A must-have NFT Bible for beginners: master all NFT knowledge in one article

Non-fungible token (NFT) is a unique Crypto project with blockchain management ownership. Including collectibles, game items, Crypto art, event tickets, domain names, and even ownership records of physical assets.

If you have been in the crypto world for a while, you may have heard of “non-homogeneous tokens”, or “NFT”. Maybe you are a skeptic, a believer, or maybe you still don’t know what a truly non-homogeneous token is. In any case, this article is for you!

As an NFT market, OpenSea has a unique advantage: since the first NFT standard appeared at the end of 2017, we have seen almost all NFT-related projects. In fact, if you ask us about the NFT project, we will bet you with a Gods Unchained card. We have already heard of it, and probably talked to the developers at some point! The NFT ecosystem is A close organization of an incredible group of innovators: each is a fanatic, from developers, gamers, entrepreneurs to artists. We are honored to be a member of this community.


▲Gods Unchained Card See https://opensea.io/assets/gods-unchained for details

This article aims to provide an in-depth overview of non-homogeneous tokens: the technical analysis of ERC721, the history of NFT, common misunderstandings about NFT, and the current state of the NFT market. We hope this makes sense for both newbies in the field and people who already know NFT but want to better understand the nuances of its internal workings.

What is a non-homogeneous token

Non-homogeneous assets are common assets. Homogeneous assets are strange assets!

Most discussions on non-homogeneous tokens start with the introduction of the concept of homogeneity, which is defined as “capable of being replaced or replaced by another identical item.” We think this complicates things. To better understand what might constitute a non-homogeneous asset, just think about most of what you have. The chair you sit in, your phone, your laptop, anything you can sell on eBay. All of these are non-homogeneous things.


Facts have proved that homogenized assets are actually rare. Currency is a typical example of homogenized assets. Five dollars will always be five dollars, no matter what the serial number on the bill is, and whether or not the five dollars are in your bank account. The ability to exchange one five-dollar bill for another five-dollar bill (or five one-dollar bills) is why currencies are interchangeable.

Interestingly, fungibility can also be subjective. Going back to the air ticket example: if a person wants to sit in a window seat or an aisle seat, he may not consider that two economy class tickets can be interchanged. Similarly, a rare coin may be worth 1 cent to me, but it is more valuable to coin collectors. We will see that when representing these items on the blockchain, some of the nuances become very important.

1.1 Non-homogeneous tokens based on blockchain

Just as we had cryptocurrencies (such as airline points, in-game coins) before the advent of crypto currencies, since the birth of the Internet, we have had non-homogeneous Crypto assets. Domain names, event tickets, game props, and even accounts on social networks such as Twitter or Facebook are irreplaceable Crypto assets; they only differ in terms of tradability, liquidity, and interoperability. Many of these are very valuable: Epic Games earned US$2.4 billion in clothing sales through the free game Fortnite in 2018 alone, and the event ticket market is expected to reach US$68 billion in 2025. Domain name The market will continue to grow steadily.


▲Fortress night https://www.investopedia.com/tech/how-does-fortnite-make-money/


▲For event market tickets, please see https://www.grandviewresearch.com/press-release/global-online-event-ticketing-market


▲For the domain name market, please see https://www.thedomains.com/2019/10/05/the-number-of-domain-names-sold-in-2019-has-already-surpassed-2018/

We have a large number of Crypto assets, but we have never really owned them.

Obviously, we already have a large number of Crypto assets. But to what extent do we “own” them? If Crypto ownership only means that an item belongs to you and not to someone else, then in a sense, you own them. However, if Crypto ownership is more like ownership of the physical world (freedom to hold and transfer unlimited), Crypto assets do not always seem to be the case. On the contrary, you own these assets in a specific “context”, which more or less does not make it easy to transfer them. Try to sell Fortnite skins on eBay, and you will find it difficult to transfer Crypto assets from one person to another.

This is where the blockchain is useful! Blockchain provides a coordination layer for Crypto assets, giving users ownership and management rights. Blockchain adds some unique attributes to non-homogeneous assets, changing the relationship between users and developers and these assets

  • standardization


Traditional Crypto assets-from event tickets to domain names-do not have a unified form of expression in the Crypto world. A game may present its internal collectibles in a way that is completely different from the event ticketing system. By representing non-homogeneous tokens on a public blockchain, developers can build universal, reusable, and inheritable standards related to all non-homogeneous tokens. These standards include the basic units of ownership, transfer, and simple access control. Additional criteria (for example, how to demonstrate NFT) can be assigned to the top level of the application to achieve a rich display.

This is similar to other building blocks of the Crypto world, such as JPEG or PNG file formats for images, HTTP for requests between computers, and HTML/CSS for displaying content on the web. The blockchain adds a layer to it, providing developers with a new set of stateful primitives on which applications can be built.

