There's been a lot of discussion in the cryptocurrency world about how disruptive crypto and non-fungible tokens (NFTs) can be to business as we know it. I recently got involved in a project on the Solana (SOL -0.10%) blockchain that may be a template for building long-term value in NFTs.
Turning JPEG images into real value may sound crazy, but remember that disruption often sounds crazy until everyone is doing it. The Stoned Ape Crew has shown me some of what's possible in the NFT market in a short time.
Paving the way
There are dozens of successful projects in the NFT space, with the most notable being the Bored Ape Yacht Club, which counts Jimmy Fallon, Steph Curry, Mark Cuban, and other celebrities among its owners. The "club" has become something of a status symbol in the crypto world and includes its own exclusive merchandise store and benefits like airdrops of new NFTs. Given the exclusivity, the price to get in right now is over 40 Ethereum (ETH 0.02%), or around $160,000, so big money is involved.
There isn't a lot of utility in a Bored Ape today outside of status, but there are plenty of items, like cars and handbags, that offer status with little added utility for a high cost. What's interesting is how new NFT projects today are building utility and value from the start.
Pot, NFTs, and tokens collide
One of the most interesting projects I've gotten into is the Stoned Ape Crew. The Solana-based NFT project includes five types of ape NFTs with different characteristics and benefits. Here are some of the "utilities" from this project.
- There will be a real-world party in Amsterdam only for community members.
- Each NFT earns $PUFF tokens for being "staked" for a day. When staking starts, 15 $PUFF will be the minimum. However, that value increases to 30 $PUFF per day for role-based apes and even more for some exclusive apes.
- Lower-level apes can be sent on "retreat," which will take time and cost $PUFF to complete. But there's a chance your ape will be upgraded to a higher level while away.
- Stoned Ape Crew NFTs will also be a pass for future collections, similar to how the Bored Ape Yacht Club led to the Bored Ape Kennel Club and the Mutant Ape Yacht Club, which are lower-level spinoffs of the original.
- People will be able to use $PUFF to buy future items, which may include new NFTs.
I think of $PUFF like the gems in a game. People pay real money for gems, and in this case, it's a way for NFT developers to try to build community and value with a token of their own. And if it's done right, $PUFF could be a daily dividend for holders or an asset to be exchanged for goods or services.
The community adds value itself
The community activity has been fascinating to watch as a new NFT owner. NFTs allow people to come together and share ideas under a common goal or belief system. That is what attracted me to this project. Marijuana is a tight-knit community and has the potential for very interesting real-world benefits for NFT holders.
Seeing the Discord community generate ideas for future projects and merchandise in a very short amount of time has also been incredible. People are posting merchandise ideas they have created and painting murals of apes, and one group is even trying to raise money to get a member to get a Stoned Ape Crew tattoo. Once the community ball gets rolling, it seems like it may be hard to stop as long as the community leaders stay engaged.
Trust is the key to NFTs
What's difficult with NFTs today is that any of this could fall apart at any time. If developers abandon the project (known as a "rug pull"), the value of NFTs and tokens could drop overnight. In theory, the tokens and ongoing royalties owned by the development team should keep them engaged, but that's not a guarantee.
I talked with someone from the Stoned Ape Crew team, and he thinks about the project more as if it's a business rather than a collection of digital art. In a technical sense, NFT projects aren't businesses, but this could be an interesting structure that could disrupt how we think of funding ideas.
An NFT is only as strong as the development team and community, and the Stoned Ape Crew has been a potentially disruptive project to be a part of in the NFT and marijuana markets. And it shows some of the value of NFTs on a fast, low-cost cryptocurrency like Solana.