What Are Utility NFTs?
The first time anyone ever heard about NFTs was back in 2012 when Vitalik Buterin introduced colored crypto coins. There wasn’t much of an uproar about them even after the first NFT was introduced in 2015 at DEVCON. It would not be for another two years, in 2017 before the idea of NFTs took on a life of its own with the Crypto Kitties that made instant millionaires of a lot of people.
The year 2017 marked the era people began to warm up to NFTs and by 2020, the single most expensive NFT to ever be sold was sold by Beeple for $69 million. This era of NFT popularity is known as the first wave of NFTs, or NFT 1.0.
Evolving From NFT 1.0 to NFT 2.0
The first wave of NFTs was driven by the idea of authenticity and ownership, which is why they were dubbed the ‘digital collectibles’. Most of the digital tokens belonging to this wave were artworks like Beeple’s ‘5000 Days’, and other tokens like an NFT of the Twitter founder, Jack Dorsey’s first tweet, which sold for $2.9 million.
But the allure of verifiable ownership and collection is not enough to keep the attention of people, investors, and companies in this nascent market. In mid-2021, a new wave of NFTs emerged to fill the gaps left by the first. NFTs from this era are referred to as NFT 2.0, and they possess a greater degree of dynamism than their predecessors. They can be upgraded and edited, and also linked to other asset types. With NFT 2.0, creators are all about testing the barriers to see how much more NFTs can offer.
Utility NFTs, Explained
Utility NFTs are non-fungible tokens that grant their holder extra benefits beyond ownership. Their values lie in what exclusive perks they are able to provide. There are a few utility NFTs gaining ground in the world with most of them offering benefits like:
- Entrance into exclusive mansion parties
- Entrance into exclusive social clubs
- Exclusive access to member-only events
- In-game items
- Exclusive invites to celebrity parties
- Early access to products
- Shares and partial ownership of NFTs and crypto companies
How Utility NFTs are Used
To fully understand NFT utility, you first have to know the different categories where these utility NFTs are used. There are many use-cases for utility NFTs, but the following categories are some of the most common:
- In-Game NFTs
- Fantasy Sports NFTs
- Community NFTs
- Social NFTs
- Gambling NFTs
The above categories represent the areas where utility NFTs are already being popularized. Although, with the growing trend of utility NFTs, it will likely only take a few months for a number of categories to rise exponentially as utility NFTs are better adopted across several industries.
Some other areas where utility NFTs are also currently in use include:
1| Utility NFTs in Gaming
The gaming industry seems to be the most affiliated with utility NFTs than any other industry. There are many ways NFTs are already being used in the gaming industry. One of them is in play-to-earn games where players can earn crypto as a reward for playing blockchain games with NFTs in the form of in-game characters.
With utility NFTs, players can enjoy exclusive benefits within the game, as well as access to exclusive character modifications, special games, and rewards for a more immersive gaming experience. A good example of a game that uses utility NFTs is Axie Infinity.
Axie Infinity is an NFT game that uses utility NFTs known as Axies. Each Axie can be enhanced to become even more powerful, trained, leveled up, and bred to improve its value. Axies can also be sold on the Axie Infinity marketplace or transferred to other players.
The Bored Ape Yacht club also has an exclusive game open only to members of the Bored Ape Club.
2| Utility NFTs in Fashion
NFTs have already played a big role in fashion pieces, particularly within the gaming industry, where players can buy digital fashion pieces and use them to change the appearance of their game characters. The future of virtual fashion is about to change with the introduction of utility NFTs.
Fashion houses can mint and sell utility NFTs that grant holders access to exclusive virtual fashion shows, early releases, and access to vintage limited fashion pieces.
3| Creation of Exclusive Communities
The impact of utility NFTs on the social scene is very apparent. Some of the biggest utility NFTs have their values based on exclusive community memberships. The biggest example of NFTs in a social scene is the Bored Ape Yacht Club which has a utility NFT token that grants holders membership to an exclusive club. Some of the members of these clubs are celebrities like Snoop Dogg and Justin Bieber.