  • interoperability

The non-homogeneous token standard allows non-homogeneous tokens to be easily transferred across multiple ecosystems. When a developer launches a new NFT project, these NFTs can be immediately seen in dozens of different wallet providers, can be traded in the market, and recently can be displayed in the virtual world. This is possible because open standards provide clear, consistent, reliable, and permissioned APIs for reading and writing data.

  • Tradability

The most striking feature of interoperability is free trade in open markets. This is the first time that users can transfer items from their original environment to a market, where they can use complex trading functions such as eBay-style auctions, bidding, bundling, and can be sold into any other currency, such as stablecoins. And specific application currency.


▲See the eBay auction for details



▲See specific application currency for details


For game developers, the tradability of assets represents a transition from a closed economy to an open, free market economy. Game developers no longer need to manage every part of their economy: from the supply of resources to pricing, to capital control. Instead, they can let the free market do the heavy lifting!

  • fluidity

The instant transaction capability of non-homogeneous tokens will lead to higher liquidity. The NFT market can cater to different audiences-from core traders to more novices-allowing more assets to be exposed to a wider range of buyers. Just as the 2017 ICO boom gave birth to a new asset class driven by instant liquidity tokens, NFTs have also expanded the market for unique Crypto assets.

  • Proof of immutability and scarcity

Smart contracts allow developers to set a hard cap on the supply of non-homogeneous tokens and enforce persistent attributes that cannot be modified after the NFT is issued. For example, developers can programmatically force the creation of only a specific number of specific rare items, while maintaining an unlimited supply of more common items. Developers can also enforce specific attributes not to change over time by coding on the chain. This is especially interesting for art, because art relies heavily on the provable scarcity of original works.

  • Programmability

Of course, like traditional Crypto assets, NFT is fully programmable. CryptoKitties (which we will discuss later) integrates the reproduction mechanism directly into the contract that represents the CryptoKitties. Today’s many NFTs have more complex mechanisms, such as forging, crafting, exchange, and random generation. The design space is full of possibilities.

Non-homogeneous token standard

Standards are part of what makes non-homogeneous tokens powerful. They assure developers that the asset will behave in a specific way and describe exactly how to interact with the basic functionality of the asset.

2.1 ERC721

ERC721 was pioneered by CryptoKitties and was the first standard to represent non-homogeneous Crypto assets. ERC721 is an inheritable Solidity smart contract standard, which means that developers can easily create new ERC721-compliant contracts by importing it from the OpenZeppelin library (here is a useful tutorial on creating the first ERC721 contract). ERC721 is actually relatively simple: it provides a mapping from a unique identifier (each identifier represents a single asset) to an address, and the address represents the owner of the identifier. ERC721 also uses the transferFrom method to provide a permitted way to transfer these assets.

interface ERC721 {

function ownerOf(uint256 _tokenId) external view returns (address)

function transferFrom(address _from, address _to, uint256 _tokenId) external payable


If you think about it, these two methods actually represent what NFT needs: a method of checking who owns what and a method of transferring items. The standard has other fancy operations (some of which are very important to the NFT market), but the core of ERC721 is very basic.

2.2 ERC1155

ERC1155 was pioneered by the Enjin team and introduced the concept of semi-homogenization into the NFT field. With ERC1155, ID does not represent a single asset, but a category of asset . For example, an ID may represent “sword”, and a wallet may have 1,000 such swords. In this case, the balanceOf method will return the number of swords owned by the wallet, and the user can transfer any number of swords by calling transferFrom with the “sword” ID.


For more information about Enjin, please refer to https://enjinx.io/

interface ERC1155 {

function balanceOf(address _owner, uint256 _id) external view returns (address)

function transferFrom(address _from, address _to, uint256 _id, uint256 quantity) external payable


One advantage of this type of system is efficiency : when using ERC721, if users want to transfer 1,000 swords, they will need to modify the state of the smart contract for these 1,000 unique tokens (by calling the transferFrom method). But for ERC1155, developers only need to call transferFrom with a quantity of 1000 and perform a transfer operation. Of course, this increase in efficiency is accompanied by the loss of information: we can no longer track the transaction history of a single sword.

Also note that ERC1155 provides a superset of ERC721 functionality, which means that ERC1155 can be used to build ERC721 assets (you only need to have a separate ID and quantity1 for each asset). Due to these advantages, we have recently seen more and more people adopt the ERC1155 standard. OpenSea recently developed a repository for getting started with the ERC1155 standard on Github.




Analysis of ERC20, ERC721 and ERC1155 standards. ERC20 maps addresses to amounts, ERC721 maps unique IDs to owners, and ERC1155 maps IDs nested to owners and amounts.

