Every Type of NFT Utility Explained | DAO, Staking, Burning, Breeding, Utility Tokens and More!

What’s going on everybody it’s another great day live in the brett way and today we’re going over all sorts of nft utility that we see a lot of projects using out there let’s get into it all right so you might be somewhat new to the nft space or maybe you’ve been around for a while but what we’re seeing.

And hearing a lot is what utility do these nft projects have behind them when you’re trying to make a buying decision okay so the term utility let’s start there utility just means what value are they adding to the project what use cases are there for that nft on top of the art okay so of course there are a lot of nft projects where it’s just high.

Art like think curated art blocks where you people are literally buying it just like they’re buying a mona lisa or just a nice piece of art for their house they’re literally just buying these curated art block projects or pieces because they like the art and that’s it there’s nothing else to it so in the avatar.

Profile picture category of nfts these are really community based so we’re hearing a lot of these terms called utility and so there are a lot of buzzwords out there that a lot of bad actors are using to exploit but also a lot of projects that have been innovating by implementing these d5 mechanics in their nft projects and.

Community so we are very heavy in community on these avatar profile picture projects that’s why i think it is very smart for a lot of these projects that have good intentions and good plans to be implementing these defy mechanics so the very first concept i want to start with is a dao because there’s been a lot of controversy around.

The dow turtles and open sea taking them down a very quick brief explanation of what happened is they were just very heavily promoting the fact that you could earn the keyword the buzzword passive income by holding a dow turtle since they were overly stating that you can make money from this it comes off like a security so openc decided to take.

Them off the platform i am not a fan of openc making those censorship decisions like that i understand why they had to do it it’s a pretty clear guideline in a pretty clear line that the dow turtles crossed so i understand but that is kind of putting a negative perception on the word dao right now you guys can understand that daos are a great thing.

It should absolutely be implemented by every nft project in my opinion because the end goal for all of these nft projects and communities is to be making decisions together and it should not be centralized by a business or one or two leaders in my opinion and i think dials are the perfect way to spread out decision making overall create.

Governance in the ecosystem so let’s go ahead and jump into daos a little deeper with some graphics because i know i’m a visual learner it’ll be much easier to explain from there let’s hop into the charts all right so first off i want to lay down a very clear concise definition of a dow so you understand what the broad.

Concept is and to do that i’m going to use this tweet so you can read along with me i know i might talk fast but i want to give as many visual representations here as possible so this is from she generates and basically they’re saying a dao is a decentralized autonomous organization unity now members vote on how to spend pooled.

Funds then funds are moved automatically by smart contracts when votes pass how to get paid by a dow pick a dow write docs memes codes etc basically do work then members vote to pay you through the dow’s money all right so now that we have a clear definition i want to show you guys a chart and kind of give you my explanation how i understand and how i.

Think about it so basically it’s going to be centralized versus decentralized versus distributed network but let’s focus on the first two for now basically a centralized network is like a corporation or just a business where you basically have a ceo and like a leading team where they make all the decisions and then they outsource all.

The work to their team members to people in the organization in the company but the people at the top make all the decisions and then the other people really come around and just do the work where a decentralized network actually have a widespread group of people all making decisions but they have the same common goal in mind so this is why we.

Call a decentralized autonomous organization because it’s decentralized so basically there’s not one central authority here there’s multiple authorities and even these people could be authorities if they wanted to it’s autonomous because there’s not one person making decision we’re not waiting on that bottleneck to actually make.

Decisions it’s fully autonomous because everyone in the community is simultaneously making decisions for the greater good and we’re all voting together to make decisions of just one small group of people that is the best way to visualize a centralized organization versus a decentralized organization.

Exactly what i think every nft community that’s decentralized wants to be and the reason this is so perfect for nft communities is because this is the exact approach the ethereum network took this is how ethereum the blockchain the platform the token was all built and so these are not new mechanics by any means d5 2017 ethereum all of that where the.

Innovators have created it now we’re seeing nft projects starting to implement it into their communities which is really cool so this is the goal of a decentralized network and dials just make this much more optimized to be quicker to make decisions so and one more graphic that i like it’s a little simpler is centralized again all coming.

From the middle decentralized so i like this just because it’s not showing there’s like five power positions this is all just like groups of people like this person had an idea they told this person this person got these two people involved and this person subcontracted this person to make sure this job got done so basically.

