Designing Non-Fungible Tokens as Open Ecosystems
Airdrops, Interoperability & Extensibility, and Royalties
tl;dr: We need to take advantage of what a slow Ethereum blockchain offers to create open ecosystems for non-fungible tokens that centralized counterparts cannot compete with. We need airdrops to distribute content. We need more burning & swapping between different assets to acquire users. Finally, we need to take advantage of ways non-technical creators can earn cryptocurrency through royalties.
I’ve been thinking a lot about blockchain games and closed vs. open ecosystems.
We’ve been creating these experiences where games don’t actually want users to move their tokens out of the platform because it takes away from the gameplay.
And for what use, besides liquidity, do users want to move their NFTs off the native platform? What does this blockchain game offer that a normal game doesn’t, besides the ability to liquidate items?
Developers are currently creating closed ecosystems to foster a community of players inside of their platform. We need to start creating open ecosystems by utilizing blockchain mechanics so third-party developers and creators can benefit from contributing to the ecosystem and earn real, sustainable revenue for doing so. A non-fungible token community needs not just players, but a community of creators.
The primary purpose of a digital economy is to reward referrals and incentivize contributions, while balancing the need to hold attention in an open ecosystem.
Here are some ways I think dApps and blockchain games can design their non-fungible tokens to create more open ecosystems & include creators:
1. Airdrops to distribute content or give demos
This works really well for when there’s a NFT with hierarchal properties, like granting access to future content. DLCs (Downloadable Content) are great use cases of NFTs because it provides an easy whitelist of members who can obtain content.
Maybe we want to try out all the new blockchain games, but don’t want to buy game assets in order to play. Instead, we can buy a single NFT which can act as a game pass to obtain demo/low-level game assets. Each time a new game is released, games can airdrop the game assets on top of the game pass owners.
Non-technical creators and artists can create additional experiences around non-fungible tokens by airdropping new non-fungible tokens on top of existing token holders. Any user (not just creators) can airdrop their own user-generated tokens on top of another game’s users if they are willing to pay the gas costs.
This can expose the creator to a wide range of audience, and could even get their user-generated token in the hands of an influencer if they have their wallet address.
2. Interoperability & Extensibility — Using a token as a means of progression, programmed by anyone
There are 3 ways platforms can use interoperability & extensibility as part of their product strategy:
- Burning — This eliminates users existing assets in order to gain new assets. by sending a cryptogood to 0x0 (empty address)…also known as proof-of-acquisition. CryptoStrikers tested the waters here on what is an interesting marketing/growth hack. CryptoStrikers accepted CryptoKitties as payment for card packs. They created a new contract that had no withdraw function, even though CryptoKitties prevented their cats from being sent to 0x0. Is it wise for games and platforms require users to “burn” existing tokens as part of gameplay? Does it benefit it the user?
- Atomic Swaps — Users can trade in their assets to receive another asset from the address who minted the token. Using relayers, users who create non-fungible tokens can set buy orders for their tokens using any existing token. CryptoStrikers could have received the CryptoKitties directly to their wallet address in exchange for the packs. They could have become an ultimate-kitty breeder and earned some revenue. This is a good product strategy on the developer side to earn some extra cash.
- Tokens as access (Extensibility)— If users obtain a token in their wallet, they can unlock new features or tokens in other dApps. Tokens which were once worth nothing, now are worth the equivalent of whatever feature/token it unlocks. Any third-party can program an existing token as a key to unlocking another token/feature. User Interfaces can hide these features until the user acquires the token in their wallet, creating brand new experiences.
3. Royalties — Users create assets to have more skin-in-the-game
An underutilized feature of non-fungible tokens is the concept of royalties. Designers & Creators can create assets that make the economy of the ecosystem and generate an income if users decide to use their assets.
In Ethmoji, users can own a base component. When that base component is used in another user’s composition of an Ethmoji, the owner of the base component receives a royalty.
Now what if influencers had the ability to create components as well? Instead of buying a non-fungible token on Fan Bits, users can buy components from influencers. Influencers can now receive royalties every time the item is purchased for their Ethmoji.
Start… Now
We don’t need any new standards or infrastructure for this to happen — we can start building experiences and platforms using open ecosystems right now.
We don’t need to wait for better scaling solutions.
State channels & side-chain scaling solutions just enforce closed ecosystems. Design for interoperability and extensibility and think of blockchain as a shared database of all game assets.
Ask yourself: What have other teams and developers built that we can use or incorporate for our own platform? How can we engage existing users of another game to check out what we’re trying to do?
I’m super stoked about the possibilities of NFTs. If you want to talk about NFTs, or anything crypto related, drop me a line on twitter @flynnjamm, my DMs are always open.
Thanks to Tom Ibold, Kevin D. Kim and Gianni Settino for helping me put together my thoughts on this topic.