2.2.1 Composability

Composables, led by the ERC-998 standard, provides a template through which NFT can own non-homogeneous assets and homogenous assets. There are currently only a few combinable NFTs on the main network, but we think there are many exciting opportunities to use them!

2.3 Non-Ethereum standard

Although Ethereum is where most actions are currently taking place, several other NFT standards have emerged on other chains. DGoods, pioneered by the Mythical Games team, is committed to providing feature-rich cross-chain standards starting from EOS. The Cosmos project is also developing an NFT module, which can be used as part of the Cosmos SDK.


▲ https: //mythicalgames.com/


Go to https: //dgoods.org/

Metadata of non-homogeneous tokens

As mentioned above, the ownerOf method provides a way to query the owner of the NFT. For example, by querying ownerOf(1500718) on the CryptoKitties smart contract, we can see that CryptoKitty is an account with address 0x6452 when #1500718 is written… This can be verified by OpenSea or CryptoKitties.co.


But how do OpenSea and CryptoKitties know what CryptoKitty #1500718 is like? What about its name and unique attributes?

This is the role of metadata. Metadata provides descriptive information for a specific token ID. For CryptoKittty, the metadata is the name of the cat, the cat’s picture, description, and any additional traits (for CryptoKitties, called “attributes”). For applications such as tickets, metadata may include the date of the event and the type of ticket in addition to the name and description. The metadata of the above cat might look like this:


“name”: “Duke Khanplum”

“image”: “https://storage.googleapis.com/ck-kitty-image/0x06012c8cf97bead5deae237070f9587f8e7a266d/1500718.png”

“description”: “Heya. My name is Duke Khanplum, but I’ve always believed I’m King Henry VIII reincarnated.


The question is how and where to store this data so that NFT applications can access it.

3.1 On-chain and off-chain

For developers, the first decision is to represent metadata on or off-chain. In other words, do you want to write metadata directly into the token smart contract or host it separately.

3.1.1 On-chain metadata

The advantages of representing metadata on the chain are: 1) Metadata and tokens exist forever, and will still exist after the life cycle of any application ends; 2) Metadata can be changed according to on-chain logic. If the asset is intended to have long-term value far beyond the initial creation, then point 1 is important. For example, a Crypto artwork is considered to be preserved in all ages, regardless of whether the website originally used to create the artwork still exists. Then, its metadata must exist at the same time as the life cycle of the token identifier.

In addition, on-chain logic may need to interact with metadata. For example, taking CryptoKitty as an example, the “generation” of CryptoKitty will affect the reproduction speed of CryptoKitty, and reproduction occurs on the chain (the reproduction speed of high-generation cats is slower). Therefore, the logic inside the smart contract needs to be able to read metadata from its internal state.

3.1.2 Off-chain metadata

Despite the benefits of on-chain metadata, most projects only store their metadata off-chain due to the current storage limitations of the Ethereum blockchain. Therefore, the ERC721 standard includes a method called tokenURI, which developers can implement to tell applications where to find metadata for a given item.

function tokenURI(uint256 _tokenId) public view returns (string)

The tokenURI method returns a public URL. Then in turn it will return a JSON data dictionary, similar to the CryptoKitty example dictionary above. This metadata should conform to the official ERC721 metadata standard before it can be used by applications such as OpenSea. At OpenSea, we hope to provide developers with the ability to build rich metadata displayed in our market. Therefore, we have added extensions to the ERC721 metadata standard, allowing developers to add content such as features, animations, and background colors.


3.2 Off-chain storage solutions

If you store metadata off-chain, you have several options:

  • Centralized server

The easiest way is to store metadata on a centralized server, or a cloud storage solution like AWS. Of course, this also has disadvantages: 1) The developer can change the metadata at will; 2) If the item of the metadata goes offline, the metadata may disappear from the source. In order to alleviate the second problem, some services (including OpenSea) now cache metadata on their own servers to ensure that even if the original hosting solution fails, they can effectively provide services to users.

  • IPFS

More and more developers, especially those in the field of Crypto art, are using InterPlanetary File System (IPFS) to store metadata offline. IPFS is a peer-to-peer file storage system that allows content to be hosted on different computers , that is, files can be copied in multiple different locations. This ensures that A) the metadata is immutable because it is uniquely addressed by the hash of the file, and B) as long as a node is willing to host the data, the data will continue to exist. Now there are services like Pinata, which make it easier for developers by handling the infrastructure for deploying and managing IPFS nodes, and the highly anticipated Filecoin network will (theoretically) add a point to IPFS. Layer to incentivize nodes to host files.


