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The technology behind NFTs is incredibly under-explored, and their potential has barely been found. The hype and mainstream explosion of these blockchain assets hindered their innovation greatly. The pinnacle of this NFT cycle was skyrocketing prices of art-based digital assets and celebrity endorsements — a poor foundation for what can be a powerful component of Web3.
At Oasis, we have identified the pillars and components that will progress the world to Web3 and are firm believers that NFTs have their role to play. However, we also understand that in this crypto bear market, devoid of attention-sapping hype, there is an opportunity to build and innovate in the space.
NFTs need utility. They need their technology to embrace Web3 ideals — like privacy. NFTs need to be better assets and bolster their creator empowerment and community-building potential.
Despite the current downturn in the crypto and NFT market, we believe NFTs have a second chance to reinvent themselves and serve a purpose in Web3. The move away from Web2 and towards Web3 calls for harnessing converging technologies to create an inclusive, human-centred future — this is where we believe NFTs, and data-backed NFTs in particular, will play a significant role.
A brief History of NFTs
On March 11, 2021, Beeple’s Everydays — The First 5,000 Days NFT, sold for $69,346,250 at Christie’s Auction House, throwing the Blockchain-based digital art world squarely in the mainstream spotlight.
The headline: “A jpeg just sold for $69.3 million amid the NFT craze”, said a lot about what was happening and about to happen for NFTs.
CryptoPunks, Bored Ape Yacht Club, NBA Top Shots, and endless celebrity endorsements and purchases followed. NFTs were hot property, and everyone from Elon Musk’s girlfriend, Grimes, to Paris Hilton, were releasing ‘jpeg’ NFTs.
The frenzy saw colourful apes to 8-bit faces art pieces going for millions. However, it was relatively short-lived for some of these assets, as the news is now full of massive loss stories.
Sina Estavi made headlines the same month Beeple’s NFT was sold at Christie’s — he paid $2.9m for an NFT of Twitter boss Jack Dorsey’s first tweet. But his efforts to resell it have run aground, with a top bid of just $6,800 coming only a year later.
It must be remembered, though, that NFTs were not born in March 2021 with Beeple — they have already had a hype cycle.
In 2017, CryptoKitties were the first NFTs minted using Ethereum’s ERC-721 token standard, and their popularity quickly congested the network. These cats were raking in around $113,000 at the top for one — so quite a bit short of Beeple’s record. Interestingly, CryptoKitties was created by Dapper Labs, the team behind the highly successful NBA Top Shots.
Spending in NFT marketplaces exceeded $38 billion in May 2021, but following the broader crypto crash, NFT sales have fallen significantly, with monthly sales down from over $12 billion in January this year to under $1 billion in June.
So, while NFT art pieces are falling in price and the hype seems to have died down — you can not begrudge how this hype cycle helped bring them — and blockchain — to the mainstream. But, it seems people have become jaded in their lack of use and utility.
NFTs Are More Than Just Art and Content
At Oasis, we want to evolve NFTs beyond just art and content with data-backed NFTs. Making NFTs data-backed opens up a massive world of opportunities in Web3, but it also requires added protection for that data. This is why we have created Confidential NFTs.
Confidential NFTs operate just like regular NFTs but also confer access to data, which is entirely private. These NFTs run on Oasis’ privacy-preserving technology Parcel, meaning the data is kept on a full permissioning and compute layer, allowing a lot more functionality and possibility.
A good example of Confidential NFTs in action is the “Army of Minions” NFT Collection by bishop on Oasis. The owners of these NFTs have exclusive access to the underlying mathematical function — the data backed on the outward-facing image — that created their Minions.
Each minion image contains unique DNA displayed in the background.
While this is an excellent example of Oasis’ Confidential NFTs having more function thanks to being data-backed, there is much more possibility and potential around these types of tokens.
Parcel’s full permissioning and compute layer allows you to set access policies for who is holding the data-backed confidential NFT. For example, you can set time-based policies to allow access only for a specific time to those holding the NFT. Now, the control of one’s data is firmly in their own hands.
