital artist Beeple that sold for $69.3 million.
While these two assets were valued depending on the celebrity or individual attached to them, other NFTs are weighted differently based on the four components mentioned below:
The utility value of an NFT is dependent on how the NFT can be used. While most NFTs represent sentimental value, there are a few NFTs that have actual uses. For instance, two major NFT categories with high utility are in-game NFT assets and metaverse NFT assets. A good example is the blockchain-based gaming platform, the Axie Infinity project. Axie Infinity allows players to earn rewards in the form of cryptocurrency tokens, which can then be exchanged for money or re-used in the game to buy assets.
2. Ownership History
The value of NFTs greatly depends on the identity of the creator, issuer, and its previous owners. Top NFT projects possess strong historical value. An NFT with a strong historical value that includes celebrities and well-known companies are often highly valued. For instance, CryptoPunks are highly valued since they are attached to Larva Labs, a renowned development company with a strong brand.
3. Future Value
The future value of an NFT can be derived from its utility, valuation changes, and future cash flow. In most cases, price valuation is driven by speculation. While some consider this a negative factor, speculation is human nature, more so in sentimental assets.
Future cash flow depends on the trading price history of an NFT and the royalties paid to the initial developer. In cases where the trading price constantly increases and the developer receives higher royalties, they may be incentivized to add more utility to the NFT, thereby increasing its value in the future.
High liquidity results in a highly valued NFT asset. A highly liquid NFT markets mean that the assets are in demand and can be easily traded. It is crucial to note that liquidity largely depends on the blockchain on which the token was created. For instance, ERC standard NFTs can be traded relatively quickly without friction on secondary markets with investors who hold ETH, thus increasing the number of potential buyers.
Top 5 NFT Token Projects and Collection
Launched in June 2017, Decentraland one of the top NFT projects, is a virtual reality platform built on top of the Ethereum Protocol. MANA is an ERC-20 token that must be burned to generate the NFT ERC-721 LAND tokens. Users who own MANA are free to create digital environments and Dapps such as games, themed communities, and estates. These assets can be monetized by either selling or renting out the piece of land and creating digital art galleries to host art auctions, to mention a few.
Unlike other metaverses, Decentralized is not controlled by a single entity. Instead, it is governed by MANA, LAND, and Estate token holders through a decentralized autonomous organization. Due to the diverse applications of Decentraland, the large community, and the limited amount of assets, its value is expected to grow in the future.
2. Axie Infinity
Developed in 2018, Axie Infinity, another project on the list of top NFT projects, is an NFT blockchain-based trading and battling game inspired by games like Pokemon. The Axie infinity metaverse includes a play-to-earn feature that provides users with regular income. The platform has four main features: battle, breeding, land, and the marketplace.
The battle is a turn-based card game that allows players to defeat opponents using their Axie NFT and earn rewards. Users can also breed their Axies to create offspring that are sold, bred, or deployed into battle. The homeland of the Axies is known as Lunancia, and it’s divided into 90,601 plots, and players can discover AXS tokens on their plots.
There is a governance token for the Axie infinity ecosystem called Axie Infinity Shards (AXS). AXS tokens are meant to reward players while incentivizing users to hold AXS tokens for the long term to keep the governance decentralized.
Blockchain-based gaming has been on the rise since 2017. Axie Infinity’s success can be significantly attributed to its integration of cryptographic and blockchain-based elements into a gaming experience built on traditional turn-based battle games. As a result, Axies Infinity’s success is not yet over; its prices are set to skyrocket as the community grows.
Launched in 2017 by Larva Labs as one of the first NFT projects on Ethereum, CryptoPunks are a series of avatars with a pixelated design. Each punk (avatar) was algorithmically generated, and the collection is limited to 10,000 punks. While human punks are the most popular, the collection is also composed of Alien Punks, Ape Punks, and Zombie Punks.
Being one of the leaders of profile picture NFTs and among the top NFT projects of all time, CryptoPunks are mostly purchased for sentimental value or price speculation purposes, but their value lies in their scarcity and a highly liquid market. No single CryptoPunk is the same as another. As a result, the rarer the item, the higher its value.
While the floor value of CryptoPunks is relatively high, the scarcity and highly liquid market make them profitable.
4. Proof of Beauty (PoB)
PoB is another innovative top NFT project focused on documenting the history of the top NFT and ethereum blockchains. PoB’s first series, HASH, allows users to record personal and historical blockchain transactions and represent them in beautiful NFT artwork.
For instance, HASH contains the history of Vitalik’s first ethereum transaction and Jay-Z’s Cryptopunk purchases in the form of artwork. PoB integrates the transaction data with beautiful color pallets, shapes, and textures. While most PoB products might seem like regular art, the historical value of PoB assets is of high value due to the attached owners.
5. The Sandbox
Launched in 2011, The Sandbox is another NFT blockchain-based gaming platform on the list of top NFT projects that allow users to create, buy, sell and invest in digital assets in the form of a game. It’s designed to disrupt the traditional gaming sector in which platforms own and control user-generated content, and the rights of the creators are limited. In The Sandbox, users have total ownership and control of their in-game assets.
The Sandbox is made of three primary products: VoxEdit – allows users to create 3D objects, a marketplace – a venue where users can publish their objects and The Game Maker, which allows users to create 3D games for free.
The Sandbox is governed by the ERC-20 token, SAND, which allows users to cast votes on the platform, make transactions, and interact with other users. SAND also allows users to buy ASSETS and LANDS (digital real estate). Finally, users can stake SAND tokens to acquire more SAND and gems and catalyst – two more types of tokens sold on the marketplace for profit.
Humans are naturally known to flaunt their wealth, whether it’s an expensive piece of artwork, rare jewelry, exotic cars, and now by owning assets in top NFT projects similar to the ones listed above. NFTs have introduced novel ways for people to verify the authenticity of rare and expensive items, making it easy for anyone to purchase assets and prove their ownership through the blockchain. While many consider it to be a bubble, numerous artists, developers and artists have found a way to monetize their products and sell them to high-end clients quickly and securely.