▲InterPlanetary File System is detailed at https://ipfs.io/


▲For Pinata, please refer to https://pinata.cloud/

The history of non-homogeneous tokens (2017 – 2020)

We have understood what non-inhomogeneous tokens are and how to build them, now let us take a deeper look at how they are produced.

4.1.0 BC: Before CryptoKitties appeared

The NFT experiment started with the appearance of colored coins on the Bitcoin network. Rare Pepes is the first illustration of the Pepe the Frog character established on the Bitcoin counterparty system. Some of them were already sold on eBay, and a set of Rare Pepes was later sold at a live auction in New York.


▲For details of colored coins, please see https://en.bitcoin.it/wiki/Colored_Coins


The first NFT experiment based on Ethereum is CryptoPunks , which consists of 10,000 unique collectible punks, each with a unique set of characteristics. CryptoPunks is created by Larva Labs and is characterized by its on-chain market that can be used with wallets such as MetaMask, which lowers the barrier to interact with NFTs. Nowadays, due to the limited supply of CryptoPunks and strong brand influence in the early user community, CryptoPunks may be the best choice for real crypto treasures. In addition, the fact that punks live on the Ethereum network allows them to communicate with the market and wallets (although they are slightly inferior to the new assets because they appeared earlier than the ERC721 standard).


4.2.0 BC: The Birth of CryptoKitties

CryptoKitties is the first project to push NFT to the mainstream. CryptoKitties was launched at the ETH Waterloo hackathon at the end of 2017. Its characteristic is that it is an original on-chain game that allows users to breed crypto cats together to produce new cats with different rarities. In the Dutch auction house, the “Generation 0” cat was auctioned off, and new cats can also be sold on the secondary market.


▲See the Dutch auction house for details


Although some people in the gaming community later marked CryptoKitties as “not a real game”, given the design constraints of the blockchain, the team actually made a lot of efforts to develop on-chain game mechanisms. To this end, they established an on-chain reproduction algorithm, which is hidden in a closed-source smart contract that determines the genetic code of the cat (which in turn determines the “attribute” of the cat). The CryptoKitties team even ensures the randomness of reproduction through an advanced incentive system, and has foresight to reserve certain low-ID cats as future promotion tools. Finally, they created the Dutch auction contract, which later became one of the main price discovery mechanisms of NFT. The excellent foresight of the CryptoKitties team has provided a huge impetus to the development of the NFT space.

We believe that the viral transmission of CryptoKitties can be attributed to:

  • Speculation

The breeding and trading mechanism of CryptoKitties brings a clear profit path: buy a few cats, breed them into a rare cat, speculate the cat, repeat (or simply buy a rare cat, and hope Someone will come and buy). This promotes the development of the breeder community: a user group dedicated to breeding and speculating rare cats. As long as new users enter and play the game, the price will rise.

At the peak of the frenzy, the trading volume of CryptoKitties was close to 5,000 ETH, of which Genesis Cat#18 was sold for 253 ETH (the price at the time was $110,000). This transaction was later defeated by Dragon Cat’s 600 ETH sales, which was at $170,000 (September 2018), although many people speculated that Dragon sales were illegal. These high prices have attracted more users into the gold rush.



  • Viral story

Another success of CryptoKitties lies in its story. CryptoKitties is cute, shareable, and fun-and the idea of ​​buying a $1,000 crypto kit is so absurd that it becomes a good news story. In addition, the excessive use of smart contract users has “destroyed Ethereum”, which is a story in itself. Since Ethereum can only process a limited number of transactions at a time (approximately 15 transactions per second), the higher throughput on the network has led to an expansion of the pending transaction pool and an increase in gas fees. The daily average pending transactions increased from 1,500 to 11,000. New potential cat buyers are paying sky-high fees and have to wait several hours to confirm the transaction.

These factors have led to the “CryptoKitty bubble” : new demand enters the CryptoKitty world, and price increases and price increases have brought new demand. Of course, all bubbles will eventually burst. At the beginning of December, the average price of kittens began to fall, and the volume of transactions also began to fall. Many people realize that, compared to “real games”, the CryptoKitties gameplay is primitive and will not attract more speculators. Once the novelty disappears, the market suffers. Today, the weekly trading volume of CryptoKitties is about 50 ETH.


4.3 2018: Hype, hot games and layer 2

Despite the market downturn, the early days of CryptoKitties provided a magical moment for many people. This is the first time a team has deployed a blockchain-based non-financial application, and the application has entered the mainstream of technology, although this is only a few weeks away. After CryptoKitties, as investors and entrepreneurs began to think about new ways to own crypto assets, NFT experienced its second small-scale hype in early 2018.