It’s like this person said i want to make an nft project okay i need a i need a developer okay so he gets a developer and someone to generate the art and then the person that wants to generate the art needs the artist so you have the idea guy the manager finding the smart contract developer.

Finding the art generator and then they hired the artist so it’s perfect web of people all making decisions for the greater good and they actually get rewarded through what we call a utility token uh more on that later i do want to show you guys that if you are interested in dowse there’s actually a lot of tools and platforms out there where you can.

Actually create dowels pretty easily i think you can actually make one of these in less than an hour which is really cool and that’s what i love about defy there’s been years of years of work put behind the scenes during the bear market and now we have all these awesome mechanics to actually implement a dow and so syndicate io is actually just one.

Of the tools you can use to create a dow very quickly and get a big group of people making decisions together almost effortlessly so but one thing i want to make very clear to you guys and hope you understand is that none of these buzzwords none of these utility pieces are that hard to do or difficult to do so if you hear a project implementing.

Any of these like burning staking dowels uh utility tokens it’s not hard so make sure that you’re not buying into these projects just because you think that’s some big innovation that they made this was all innovated back 2017 2018-2019 now nft projects are just picking up on these d5 mechanics so don’t get me wrong they’re not easy you need some sort of.

Expertise but for the most part you guys shouldn’t be valuing a project just because they have these mechanics you should be valuing a project because how they plan to use it how they’re going to gamify the tokenomics or how they’re going to implement this dow how you can be a part of it their vision and overall the values of the founders guys that is.

Always going to be the most important part make sure you’re investing time into a community with competent people people with good intentions good integrity and want the best for the greater whole so that is what it should take to get into a good project not just because they have some of these mechanics but what they plan on doing.

With them it’s all about the why not the what all right so i mentioned utility tokens and this is where it starts to get complicated like is this a security or is this not but guys i just want to re-emphasize making a token takes less than an hour if you wanted to create your own cryptocurrency you could do it.

In probably 10 minutes on the binance smart chain ethereum token might be a little more complex but still less than an hour even if you know the basics everything is open source that’s the great part about ethereum and being a decentralized uh platform that it’s all open source you can find all this code whether it’s chain link oracles or.

Ethereum as a whole it’s all out there for you to just plug and play and put your own specifications on your token so this article right here you can find a hundred of these are literally walking through giving you the code you just input the name input the number and implement the actual tokenomics and it’s super simple they just walk you straight.

Through it and you’ll have it done within an hour if you have a solidity developer on your team like we do it’s super simple so the actual ability to make a token is not something that should excite you guys when you see that in a project you actually need to go in and see how they plan to keep the ball rolling and create value for that token.

Okay so you have the dow that’s how you organize decision making give people governance you can implement the token so the more tokens that you hold the more votes you can have or you can just use your nft as governance so if there’s a hundred nfts each one is actually gonna be one out of a hundred votes and so if you hold three you get three votes.

Very easy concept to understand that’s what a dow is now you implement a utility token to actually create value in the community so let’s say you met a hundred nfts for one each all of that money will go into the dow so each nft is now just governance and now there’s 100 each in the dow okay so now we can separate that 100 each into a million of.

Our tokens so one of one million tokens is whatever that fraction is out of 100 each then you’ll basically get rewarded each day in the utility token and if you want to sell it you can just sell it and get the eat back out but this creates liquidity in the market so whatever you do you can get these tokens so now you can get rewarded in these tokens for the.

Tasks that you do whether it’s writing a document creating an sop or just doing any sort of valuable act for the community you would do that you would all vote this act equals this amount of utility tokens and now you get 20 of your tokens and let’s say you want to stack up your tokens because you like the tokens and there’s other use cases.

Like breeding or whatever that’s further down in this video but there’s infinite use cases for these tokens because in the day one token is worth one token and if an organization can structurally start to make a system where this act equals five tokens then those tokens are going to be worth more and more as time goes on then of course you can always.

Just sell your tokens back for ethereum and you know what you can do from there but we can’t promise passive income but that is the idea behind it guys so we have been seeing a lot of projects that have been doing very well because of this they are doing a dow with a utility token the cyber kongs are one of the biggest the biggest name right now of.

Course the anonymize and the stack toads a few other projects out there are doing this if you guys want to read more on what this is all about there is a fantastic thread by will x lee he’s also a youtuber you definitely check out his channel but the threat is called passive income equals lose all your money here’s why and so he is making a very good.

