Key Predictions for the NFT and DeFi Scene

With the 2021 NFT hype cycle firmly in the rearview mirror, experts believe NFTs will power the next generation of consumer brand engagement in 2023, ushering new audiences into the metaverse.

Despite the non-fungible token (NFT) market being deep in bear territory, many major industry players believe that 2023 will be an opportunity to build new infrastructure to prepare for the next crypto bull market.

NFTs Will Fuel the Metaverse Migration for Brands

Corporate growth consulting firm Forrester suggests that non-fungible tokens (NFTs) will be a key touchpoint for brands in the metaverse in 2023. NFTs are unique digital tokens that irreversibly record the origin and ownership history of a physical or digital asset on a blockchain.

While the vision of a metaverse has never been fully defined, let alone created, venture capitalist Matthew Ball offers this definition of the metaverse in his 2022 book The Metaverse:

“A massive scale and interoperable network of real-time rendered 3D virtual worlds that can be accessed asynchronously by an effectively unlimited number of users with a personal sense of presence and the persistence of data such as identity, history, eligibility, and can be experienced continuously.Commodities, communication and payments.

Corporate metaverse ambitions will continue to grow in 2023, with companies such as Samsung, Nickelodeon, Gucci, and Nike making efforts to refresh their brands and attract new revenue streams in 2022.

Brands will continue to offer exclusive NFT privileges

At the 2022 NFT.NYC conference in New York City, Jeff MacDonald, a director at advertising agency Mechanism, said brands are offering their Web3 customers special privileges, financial incentives or guaranteed bragging rights. Coffee chain Starbucks has already pioneered an NFT-based brand loyalty program that gives unique real-world rewards to holders of coffee-based NFTs. Entertainment behemoth Nickelodeon is betting that the nostalgic Rugrats profile picture will attract old fans to its Ricker Forever Inc. NFT platform.

Sports and leisure apparel brand Nike is adopting a futuristic hybrid model that allows physical sneaker owners to complete their avatars with a single piece of gear. This model will likely gain traction in 2023, with layer two solutions proving attractive to polygonal corporate applications.

At the NFT.NYC conference, The Wall Street Journal reported that many brands’ Web3 plans extend far into the future.

NFTs also provide marketers with new channels for monetizing and promoting products. Crisps maker Pringles released an MP4 video NFT in 2022 as part of its cryptographic collection. International fast-food chain McDonald’s launched an NFT collection in the US in December 2021 to celebrate the reintroduction of its McRib product.

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Art will blossom with unprecedented autonomy

Venture capitalist and Patreon backer Valentina Zakirova believes that in 2023 non-fungible tokens will give art creators unprecedented autonomy. Accordingly, artists will be able to fully monetize their work without paying an intermediary.

Signed music platform Band Royalty will add more artists to its 3,000 or so NFT-based song catalog in 2023. On band royalties, artists are paid each time their song is played on a playlist.

The 2022 bear market has tested the staying power of symbolic art. Beeple, the author of “Everydays: The First 5000 Days,” a seminal nonfungible token work that will sell for close to $70 million in 2021, is set to fetch another $252,000 at a Christie’s auction in mid-2022. To combat dwindling interest, artists can also take advantage of the concept of fractional NFT art. Buyers can purchase an NFT representing a fractional ownership stake of the artwork at a low cost.

Christie’s $5.9 million token art sale in 2022 was down 96% from 2021’s $150 million. Despite the low sales, the British auction house is clearly interested in the intersection of art and blockchain technology. Christie launched its Web3-focused venture capital arm earlier this year. So far, it has invested in Layer Zero, a blockchain interoperability startup.

Emerging Decentralized Finance Applications for NFTs

With more widespread corporate investment in 2023, non-fungible tokens could gain traction in the decentralized finance (DeFi) space.

Steven Boyke Sidley and Simon Dingle, authors of the forward-looking DeFi book “Beyond Bitcoin: Decentralized Finance and the End of Banks,” believe users may one day contribute NFTs of assets as liquidity to a decentralized exchange’s liquidity pool. They could borrow cryptocurrency against that NFT to invest in other yielding products.

Platforms such as NFTFI already offer loans against NFT-based collateral. The venue pays the loan in ETH, with NFT going to the lender if the borrower defaults.

Doctor. According to Jane Thomson, NFTs will also be used to tokenize licenses and academic credentials. Thomson is the chairman of the board of British digital asset firm KC Holdings.

NFT-based credit scores could also be a significant innovation in 2023. Earlier this year, Charles Hoskinson stressed the importance of creating a decentralized economic identity. Such recognition will help in realizing the economic potential of those excluded from traditional financial services.

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