4.3.1 Layer 2 games and experiences

After CryptoKitties, an innovative “Layer 2” game appeared. This game was built on top of CryptoKitties by third-party developers and has nothing to do with the original CryptoKitties team. The magic of CryptoKitties is that this type of experience can be borrowed from development “for free”: developers only need to put their own applications on top of a public CryptoKitty smart contract. In a sense, CryptoKitty can have its own life outside of the original environment. For example, Kitty Race allows you to race against CryptoKitties to win ETH, and KittyHats lets users decorate their CryptoKitty with hats and paintings. Later, Wrapped Kitties combined Kitties and DeFi, allowing you to trade CryptoKitties on decentralized exchanges by turning CryptoKitties into exchangeable ERC20 tokens, thus having various interesting effects on the CryptoKitty market. Dapper Labs (the newly formed company behind CryptoKitties) accepted these projects and established KittyVerse.


▲For Layer 2 games, please see https://www.coindesk.com/the-emerging-trends-in-the-blockchain-gaming-world

4.3.1 Drumming and passing flowers game

This period also appeared in the hot potato (drumming and passing flower game) game. If you already know what a hot potato game is, then you are a true NFT expert. In January 2018, a game called CryptoCelebrities was released. Its mechanism is very simple. First, buy a celebrity NFT that can be collected. Soon, the celebrity becomes a celebrity who can be purchased (or “predated”) at a higher price, which is some increase in the previous price. When someone buys your celebrity, you can earn the difference between your purchase price and the new purchase price (minus developer fees). As long as someone is willing to buy your celebrity, you will make a profit. However, if you become the last person to hold a celebrity, you will lose money.

Due to this speculative mechanism, the CryptoCelebrity mechanism proved to be extremely viral, and celebrities like Donald Trump were sold at an astronomically high price (123 ETH, at that time $137,000). Although the CryptoCelebrity game may harm the entire market space, in fact, we believe that the practice of pricing and auction mechanisms is an exciting part of the NFT design space.

4.3.3 Interest of venture capital

At the beginning of 2018, venture capital and crypto funds also became curious about the NFT financial sector. CryptoKitties raised $12 million from top investors, and in November it raised another $15 million. Rare Bits, founded by the co-founders of Farmville, raised US$6 million in early 2018, and blockchain game studio Lucid Sight also raised US$6 million. Later, Forte and Ripple jointly raised a $100 million blockchain game fund. Immutable (the company behind “Gods Unchained”) raised $15 million from Naspers Ventures and Galaxy Digital. Led by Javelin Venture Partners, Mythical Games has raised $19 million for a flagship game Blankos Block Party on EOS.

OpenSea has received moderate seed round financing and strategic investment to further realize our vision of establishing a general open market. Thank you very much to all our investors!

4.4 2018 – 2019: Back to construction

After the small hype cycle in early 2018, the NFT project settled down and people returned to construction. Teams such as Axie Infinity and Neon District, which started shortly after CryptoKitties, put more emphasis on their core enthusiast community. NonFungible.com launched a tracking platform for the NFT market and consolidated the term “non-homogenization” as the main term for describing new asset classes.


▲For NonFungible.com, please visit https://nonfungible.com/

4.4.1 Digital Art

Around this time, the art world became excited about NFT. Facts have proved that Crypto art is very suitable for non-homogeneous tokens. One of the core elements of the value of artwork is that it can reliably prove the ownership of an artwork and display it somewhere, which has never been realized in the Crypto world. So a group of excited Crypto artists began to try.

The Crypto art platform also came into being. SuperRare, Known Origin, MakersPlace and Rare Art Labs have all established platforms dedicated to publishing and discovering Crypto art. Other artists such as JOY and Josie have deployed their own smart contracts to create a real brand for themselves in the field. Cent, a social network with a unique micropayment system, has also become a popular community for people to share and discuss the art of encryption.


▲Cent see https://www.cent.co/ for details


▲Josie’s “Tune In”, an crypto artwork, sold on OpenSea for 6 ETH.

4.4.2 NFT’s casting platform

The NFT casting platform makes it easier for anyone to cast NFTs, regardless of whether they have the development skills to deploy smart contracts.

In mid-2018, Digital Art Chain launched a project that allows users to make NFTs with any Crypto images uploaded. This is the first project of the project. In the same year, a project called Marble Cards added an interesting change, allowing users to create unique Crypto cards based on any URL in a process called “Marbling”. This will automatically generate a unique design and image based on the content of the URL, and cause some controversy over the “marbling” of encryption art in the Crypto art world.


▲For details on Digital Art Chain, please visit https://Cryptoartchain.com/


▲For details of Marble Cards, please see https://marble.cards/

In 2019, the foundry tool was significantly mature, although there were still frictions in the process of recruiting new employees. Mintbase and Mintable have established a site dedicated to making it easier for ordinary people to create their own NFT. The Kred platform allows influential people to easily create business cards, collectibles and coupons. Kred also collaborated with CoinDesk’s consensus conference to create a Crypto NFT “gift package” project for attendees. OpenSea created a simple storefront manager to deploy smart contracts and add NFTs to it.