You can even allow access to specific compute jobs, which means — for example — you might not be able to download the NFT. Still, if you have a private seed that is an NFT, then you could use that to generate additional artwork NFTs by running a private machine learning model.
Data-backed NFTs for Social Good
Beyond individual use cases and data ownership with data-backed NFTs, on Oasis, these tokens can also be enablers for Data DAOs. When we venture into the application of Data DAOs, we are also making giant leaps toward Web3 and its ideals of social good and data sovereignty.
A Data-DAO is an organisation of individuals and entities that supports individual data rights, rewards data owners for data use, and handles data with confidentiality and privacy, with verifiable transparency in its operations.
For society, a Data DAO means individual data sovereignty, maximising social welfare and economic efficiency with the data, a chance to provide incentives, and fair governance.
When you start incorporating data NFTs in this organisation, you have a smart technology stack that enables individual data protections and ownership in the DAO. These tokens provide access to run computations on data that backs them, consistent with policies specified by the data owner on data use.
To further highlight how the individual can control data with Confidential NFTs, we can turn to Professor George Church, co-founder of Nebula Genomics and professor of Genetics at Harvard Medical School. He has minted an NFT of his genomic data, with the data hosted on the Oasis Network.
The inspiration for this move came from thinking about how genomic and health data can be fairly shared and monetised while keeping it secure, private, and in control of the data owner. This is the future we see for Confidential NFTs. Professor Church has data which can be useful to others, but he has full sovereignty of it, total protection of it, and can monetise it as much as he wants, thanks to the Oasis Network.
The potential for NFTs in Web3
NFTs have shown glimpses of their potential to be creator-empowering assets. But when we start to incorporate data sovereignty with Confidential NFTs on Oasis, their true Web3 potential shines.
Web3 Powers the Creator Economy
Web3 platforms can offer fairer economic terms, and Web3 technologies like data-backed NFTs can flip the power into the hands of the people. When a creator mints an NFT, they are in control.
In general, NFTs, creators and collectors determine NFT value and the creator can set the price, set the royalty percentage, and market their work to their communities. At Oasis, things go further with confidential NFTs, as creators can also specify the parameters and abilities of their data-backed NFT.
The Web3 space is about empowering creators and ensuring they get their complete and ongoing earnings for what they do — but it is also a space for community building.
Creator communities value the creator’s work, and the creator values the community, but in Web2, there are scarce opportunities for value exchange and shared ownership.
In Web3, when a community purchases an NFT from a creator, they actively invest in that creator and share the value of their career by holding their work. NFTs help creators and communities reward each other instead of being exploited by platforms.
NFTs are Still Evolving
During this bear market, it is easy to get disheartened and disinterested in blockchain products merely because their price drops. However, it has been shown that these market downturns are often times of great innovation for blockchain.
Linda Lu, the Director of Ecosystem at Oasis, believes we are just in the beginning stages of NFTs.
“NFTs are not dead and buried,” she explained. “The hype we saw in the last 18 months or so did not lend itself to good technological foundations for NFTs — but that’s fine, because this is just the beginning. The industry is now starting to explore the real-world use cases of NFT. At Oasis, we are excited about data-backed NFTs and how that manifests in our day-to-day life in the future.”
NFTs are ripe for additional innovation, and, away from unnecessary hype, we are pushing forward with making NFTs functional and viable for a Web3 world. We appreciate that privacy and data ownership are essential pillars of Web3, and we want to instil those values in the next wave of NFTs — Confidential data-backed NFTs.
“Data-backed NFTs enable data owners to set policies regarding how they want their data to be shared and consumed — this is groundbreaking and totally in line with where the Web is heading. Web1 was read, Web2 is read and write and Web3 will be read, write and own. Ownership cannot happen without data-backed NFTs, where data owners contribute their data on their own terms and for specific purposes.”