Not every token associated with NFTs is non-fungible. For every ERC-721 used to denote virtual land, PFPs, armor, or other in-game items, there’s a fungible ERC-20 or SPL used alongside. Whether for governance, in-game currency, covering trading fees, or denominating P2P marketplace sales, fungible tokens are essential.
Over the last 12 months, a number of existing NFT projects have introduced a native token, while others have launched with a fungible token in place from day one. This is particularly true of NFT marketplaces, which form a prime artery at the center of this rapidly evolving industry.
While OpenSea has yet to go down the tokenization route, many of its rivals – both on Ethereum and other chains – have had no qualms about deploying a native asset. And on the face of it, there are a lot of arguments in favor of issuing a native marketplace token. When implemented correctly, a proprietary token can:
- Fund development
- Bootstrap a new platform
- Reinforce network effects
- Incentivize trading and increase customer loyalty
- Support complementary products such as NFT launchpads, staking, and drops
Not all NFT platforms sport a well-designed token model, however. No matter how smooth the interface is or low the fees are, a suboptimal token can introduce friction rather than solve problems. The following six NFT marketplaces differ significantly in terms of their target audience, network, maturity, features, and roadmap. But they all share this much in common: a cleverly designed token that has the potential to accrue value and generate powerful network effects.
Loop Finance (LOOP)
Loop is an NFT marketplace, DEX, and launchpad rolled into one. One of its most novel features is the ability for projects to issue native fungible tokens to users who stake DeFi NFTs, forming an effective and flexible fundraising mechanism. This transforms the usual IDO into an Initial NFT Offering, or INO, while reducing token velocity because issuance is correlated to staking duration.
Situated at the heart of the Cosmos ecosystem, on the Juno network, Loop is on a mission to forge economic opportunities, shared experiences, strong community bonds, and all of the other positive effects that NFTs can engender. To support these goals, there is LOOP, the platform’s native asset which performs a number of useful roles.
Because Loop Finance has an integrated AMM that aggregates liquidity from across Juno network, one of LOOP’s first roles has been a rewards token. This solves the problem of issuance, by gradually disbursing tokens to the community over time, and it also provides a reward mechanism to bootstrap liquidity.
Then there’s a feature called Loop Power that multiplies the DEX swap fees and NFT marketplace fees distributed to LOOP stakers. To qualify for Loop Power, community members need to either stake tokens or mint and hold NFTs. It’s a clever way of keeping value within the ecosystem while incentivizing community members to stick around for the long haul as Loop and the accelerating Cosmos universe reach critical velocity.
LooksRare is a no-nonsense NFT marketplace with a native token attached. Its focus is on helping buyers discover top new collections from the moment they drop – no mean feat in an industry where 10k mints are 10 a penny. Features such as Discord notification of new mints allow buyers to stay in the loop, while the minimalist marketplace keeps clutter to a minimum, making it easy to tell what’s trending at a glance.
The LOOKS token functions similarly to X2Y2, giving stakers 100% of all platform fees. You can also earn LOOKS rewards for buying or selling NFTs on LooksRare. At present, an APY of up to 58% is promised for LOOKS stakers. And with rewards distributed daily for buyers and sellers, there’s no hanging around to claim what’s rightfully yours.
X2Y2 is an NFT marketplace that launched on Ethereum as a direct competitor to OpenSea and LooksRare. And, thanks to lower fees and juicy token incentives from day one, it succeeded in grabbing significant market share straight out of the gate. That much could have been predicted. What has taken many by surprise, though, is the fact that X2Y2 is still here eight months on.
Both the platform itself and its eponymous token are seeing significant usage, with around 10,000 ETH in NFT volume per day on the marketplace and close to $2 million in X2Y2 trading volume. Stakers of X2Y2 receive 100% of all revenue, which currently records a respectable 50% APY. The marketplace hasn’t just innovated in launching with a token from the outset: it’s also consistently implemented useful new features such as analytics that show the proportion of traders in profit or loss for a particular collection.
SuperRare is an artists-first marketplace. In other words, its focus is on serving the needs of NFT creators, including support for royalty streams in perpetuity. It hosts exclusive collections from some of the world’s top digital artists and is the place to discover NFTs that have real aesthetic appeal over and above the base world of PFPs and pixelated anthropomorphic collections.
The RARE token is very much governance-based, with a corresponding DAO used to rally the community around suitable artists, causes, and galleries that deserve a spotlight. Membership of the SuperRare DAO allows holders to curate the platform and control marketplace parameters. SuperRare is a very different beast to OpenSea and its ilk. As the platform matures, expect new use cases for the RARE token to be implemented that will strengthen the bond between creators and collectors.
Rarible isn’t exactly new to the NFT hustle; its platform was responsible for shifting PFPs en masse long before non-fungible became the hottest token type in town. It’s since expanded from Ethereum to support five networks. You can now purchase NFTs on Rarible that are aggregated from such chains as Polygon, Immutable X, Tezos, and Flow. The ability to make multiple NFT purchases in a single transaction is just one way in which Rarible is driving down gas fees.
Rarible’s native token has been a cornerstone of the platform for a long time now, but its role recently evolved. That’s because the token once known as RARI has been changed into Rarible Governance Token (RARI), giving it a firmer emphasis on facilitating – that’s right – governance. Given the team’s focus on building out Rarible Protocol, it seems RARI will be used to incentivize web3 teams building on its infrastructure. Expect to be hearing a lot more about RARI as the protocol starts to see adoption, with projects likely to be greenlit whose business model channels value back to RARI holders.
Who says you have to sell a whole NFT? Nftfy believes it should be simple to sell just a portion of an NFT, allowing its holder to unlock liquidity without departing with the cherished asset itself. Its platform for fractionalized NFT trading has achieved product-market fit and is now routinely used by individuals who’d like to sell or buy a sliver of an NFT. In addition to its marketplace, Nftfy provides a Crowdpad for NFT issuance, while RockPool is where blue chip NFTs can be purchased in fractional amounts.
The NFTFY token is used as collateral for new Fractions that are placed in liquidity pools. Each pool must have NFTFY as part of its composition to be eligible for rewards mechanisms and to be recognized as an official Nftfy pool. In addition, NFTFY is the primary reward mechanism, incentivizing holders to place their floor NFTs in pools which are essential to ensure there is sufficient liquidity for buyers.
The Evolution of NFT Platforms
As a technology, NFTs aren’t particularly new – at least in crypto terms. But as an industry, the space has morphed into a multi-billion dollar juggernaut in less than two years. In that short time, we’ve seen an array of new platforms spring up across multiple chains to support the trading, staking, issuance, borrowing, and fractionalized selling of NFTs.
Many of these platforms have emerged with a native token built in, while others have added one retroactively. A few have even returned to the drawing board, torn up their token model, and issued a new one entirely. If you’re considering buying NFT platform tokens, do due diligence into the project to glean its weekly fees, users, and other metrics that are indicative of steady growth.
In addition, however, you’ll need to factor in the fact that many of these platforms are very new, often on networks that are themselves still fresh. In such cases, empirical data can only tell you so much since their best years are yet to come. Pay close attention to the projects that keep building and innovating now. They’re the ones whose hard work will be rewarded when the market cycle flips once more and NFTs return to breaking records and capturing headlines.
This article is originally from Cryptonews.