Coming to 2020, these platforms, as well as Rarible and Cargo, have evolved and have more features for batch creation, unlockable content and rich media. In this way, artists, Crypto creators and even musicians can create NFTs without writing smart contracts. By the end of this year, OpenSea eliminated the need to pay for the natural gas costs associated with casting and thus produced NFTs for free.



4.4.3 Traditional IP foothold

After CryptoKitties, traditional IP owners have made many attempts in the field of crypto collectibles. Major League Baseball MLB cooperated with Lucid Sight to launch a “MLB cryptocurrency” mainly based on the on-chain baseball game in April 2018. Formula 1 collaborated with Animoca Brands to launch F1DeltaTime, which sold a 1-1-1 car powered by OpenSea for $100,000. “Star Trek” (Star Trek) launched a series of spacecraft in the Lucid Sight game CryptoSpaceCommanders, and several licensed football trading card companies went online, including Stryking and Sorare. Recently, Panini America, one of the largest sellers of physical collections, released a blockchain-based transaction card collection. MotoGP also cooperates with Animoca to develop blockchain games.


▲For details of Panini America’s release, please refer to https://defirepublic.com/panini-america-enters-blockchain-collectibles-market/


▲For details of the cooperation between MotoGP and Animoca, please refer to https://www.coindesk.com/animoca-to-develop-motogp-blockchain-game-with-crypto-collectibles



4.4.4 Japan takes the lead in entering the market

Japanese games have created more advanced user gameplay, thus attracting early user groups. MyCryptoHeroes , an RPG game with complex in-game economy, turned out, and continues to rank high on the DappRadar rankings. MyCryptoHeroes is one of the first games to combine on-chain ownership with more complex off-chain gameplay. Users can use their heroes in the game and then transfer them to Ethereum when they want to sell them on the secondary market.

4.4.5 Virtual World Expansion

The new blockchain native virtual world has launched NFT to acquire land ownership and assets in the world. Decentraland raised US$25 million for its MANA token in the ICO, and packaged and sold US$10 million of land in its virtual reality metaverse. The trading volume of Decentraland’s LAND NFT surpassed any other NFT for most of 2018. The Decentraland project now has some fairly good early experience public betas, such as “Battle Racers”, a racing game that can be played in Decentraland.



1620008644984982▲ https://battleracers.io/

Another virtual world project, Cryptovoxels, takes a more streamlined approach. CryptoVoxels launched a very simple webVR experience with only one developer in mid-2018, gradually expanding its universe, and carefully selling land that does not exceed existing needs. Today, the trading volume of CryptoVoxels has exceeded 1,700 ETH, and the average price of land is also steadily increasing.


▲For details about Cryptovoxels, please visit https://www.cryptovoxels.com/

The most exciting element of CryptoVoxels (and Decentraland) is the ability to showcase your NFT around the world. Collecting enthusiasts have created the CryptoKitty Museum, Cyberpunk Art Gallery, NFT Adventure Calendar, a tower with top NFT projects, and shops around the world where you can wear your virtual avatar. The CrypoVoxels environment is growing rapidly among Crypto artists, especially among the users of Cent, a new content platform that focuses on the cryptocurrency crowd. Some artists are even using Roll (an application that can easily deploy new ERC20 tokens) to create their own currency or “social currency” and put their artworks on social currency for sale.

Other virtual world projects have also appeared one after another, including Somnium Space, and the creator of Second Life’s project High Fidelity. The Sandbox recently launched a land sale for its Roblox-like universe, aimed at enhancing the capabilities of creators and content creators. It is one of the most anticipated blockchain games.


▲ https: //www.sandbox.game/en/


At the end of 2017, Enjin raised 75041 ETH in its ICO and expanded its “multiverse” platform, which is a gaming ecosystem based on the ERC1155 standard. One of Enjin’s core value propositions is the ability to easily bring props from one game to another. For example, the Enjin team released a “universal” (not for a specific game) “Oindrasdain Axe”. Forgotten Artifacts added this axe as an equipped weapon in the game, giving players who already have it a reason to try their game.



4.4.6 Trading Card Game

From the beginning, trading card games have been very suitable for NFT. A physical card game like Magic the Gathering is not just a game. It is a complete economy with dozens of supporting websites and markets for trading and bartering. Although Crypto versions of Magic, like Hearthstone, can theoretically establish an in-game market for their cards, this effort can be cumbersome and may not necessarily be in line with the business model of selling new card packs. Blockchain can realize a secondary market that can operate outside the game in real time.



