The social utility of NFTs
Utility is defined in economics as the total satisfaction gained from consuming a good or service. This overall satisfaction depends on consumer interest, owner vision, and market trends. On the most basic scale, NFT utility is the benefit for NFT buyers and holders to see themselves as the HODLER/owner of a particular item.
For example, in GameFi, consumers believe that Axie Infinity NFT provides the utility of game participation, participation in community governance, and the ability to generate revenue through P2E rewards. Another example is BAYC NFTs. BAYC has most of its utility due to the vast, famous and wealthy network it provides to its owners. In each possible utility, the theme is how NFTs can provide utility to a wider audience.
The spring of 2021 saw a rapid shift in digital identity. Twitter users were the first to notice: an increasing number of Twitter accounts turned their avatars into cartoon-like apes.
When NBA players and numerous A-level celebrities entered the NFT market, BAYC gathered millions of ETH trading volumes on Opensea, the NFT secondary market platform.
The success of BAYC and other NFT-generating projects can be attributed to the smooth landing of their products and meeting the community’s need for social utility. Powered by blockchain technology, the indestructible uniqueness of NFTs lays the foundation for meeting individuals’ needs for socialized digital identities.
NFTs are a balancing act between individualism and collectivism. The BAYC community fulfills individuals’ desire for an exclusive community while maintaining a platform where their community can freely express their individuality, freedom and value allegiance.
Ultimately, the purpose of the NFT community is to build, reach and aggregate consensus internally and externally:
- Inside is how the social utility of community members is satisfied.
- External is how market prices have behaved in the past, present and future (expected).
Due to the difficulty of finding new usage scenarios for NFTs, the value of NFTs is largely (not entirely) based on consensus shared by the community. NFT users tend to link the NFT value to its market price, which is the floor price of a project on Opensea.
On the other hand, due to the high gas fees and low liquidity of the Ethereum network, speculators’ ability to find value in the market is hindered, and maintaining community consensus becomes relatively easy. In other words, the value of NFTs shared by its community is always inflated relative to its market price. This is also an effective buffer against the risk of death spiral caused by FUD.
Pacific is a decentralized NFT marketplace and an integrated platform for metaverse/GameFi assets. The project has received endorsement from some of the most eminent institutions and investors, including the Web3.0 Foundation, NGC, Gate.io, Krypital Group, PAKA, Candaq etc.