The end of 2021 marked an exciting end for the NFT ecosystem, with transaction volume on OpenSea surging back to almost the peak of August 2021. Richard Chen‘s dashboard on Dune Analytics has been mine go-to with easy-to-understand charts.
The Block’s 2022 Digital Asset Outlook has a great summary of the year which saw US$8.8b in total NFT trading volume. That’s a whooping number, considering its relative size to the US$50b in global sales of art and antiques in 2021, according to Art Basel.
This comparison might trigger some of your thoughts on the whole debate around NFT = art + more vs right-click-save. I don’t plan to convince you where I stand on in this article, but I want to start with Pak’s latest collection as food for thought.
For the uninitiated on Pak, check out my first feature on him in Lost Poets.
In Dec 2021, Pak dropped the Merge collection – an open edition of NFTs which are units of mass, which attracted nearly 29k collectors who spent over US$90m in 48 hours. Over 266k tokens were purchased with each m token their own defined ‘mass’.
The buyer decides how much mass he/she would like to purchase – could be 1, 5, 10 or x – and the price is determined by amount of mass i.e. $299 for mass of 1, $2990 for mass of 10. There’s some bonus mass at certain thresholds so the price isn’t necessarily linear.
The catch: you only get 1 token regardless of amount of mass you purchased.
When you buy another m token from someone else after the primary sale, that token will “merge” with the existing token in your address automatically and once again end up with 1 token but with a larger mass. You can’t sell them separately anymore. Note: this doesn’t happen if you transact with different addresses.
What does this mean for collectors? You can’t own more than 1 m token unless you use multiple addresses. Whether there’s a point of increasing mass depends on the collector’s intention. Flip for profit? But you can’t own multiple to hold some and sell some. Be the largest mass? You’ve got to buy over the market. What does this mean for the collection? There are no easy answers.
But Pak has shone some light through this tweet explaining how m tokens enable their holders to claim free NFTs, with various criteria. Some examples he provided:
If your m token fulfills a given criteria, you may free claim NFT(s) of this drop type. “The first 20 Tier I m(29) Merge tokens can get this NFT.”https://twitter.com/muratpak/status/1473833917715152896
Race: The m tokens with the highest growth rate in the provided time frame will get the NFT(s). “The top 10 tokens that increase the most in the following 48 hours will get this NFT (10/10).”https://twitter.com/muratpak/status/1473833922962366465
Now that’s really interesting. NFT’s never (just) about the image. It’s the token which represents the relationship between the holder and the creator, and/or the relationship between holders. Pak made merge full circle remarking that these mass.black NFTs may be burned into $ASH, which is a sort of creator coin that underlies this ecosystem he is creating.
Pak knows this exactly and therefore the smart contract is his canvas, and not the pixels themselves. Starting out with basic 1/1s to NFTs with intriguing mechanisms, his evolution demonstrates the deeper potential of NFTs that few creator recognizes. Time will tell whether the broader market realizes this and I can’t wait to see the mass.black drops in 1Q 2022.