After they pre-sold $5 million of cards, Immutable launched Gods Unchained , which is arguably the most promising blockchain game on the market. When the trading card game “Hearthstone” was banned due to a professional player’s protest against Hong Kong politics on a live broadcast, Gods Unchianed entered the mainstream game’s field of vision. Gods Unchained issued the following announcement:


▲ https: //www.theverge.com/2019/10/8/20904308/hearthstone-player-blitzchung-hong-kong-protesters-ban-blizzard

Before the game was released, the Gods Unchained team “locked up” the card for a long time (allowing deviations from the core ERC721 function). During this period, third-party markets allow users to sell cards, but they cannot actually be purchased because they cannot be transferred. When the card was unlocked in November, the Gods Unchained market suddenly opened, with secondary transaction volume exceeding $1.3 million.

Some other card games are also quietly building for followers. Horizon Games’ Skyweaver raised $3.75 million in seed funding from Initialized and released its public beta. Epics became the first blockchain-based collectible e-sports trading card, and CryptoSpells is a trading card game in Japan , In a leading position in the Japanese trading card market.


4.4.7 Decentralized Domain Name Service

The third largest NFT “asset class” (after games and Crypto art) is a domain name service, similar to the “.com” domain name, but based on decentralized technology. The Ethereum name service was launched in May 2017 and was funded by the Ethereum Foundation. 170,000 ETH was locked in the name from 2017 to 2018 (as long as the bidder himself holds the domain name, the bid that is successfully bid will be locked. In the contract). In May 2019, the team upgraded the ENS smart contract to be compatible with ERC721, which means that the name can be traded on the open NFT market.


▲ https://ens.domains/

In October, we cooperated with ENS to conduct an auction of 3 to 6 character names using the British auction mechanism. 50,355 bids were made for 7,670 names. The total value of all winning bids reached 5698.97 ETH. Learn some interesting statistics about auctions here.


Unstoppable Domains recently debuted with a decentralized domain name system backed by more venture capital, raising $4 million in Series A financing from Draper Associates and Boost VC. Unstoppable Domains was originally built on the Zilliqa blockchain and recently released the .crypto domain as an ERC721 asset.



The Kred team is working on developing an NFT compatible with both ENS and DNS. Holding Kred Domain Token in your wallet can grant you the authority to manage the name on DNS (link to website) and ENS (link to wallet or contract).



4.4.8 Other experiments

Although most experiments in NFT are conducted in collectibles and games, other use cases are gradually coming online. Both NFT.NYC and Token Summit sell event tickets in the form of NFT, and the Coin.Kred team also released a “NFT package” for the event. Binance recently started releasing holiday collections, and Microsoft has also released Azure Heroes, a badge awarded to contributors to the Azure ecosystem.




NFT’s first major event in North America was NFT.NYC 2019. Nearly 500 attendees and more than 80 speakers met at the iconic Times Square in New York City to discuss the emerging NFT ecosystem.

The Crypto Stamp project of the Austrian Postal Service provides a convenient way for people who purchase official physical stamps to enter the world of Crypto collectibles. Every stamp has an opaque part that can be scraped off. Below the scratch area, buyers will find a private key containing a small amount of ETH and a Crypto copy of the physical seal, and they can then sell these private keys on OpenSea. This project is particularly interesting because it links the scarcity of Crypto assets with useful physical assets and attracts the existing collector community.

Dapper Labs, the creator of CryptoKitties, has launched a tournament style game called CheezeWizards . Interestingly, due to the initial error in the smart contract, the game had a hard fork, resulting in the existence of two wizards, “unpasteurized” and “pasteurized” at the same time. The project has complex on-chain gameplay, which highlights The need for more standards around NFT metadata, contract upgradeability, and the ability to update the changes in the core attributes of commodities during the auction process.


4.4.9 Loss and Gain

The past few years are not without gain. Almost all hot potato games of early 2018 have now dissipated (although these assets are still available for viewing on OpenSea). Interestingly, some of these projects were resurrected by community members. Both CryptoAssault and Ethermon (now Ethermon) were restored by their communities. Another attempt to revive crypto celebrities by joining celebrity breeding games also failed.


▲For details of CryptoAssault, please refer to https://cryptoassault.io/

The myth of non-homogeneous tokens

Now that we have an overview of this area, let’s talk about some misunderstandings.