4| Utility NFTs in Business
Another place where utility NFTs have a lot of use is in business. Big brands like Coca-Cola are already trying out utility NFTs as a way to connect better with their customers. Coca-Cola’s friendship box NFT, minted specifically to celebrate International Friendship Day is one good example of businesses using utility NFTs.
Another example is the VeeFriends NFT that business owner Gary Vaynerchuk offers. The VeeFriends NFT is for entrepreneurs and Vee enthusiasts. Each NFT gives its owner access to VeeCon business conference, a member-only restaurant, yearly gifts, and a blueprint for starting a successful NFT project.
These are just two examples of what businesses can do with utility NFTs. There’s definitely more NFT utility in business, and even more to come in future.
Examples of Utility NFTs
Some of the most popular utility NFT projects include:
The bored ape yacht club is one of the most popular utility NFTs in the world. The entire collection of NFTs cost $24.3 million, with each piece going for $200. Ownership of any of the BAYC NFTs comes with exclusive perks, one of which is the membership to the yacht club and access to the Bathroom, a pixelated canvas that allows members to draw on it every 15 minutes.
Other perks include:
- Access to the Mutant Apes Yacht club (MAYC) — holders of the BAYC NFT can get the mutant serum that turns their ape into a mutant version
- Bored Ape Kennel Club (BAKC) — this perk allows holders of the original ape NFT to get and breed dogs
- Access to the Ape vs Mutant Mobile Game Competition that pits regular ape NFT holders against mutant ape NFT holders
- Exclusive access to the member-only Merch store
Gary Vaynerchuk, popularly known as Gary Vee is the owner of the VeeFriends NFT launched in May 2021. The idea behind minting these Vee NFTs was to help others with a blueprint for starting a successful NFT project.
There are three types of VeeFriends NFTs
- Admission NFT
- Gift Goat NFT
- Access NFT
There are of course limited versions of these NFTs with the Gift Goat and access NFT having only 555 and 300 pieces each. Unlike the other ‘fun’ utility NFTs discussed in this article, the VeeFriends NFT has practicable benefits.
Each of the NFTs grants the holder 3 years of unlimited access to VeeCon, a business conference on entrepreneurship and marketing. There are also other more exclusive benefits that are open to holders of the Gift Goat and Access tokens. For example, one of the perks of the access tokens is one on one time with Gary Vee himself.
The MetaOptimist is an NFT piece from the skincare and makeup brand, Clinique. Holders of the MetaOptimist enjoy the following benefits:
- Free products for 10 years
- Access to a 50-year old, exclusive product known as Almost Lipstick Black Honey
The SVP of Clinique Global, Carolyn Dawkins, describes MetaOptimist as “a piece of code that unlocks a series of functions’.
Ghetto Sharkhood is a lot like the bored ape yacht club. The only difference is that the Ghetto Sharkhood offers holders of the shark NFTs access to real-world perks and benefits. What makes them stand out, even more, is the impact fund project they support for environmental causes and agricultural programs in rural areas.
The features and perks of the ghetto Sharkhood include:
- Ghetto Sharkade for hosting and playing NFT games
- Ghetto Shark fund for community projects
- Ghetto shark coin for collectors to stake and spend at the merch store
- Ghetto Shark play-to-earn games
- Ghetto Shark impact fund for environmental and social causes
The biggest draw for the Ghetto Sharkhood is the environmental projects they fund. All the proceeds from the games and sale of shark NFTs are used to fund environmental and animal conservation programs.
How SOLARR Creates Utility
With Solarr, the relevance of utility NFTs does not start and stop with simply being utility NFTs. If the ultimate goal of the creation of NFTs is to make profits, Solarr ensures that this ultimate goal is preserved. Solarr creates a platform whose mission is to make sure that the pool of the financials in NFTs continues to expand. The importance of Solarr to the future of NFTs is most succinctly put in how Solarr describes itself as a “decentralized platform for financializing NFTs”.
Utility NFTs may still be a new introduction to NFTs but already, it has so much potential. In the months and years to come, NFT creators, businesses, personal brands, and several industries around the world would find ways to give NFTs added value beyond the value of ownership and make them even more useful as marketable tokens.