Distinction of the right and wrong ways to use a token but guys the benefit of these tokens is without a doubt showing right now if we look at this graph these are all the projects that do passive yields with their dow and their tokens basically this is breaking down what each project is doing so the best example is cyber kong’s genesis.

Collection their token is called the banana token and basically if you have a cyber kong genesis you can actually get 10 bananas a day and right now the price of the token is 84 now how the price of the token is 84 is because all of the money from the sales of genesis kongs or royalties from the.

Tongues or any other money the organization raises or makes off of other business decisions they make as a hit goes into the dow now there’s only a set amount of bananas so as more money goes in and the bananas amount stays the same each banana becomes worth more money simple economics but very interesting dynamic but every one of.

These projects is implementing a dow with a token and then putting money into the dow through different operations and that is what’s causing these tokens to be worth so much and that is an instant result showing the floor of the nft the cheapest floor is the zombie mice 844 which is not cheap at all going all the way up to the cyber kongs which the.

Floor is right now 664 000 us dollars or around 185 each which is absolutely insane and if you hold a genesis cyber kong based on this chart you’re making 840 a day in utility token uh but what they go on deep in this thread about is actually how buildy tokens value is very subjective and very superficial because they’re implementing breeding and doing.

All these mechanics that keep the tokens valuable right now but in three months when there’s no more mechanics that are at play to keep the use for these tokens up the price could absolutely go to zero but that’s just a game of economics so you always just have to have more utility added on to keep pace for the tokens there are infinite ways to do.

That so i don’t see that being a problem for the cyber cons we’re definitely in an inflated stage very mania phase right now so keep that in mind but that is how that system works i hope that makes it kind of more understandable for you guys these really aren’t that complicated of ideas but i’ve never really seen a video where people break it down like this.

Hopefully this makes it easier i know when you hear dow breeding staking burning it’s all just like buzzwords you get excited because it sounds like a good thing but you don’t really understand and it’s almost too confusing and intimidating to try to learn so that’s why i’m making this video but moving on let’s go ahead and jump into.

One of the coolest parts of d5 and one of my favorite pieces of utility we’re seeing out there it’s actually called fractionalization and so you can actually go to a website called fractionalart.com very easy to do another web3 platform where you just connect your wallet you can actually buy a fraction of an nft so crypto punks.

Right now are 500 000 around there maybe 300 whatever it is a lot of money let’s say just for easy numbers sake there’s a crypto punk for a hundred thousand dollars you don’t even have close to 100 000 you only have a thousand dollars well fractionalization of nfts lets you buy 1 100 of an nft or of the crypto punk because it’s a hundred thousand.

Dollars you have a thousand hundred times a thousand a hundred thousand so you put that thousand dollars in now you own a fraction of that nft 1 100 of the punk so really cool concept because that allows you to get in on blue chips even if you don’t have all of the money to afford one so it’s kind of a safer investment.

Because blue chips are much more likely to go up at a higher rate and be much more steady investments so it’s just safer than buying say a brand new project with no price history though it’s actually in your budget you can own the whole thing but there’s more risk so a really cool option and we’re seeing a lot of projects out there actually do.

This but for their community with their utility token so a very popular project right now is the mutant cats and what they’re doing with their dow is buying these big blue chip nft projects from the dow and actually holding them in the dow and then fractionalizing them.

So that value gets distributed through their utility token called fish so they’re going to buy a cool cat right here for 14.5 each about 50 000 now the reward will be the fish paid out to the people that are staking their mutant cats so basically how this has worked is that they’re gonna buy an nft which is an investment and.

Ideally the cool cat will be worth more and more as time goes on so it’s an investment fund for your dow on top of that now there’s value pegged and value backed for your utility token and so when people perform an act like staking they get rewarded in the ability token i hope this is making sense guys this is the best way i can put it into.

Words but overall it’s a really cool concept and now the mutant cat floor was at almost two eighth when i covered them in my video the one correction i want to make to that yesterday was i said there’s only 1200 holders out of 10 000. i said that was a red flag there’s actually over 4 500 holders but most of them are staking their nfts.

So what’s staking your nft means you’re actually going to put your nft into a staking liquidity pool or just a wallet you send your nft to their wallet and you’re gonna basically get rewarded a certain amount of fish per day so a certain amount of their utility token per day by basically agreeing to not selling your nft today and so what.

