NFT set us free from Web2 Hierarchies and utility erode progression
If the NFT community were an extended family who got together on occasion for holiday dinners and special events, utility would be the topical equivalent of politics and religion, which people might try to avoid in order to keep things civil. In recent months, the term has sparked numerous discussions in the space, and the outcomes of those discussions are likely to answer a critical question facing the Web2 world. The definition of utility is simpler and more interesting than you might think. To get there, we must first understand what NFT utility is, why people are so concerned about it, and what its future holds.
So, exactly what is NFT utility?
NFTs that include utility (which not all do) provide holders with exclusive rights, benefits, and privileges. The beauty of NFTs is that their utility can be as varied as one’s imagination. For example, when photographer Tim Flach collaborated with Atlas Labs to release a collection of NFT photographs of the Spix’s Macaw, a species declared extinct in the wild, the team offered collectors the opportunity to attend an event commemorating their reintroduction into the Brazilian rainforest. Other projects have taken the utility concept to new heights (literally) by using NFTs to launch people into space. However, the majority of NFT projects that provide collectors with utility are located closer to ground level.
When it comes to PFP NFT projects, purchasing an NFT from the collection often comes with some pretty enticing advantages (or utilities). Collectors are frequently first in line for upcoming airdrops, they have access to exclusive in-person events, and NFTs even allow fans of TV shows and comic books to have a say in the creative direction of the IP. Projects with a clear utility focus frequently include clear roadmaps outlining where the developing team intends to lead the community. These may also include information on how and why holders’ NFTs will retain and grow in value.
And why does NFT utility matter?
Flach and the Atlas Labs team were under no obligation to provide that service to collectors. However, the project’s unique utility allowing collectors to see birds released into the wild certainly helped raise awareness for the NFT collection and encouraged people to buy the NFTs. Rather than simply providing financial support to a conservation project, utility NFTs gave owners the opportunity to be more involved in what the team was doing. In short, the utility of an NFT may help individuals feel as if they are making a significant contribution to a project.
Utility is important to other NFT collectors because it allows them to connect with other people who share their interests. In this regard, NFT ownership isn’t really about literally owning a unique digital file for some members of the NFT community. It’s the sense of belonging and camaraderie that comes with it. Digital meetups, live events, and related utilities are all important for such people.
The NFT utility divide
However, the concept of utility has created a significant schism in the NFT ecosystem. The mere fact that NFTs can be useful causes some collectors to expect it almost without exception. Others argue that the community should not put pressure on artists to provide utility, claiming that the art itself is the utility. However, this binary is false, and the range of opinions expressed by the community about NFT utility reflects the diversity of needs that NFT projects have regarding it. Utility isn’t a one-size-fits-all dynamic that anyone can praise or condemn.
Some NFT projects warrant utility
The Bored Ape Yacht Club is one of the most iconic utility NFT projects available. Owners of Bored Ape NFTs have received numerous benefits for investing in the collection, including access to exclusive merch and allowlist access to Bored Ape Kennel Club and Mutant Ape Yacht Club airdrops, both of which have become highly valuable collections in their own right due to the success of the main NFT project from which they originate. Yuga Labs, the company behind BAYC, has also reserved for collectors 45,000 parcels of digital land from the BAYC metaverse Otherside. Obtaining free (or near-free) airdrops of NFTs from successful projects before they go on sale to the public is akin to receiving free money, and when the project in question is BAYC, that money is not insignificant.
Most PFP NFT projects are digital collectibles that focus on building hype and a community base before rewarding that base for buying in and holding onto their digital assets. And, while no one is denying that the artwork behind PFP projects is unique or requires talent to create, it’s unlikely that anyone will buy into these collections simply because they look nice. BAYC, for example, would not be as successful as it is today without utility. That’s perfectly fine. It’s also reasonable to expect utility from such a project, especially if the project’s developers made that clear from the start.