And while some people are only just starting to grasp what they are and how they work, others who are a bit more accustomed to the digital world are beginning to notice that we can’t just exchange pictures back and forth forever. There’s got to be more to it.
The current way in which value is assigned to digital assets is not sustainable in the long run, so creators are starting to do something about it.
Most people believe that the value of NFTs comes from the fact that they are scarce and unique —you know, “non-fungible.” However, NFTs are now becoming more about what’s behind them: the perks and experiences they offer are casting a shadow on the art itself.
Let’s delve deeper into the concept of NFT utility and discover some exciting examples that clearly illustrate why utility will become the next big thing in the digital realm.
What is NFT utility?Although we still haven’t arrived at a clear definition of “NFT utility,” the concept refers to the value or perks that are attached to a non-fungible token. This might include a wide array of things, like physical goods, digital assets, a relevant service, memberships, access to events, and so on.
So, essentially, “utility NFTs” have a specific intrinsic value that goes beyond the usual uniqueness associated with these tokens.
And there’s a lot of room for creativity here. Creators can offer people anything they believe will add value to their NFTs or can convince potential buyers to invest.
Let’s take a look at some specific examples of NFT utility and discover why this trend is becoming the next big thing in the digital market.
NFT utility use cases and real-world examples
Staking & passive incomeEarning passive income from your NFTs is one of the best ways to leverage NFT utility.
This concept has not been around for long, but it’s truly taking the digital world by storm. NFT staking basically means locking up your tokens on a given platform in exchange for staking rewards and other benefits. Therefore, holders keep ownership of their NFTs, but they can make a passive income out of their collection.
There are many platforms out there that allow users to earn an income from their NFT collection. They will be basically making money in their sleep.
Access to eventsAnother example of how to provide value to holders with perks and exclusive experiences is by using NFT as event access passes. This means holders will be able to access digital events —and, why not, in-person events as well. You might even offer NFT holders priority access to free mints, white lists to other projects, and any other exclusive and fun experience you can think of.
This move favors exclusivity and can be a powerful tool to drive purchases and convince more people to buy your NFTs. And since blockchain technology allows for easy tracking, it’s pretty simple to verify these NFT tickets.
For example, last year, the Toronto Raptors launched a limited edition NFT collection that granted fans access to exclusive physical and virtual experiences, such as meet and greet events with players during the 2021-2022 season.
RedeemabilitySome NFTs allow holders to redeem their tokens for other digital or physical assets.
For instance, in the case of the Rebirth NFT Collection, NFT holders can redeem a physical bottle of whisky that owners can redeem. Once they do that, their NFT transforms into an evolved image that they still own and can be traded for other assets. All while they enjoy a good glass of whiskey.
GAP is another excellent example of how redeemable NFTs can provide value to holders. Its “Threads” NFT collection includes tokens that unlock physical clothing for holders.
CommunityThis is an often-overlooked type of NFT utility: owning an NFT makes you part of a closely-knit community made up of like-minded people who share your interests —and, in many cases, your taste in art!
It’s often been said that an NFT project is as successful as the community built around it. For that reason, NFT teams go above and beyond to be present on every relevant platform and foster a strong community around their project.
Owning an NFT allows holders to be part of that community and engage with its members, participate in events, and discuss crypto, blockchain, and other topics they might be interested in. NFT communities are also a great source of information and sometimes even support!
GamingOn a more entertaining note, NFTs can also allow users to play games and have fun. Lately, there’s been a bit of a surge in blockchain-powered games where users can interact via NFT avatars.
Aavegotchi is a great example of this trend: it’s an open-source, community-owned NFT gaming protocol that powers the Gotchiverse —Aavegotchi’s iteration of the metaverse. Once people purchase an Aavegotchi NFT, it becomes their avatar to interact and play in that digital world.
Another example —probably the most popular one at the moment— is Axie Infinity. It’s essentially a game that uses NFTs to enhance the gaming experience: players can collect fantasy NFT monsters that they can breed, train, or trade within the game’s marketplace.
Bottom lineNTFs are evolving with every passing minute as people discover new and exciting ways to use them and leverage their potential. Now, they are not so much about the art but rather about the perks and benefits behind them.
And while there are already plenty of use cases and examples of how an NFT can provide value beyond its uniqueness and scarcity, this trend will only continue to grow. We’ll begin to see how NFT creators and teams start finding more and more innovative ways to enhance the experience their tokens offer.
Only time will tell how NFT utility will continue to unfold, but one thing is for sure: it’s the next step in the evolution of the NFT world.