  • Only scarcity can drive demand

In the early days of the NFT ecosystem, people believed that users would care about the provable scarcity of NFTs, and they were eager to buy NFTs just because they were on the blockchain. On the contrary, we believe that demand is driven by more traditional forces: practicality and provenance. The practicality is obvious: I am willing to buy NFT tickets because it allows me to participate in meetings; if I can display a piece of art in the virtual world, I would prefer to buy it; if it can bring me special in the game Ability, I am also willing to buy an item. The concept of provenance summarizes the story behind an NFT. Where did it come from? Who ever owned it? As this field matures, the story of NFT will become more and more complex and interesting, and the value of the corresponding token will also move accordingly.

  • Smart contracts mean that assets will always exist

There is also a view that just because smart contracts are deployed, assets will always exist. This ignores the fact that there are other entities (websites, mobile applications) that act as portals for ordinary users to interact with these applications. If these portals break down, these assets will lose a lot of value. Of course, in the future, decentralized applications may be deployed in a completely distributed and “unstoppable” manner, but now, we live in a world where both centralization and decentralization coexist.

  • Abstracting it out will solve all our problems

In 2018 and 2019, some projects adopted an “abstract blockchain” approach, hiding all the mechanisms of NFT from users by providing user name and password authentication for escrow wallets. This is an interesting method because it allows the access experience to be as silky as a centralized application. But the problem is the loss of interoperability with the NFT ecosystem (virtual world, wallet, market). We found that inserting into the existing NFT ecosystem may sacrifice some usability in the short term, but it is often more attractive for current early community experimenters.

Non-homogeneous token market

6.1 Current market size


▲Editor’s note: The data comes from the first quarter of 2020 when the source article was written

Due to insufficient spot prices of assets, the market for non-homogeneous tokens is still small and more difficult to measure than the cryptocurrency market. For this analysis, we will focus on secondary transaction volume (ie, peer-to-peer sales of non-homogeneous tokens) as an indicator of market size. Through this indicator, we estimate that the monthly trading volume of the current secondary market is about 2 to 3 million US dollars. In the past six months, the following projects have led this trend.

6.2 Market growth


The number of users interacting with NFT is defined by transfer, bid, purchase or sale. Although the market is in its early stages, its growth is stable.

After the CryptoKitties bubble at the end of 2018, the number of unique accounts interacting with NFT grew slowly but steadily, from approximately 8,500 accounts in February 2018 to more than 20,000 accounts in December 2019. The market seems to be driven by a core group of powerful users. On OpenSea, the median seller has sold $71.96 worth of things, while the average seller has sold $1,178 worth of things, which shows that there are a large number of powerful sellers. Please note that a large account like the official game account does increase the average. The average purchase value of OpenSea buyers was $943.81, while the median purchaser’s purchase value was $42.72.

Considering its early appearance, the best way to measure market growth may be to look at a leading indicator: the interest of developers in the field. Last year, with the addition of new developers, the number of mainnet ERC721 contracts increased exponentially and reached 1,000 in June 2019.



6.3 Sales mechanism

NFTs are currently mainly sold as ETH on decentralized exchanges. Surprisingly, stablecoins like DAI or USDC are rarely traded, possibly due to the friction of obtaining stablecoins. Dutch auctions and fixed-price auctions are often used to sell lower-priced items, while British (eBay-style) auctions are often used to sell higher-priced items, such as valuable Gods Unchained cards or legendary game items. . Bundling is also a very popular sales mechanism, and the proportion of bundled sales has steadily increased to 20% in December this year.

6.4 NFT distribution

One question you might ask is: What are the overlaps between the various NFT projects? Is the community around the project relatively isolated (“Gods Unchained” players can only play “Gods Unchained”), or will there be mutual infiltration between communities? Is it possible for CryptoKitties enthusiasts to own the ENS field and participate in the Crypto art ecosystem?

Takens Theorem is an anonymous but very friendly Twitter account with some wonderful analysis of the blockchain ecosystem (highly recommended to follow!) and an analysis of the overlap between various NFT communities.


The figure below is a network diagram of NFT based on the raw data of about 400,000 addresses on OpenSea. On the outer ring, each network is composed of addresses that uniquely have a type of NFT. The number of nodes shown in the figure represents the number of nodes in the actual data-for example, thousands of addresses have only CryptoKitty. The size of the nodes in these graphs is determined by the number they have.


▲NFT is based on the network diagram of the raw data of about 400,000 addresses on OpenSea

In Gods Unchained, you can see that many addresses have many cards (a deck of cards!). Light gray nodes connected to NFT items indicate prominent co-ownership patterns. It can be seen on the right side of the entire image that thousands of addresses have NFTs for two games. However, there are other smaller co-ownership systems, such as between Cryptovoxels and Decentraland, and between ENS and many other projects, which are represented by decentralized connections between different projects.

6.5 What is the next step for NFT?

If you can get to this point, we congratulate you! We hope that you can learn a lot from the fun and weird world of NFT, and be inspired to understand some projects, and maybe even build a project of your own.

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