018 - Wait, NFTs aren't shit?
NFTs are the laughing stock of the Web3 world, but maybe they're not all bad...
MØRNING!
It’s been a bit quiet on the NFT front, hasn’t it? After a couple of torturous years of NFT hype (think: crypto bros selling each other digital pictures of penguins for increasingly extortionate amounts of money), the industry finally crashed last year.
It’s no secret that the movement was corrupt: most NFTs carried huge (huge) carbon footprints, and lots of people got involved for all the wrong reasons. Another tragic case of humanity setting capitalism on an innocent new innovation </3
But that doesn’t mean the technology itself is bad. After a much needed reckoning, maybe we’re ready to take a second stab at NFTs. Today we have David Watkins, who’s part of the team at STEWARD, here to tell us how NFTs can be a force for good…
You’ll be aware of Web3 and all that its technology promises us, from frictionless and secure transactions via crypto currency to new online communities like Discord or Mastodon. But NFTs? (That’s non-fungible tokens, digital files that are encrypted using blockchain)They don’t have such a good rep. “Despite the fact that Web3 is about resource sharing and decentralized communities and all of that good stuff, it got perverted really early”, explains Lydia Pang (CEO & Co-founder MØRNING & STEWARD).
Rewind to late 2021: After Beeple sold the first ever NFT artwork for $69,400,000 earlier that year, NFT hype is in full swing. Hoards of crypto bros are selling digital Penguins for thousands of dollars. Annual NFT sales will total $24.9bn. Insane environmental footprints are racking up, with a single transaction on Ethereum generating 87 kWh - the equivalent of two days electricity at home.
Let’s just say peak-NFT wasn’t humanity at its best.
But all that ugliness came at the space pretty fast. Fast-forward to 2022, and the NFT world collapsed. 99% of NFT projects went to zero. Trading volume on OpenSea, one of the biggest markets for NFT had dropped from $3 billion to $350 million in the space of a year. Justin Bieber's Bored Ape Yacht club that he purchased for $1.3Mn in January went down to a value of $70,000, Ethereum currency went down 80% to $1,080 from its all-time high of $4,891, and major crypto exchange company FTX scammed $8Bn from its customers before going bankrupt (the only response from the CEO? ‘I f*cked up’...)
Not a great look. But you get what you deserve. The NFT space got carried away with the promise of financial gain, only to lose sight of the climate and the technology itself.
The lesson? Nothing is sustainable if it's not sustainable. It was time for NFTs to step up to the podium and be less shit.
A new dawn
And so while the crypto bros nurse their bankruptcies, the rest of us find ourselves with the opportunity to use Web3 technology - which is grounded in transparency, security and collaboration because of its use of blockchain encryption - for good.
“The community is coming to reckon with a lot of those early decisions”, says Maria Li, cofounder of STEWARD. “There is a lot to be said for the patience, maturity and slowness that's coming up in the space”.
A major sign Web3 is growing up? The recorrection of energy usage. In September last year, Etheruem changed its currency minting technology to Proof of Stake, dramatically reducing its energy and financial costs. We saw the introduction of carbon negative blockchains like Celo, and Polygon blockchain making it easier and environmentally better to build on these blockchains.
There’s also a load of new players making the most of Web3 technology for community building and collaboration (here are a few of MØRNING’s favourites)
Metalabel: An operating system to help groups of likeminded creators collaborate and release projects together
Seed Club: a web developer network helping birth a new generation of Web3-based community-led cultural projects
RADAR: a decentralised global collective of 270+ researchers and innovators, using collective intelligence to supercharge trends.
iiNDYVERSE: reimagining music marketing by creating gamified campaigns for artist
SheFi: Educating the next generation of women and non-binary folks working in Web3, promoting openness, kindness, diversity, interdependence and collaboration
For STEWARD, this opportunity means using NFT technology, such as smart contracts, to directly fund climate solutions. “In the climate space, we often say we need a new system in place, because the old systems are a crumbling foundation”, says co-founder of STEWARD Sophia Li. STEWARD believes Web3 is this new system. The project works in partnership with artists, audiences and nonprofits, to change the way we look at climate impact going forward. How exactly? By transferring capital directly from the digital world to the natural world: when you purchase a STEWARD digital artwork, the money is distributed directly to the non-profts via smart contracts on the Celo blockchain (a layer 1 carbon-negative blockchain), not touching the hands of humans. And every time a piece of digital art is resold, money is sent to non-profits, creating a more consistent donation funnel.
But there’s still a long way to go here to ensure brands don’t just use the term Web3 to cover up capitalistic behaviours. See: brands like Starbucks entering the game with an extension to its loyalty programme called ‘Odyssey’ - using Web3 technology to unlock access to new benefits and experiences for members, Nike with its co-creation community platform, and Amazon creating its own NFT marketplace.
These examples are making Web3 more mainstream and introducing the technology at scale, but it doesn’t really scream ‘decentralized’ to us. Instead, look to the ever-pioneering Telfar, who has recently announced an innovative new buyer-determined pricing system. It doesn’t use crypto technology directly, but it’s a brilliant example of how Web3 values of accessibility, transparency and interactivity will come to life online.
So, what next?
In short: it’s actually a really exciting time for Web3, now that all the BS has been purged.
Brands, if you have the time and good intention, it could be worthwhile exploring this space more. But take it easy, we're still in the MySpace era of Web3. Be methodical and think about how Web3 philosophy can be celebrated in your business strategy before pushing it into your brand strategy. These are expensive and long game projects to go after, so choose your position and your expression thoughtfully (or come to MØRNING and we'll help you figure that out, wink).
Either way, Web3 isn’t going anywhere. So take this as your cue to get familiar with all that the technology has to offer, and how it could change things in the future, for good.
That’s all for now! Are there any other Web3 mavericks we should know about? And do you think you’re up for becoming a STEWARD? As always, we’d love to hear from you <3
Until next time..!
Words: David Watkins
Editor: Letty Cole