Happens is they minimize the supply of the nfts out there because everyone’s staking and they get rewarded for that in utility token which of course they could translate into ethereum if they wanted to but you’re getting rewarded you’re basically getting money for agreeing not to sell your nft that lowers the supply increasing the.

Floor of the nft because there’s less supply but demand continues to rise and as less become available the price gets higher and higher because more people want it and at the end of the day why would you sell something that’s making you passive income so a really cool dynamic at play and it’s just a really cool way to add value to an avatar.

Profile picture project so that’s what the mutant cats are doing that is why their price has gone absolutely ballistic i think it’s at 2 eth right now and moving on to their website guys staking again is a very easy concept just connect your web3 wallet right here to their site agree to stake it going to leave your wallet and in return every.

Single day that you leave it there you’re going to get paid a certain amount of utility tokens so very easy concept guys this is a little more difficult as a developer to code but not a challenge at all pretty straightforward stuff again all the instructions are out there online for free so don’t buy into projects just.

Because they have this mechanic make sure they have all of the pieces at play to make sure that this makes work make sure that this makes sense and will actually work economically okay so that is staking that is the general concept guys i want to jump over to this tweet by nate roth this is basically putting things into terms that you might be more.

Familiar with so if you trade stocks or are into like business in the united states we have a lot of terminology there uh basically this is gonna walk through the translation of crypto lingo so project equals company creator equals founder dao equals management structure collector equals the shareholder nfts equal shares jpeg equals stock.

Certificate roadmap equals 10k utility equal product immunity equals marketing royalties equal revenue token equal dividend so this makes a lot of sense i’m going to break down each one that i think is really important and really clear so your dow is literally how your organizations management structure is set up who is making.

Decisions who are in charge of each project we take votes on it and that’s what the governance is all about with the dow collector equals shareholders so you own the nft now you have control you have voting power at the board meeting okay nfts equal shares that is the share of the company you own you’re in the community if you own an nft now you have.

Governance or a shareholder because you own the nft there roadmap equals 10k every public company has to release a 10k per sec regulations this is basically where they talk about what happened this year what the decisions they made were what the outcome of this were and what their future plans are for.

The next year next 10 years so that is what the shareholders read to understand what the plan of the project is and to make decisions on if they want to stay in the project okay ability equals the product that is the nft what are you doing for the nft rate value create demand and make people community equals marketing this one i’m.

Iffy on i don’t know if i love that comparison but it does make sense royalties equals revenue it’s money that you’re making from the product the nft then token equals dividend your utility token is rewarding your holders that’s exactly what a dividend is stock market so 10 out of 10 this is a perfect comparison for people might be more.

Educated in the standard finance world or web 2.0 this is the web 3.0 version of that which is just decentralized mechanics okay all right and then moving on to another buzzword that we hear it’s called burning and that might sound really complex or really scary uh basically all burning is is limiting the supply of the nfts out there so it’s a.

Lot like staking but with staking you can actually pull it back at any moment and you own it again burning is you’re basically saying goodbye to this nft forever and it will never be for sale again so the overall supply gets lower and this is what they mean by deflationary mechanics so burning can be really good it’s just really interesting.

Because you have to reward people heavily for doing this because they are sacrificing very expensive so if they’re gonna sacrifice a two thousand dollar nft they need to be incentivized in a way that they’re gonna be getting more than two thousand dollars in value in mind so burning is a very interesting mechanism and people have done it very.

Creatively but this is very easy to set up the the cheap way is just make a wallet have everyone that wants to burn it send it there and then you send them whatever the reward is the incentive back to their wallet of course you can actually do this directly on your metamask wallet or in most marketplaces it’s a button uh either way you want to.

Do it it’s possible of course there’s plenty of ways to do this but this is not something that’s hard to implement and so if you see a project say they’re doing burning don’t put too much weight into that make sure you understand what the reward is make sure you understand why that will be valuable in the future and why it’s.

Worth burning it all right and then moving on to another really popular mechanic of utility is going to be reading this is actually one of the first mechanics i ever saw in nfts i was getting into nfts in 2017. so cryptokitties were all the craze in 2017. them and punks both released around the same time and oh my god it.

Was an absolute bad house cryptokitties were one of the most fun and exciting times in the nfc space i can remember and overall they’re like they created this they in my mind these are the og’s the founders they innovated to the t were way ahead of their time it was an amazing amazing mechanism so if you hear projects saying they’re implementing.

Breeding uh that is not a new idea they are not innovating but it doesn’t mean it’s a bad thing to have for your project other piece of utility to make owning these nfts a little more fun so cryptokitties it’s a very simple process it’s kind of exactly what it is breeding you have two nfts basically they’re.

Going to be two types of kitties how the kitties do it is they actually have different generations so the first generation was obviously called generation one and so if you have a generation one kitty and another generation one kitty uh they’re gonna breed and that makes a generation two kitty okay so you just get traits.

From each kitty so obviously every nft has unique rates you want to combine the good traits from uh kitty one and the good traits from kitty too you could breed them and then you’d make a generation two kitty with both of the good traits so very simple concept to understand on our side as a consumer they actually call it siren in the.

Cryptokitties uh game lore world but anyway it’s breeding at the end of the day and so if you breed like a generation 2 kitty with a generation 4 kitty you’re actually just going to make a generation 5 kitty because you just add one to the highest generation kitty that read so really cool mechanic here’s a little picture on how it works you.

Just get two kitties they fall in love and they make a baby kitty so super simple you get the best of both worlds really fun um i don’t personally think that this adds much value to any project because you’re just creating another nft increasing the supply sure it’s fun and if the whole project goes up the generation twos will go up.

But overall i don’t think this is that big of a game changer and not really something i’m too in our project but definitely something that i respect when other projects do do so cool way to add utility to the project the last and actually one of my favorite ways of adding utility to a project is going to be through a launch.

Pad so launch pads are really cool ways to get new projects exposure so this is something we see e5 world with coins all the time i’m a big fan of card starter it’s a cardano launch pad basically bringing light to all of the new projects launching on cardano so if you have a vision as a company you start working on it and you’re starting from.

Nothing so you want to get some attention on your project you would actually go ahead and join a launch pad and you would give them a lot of your ico or ido a lot of your coins basically from there you’re going to give like 20 percent of your apply to early supporters so that way people that get in on the launch pad.

Win because they’re in early on a good project on top of that you instantly the base of like 2 000 people or whatever the number is so it’s a win-win for both sides as long as both sides have good intentions so the doge pound one of my favorite projects who was all of these people that i’ve talked about were one of the first people i see that while.

Doing this in the nft space it has absolutely shot their project up because they got such good partnerships so if you hold a doge pound nft get pre-sale access to ar ny’s crypto membership nft which is going to have a ton of value if you know alex becker is he did this whole neo-tokyo nft project with elio trades i think the floor was around.

Eight ethereum after the first day so jrn wise i see something very similar happening with that but you can actually get early access to mint one of the jr and white crypto membership nfts just by holding a dose so as a dodge folder i’m happy because i can get in early and guarantee my spot in jrny’s project now jrny’s happy because he can help the.

People in the dogetown community well so it’s a win-win for everybody and i think it’s the best idea i think the doge pound is very undervalued they continue to deliver they’re the reason i started making nft videos they’ve done such a great job have nothing but the most respect for that team i want to emphasize that these are really cool.

Innovative mechanics in the d5 crypto space but they are no way unique so if you see an nft project doing it don’t buy it just because you hear buzz words understand that it’s a good sign that the founders are doing stuff to add more use case more utility to their project so don’t buy it just because they have one make sure you look into the project.

Understand how they’re doing it because if you just have a utility token it’s going to have no value behind it but if you have a utility token with a dow you have multiple incentives and multiple mechanics that utility token continuing to be used within your community that’s great so i’m glad i can make this guys i hope you enjoyed it if you enjoyed it.

Please leave a comment down below let me know that will actually help me be able to decide what type of videos i make in the future hit that like button if you liked it that helps us get to more people educate more people and that’s just how we get to mass adoption hit the notification bell if you want to get these videos as soon as possible other.

Than that guys wgmi that means we’re all gonna make it so if you see that on twitter you’re welcome uh have a great day thank you so much for watching i’ll see you in the next one
Source: Brett Malinowski
Channel: http://www.youtube.com/channel/UCsg20ERGZt9eHVZRXROJSqg

LEAVE A REPLY

Please enter your comment!
Please enter your name here