NFT Merry-Go-Round
NFTs (Non-Fungible Tokens) are esoteric enough themselves, with most average folks having little understanding of what they are, what they represent, or what value (intrinsic or otherwise) they might have, and while Bitcoin has been around since 2008, NFTs became ‘a thing’ in 2017[1] when Larva Labs (pvt) released “Cyberpunks”, a collection of “unique collectible characters” on Ethereum, which became the basis for standard used today for most digital art and collectibles. Billions of dollars (actual currency) have been spent on NFTs since then for a wide variety of items no longer limited to relatively primitive digital artwork, with music, game items, sports items, fashion, and real estate, but how do collectors know whether the items they are buying are ‘real’? (Real here does not mean physical but real in the sense that they are unique and owned by the seller)
A new start-up (2022) has just raised $1m in a pre-seed round including a number of VCs and Angel investors that can help NFT collectors better value potential NFT purchases by evaluating a variety of metrics and giving the particular item a “Mint Grade”, similar to the Numismatic Guaranty Corporation that has been grading collectible coins since 1987, or in the vernacular, a ‘CarFax (SPG)’, or Zillow (Z) ‘Zestimate’ for NFTs. FungyProof (pvt) gives the collector the ability to check a potential purchase or existing asset through the company’s software that evaluates blockchain and image metrics such as “Does the Metadata conform to applicable schema standards?” or “Does the Contract contain no permissions/backdoors and has ownership been relinquished?”
While we are relatively technology savvy, some of the metrics involved are so particular to the blockchain that they become almost meaningless (‘energy of token transfers’, ‘Metadata storage does not cause bloat to underlying blockchain’, etc.), but they all contribute to the items ‘score’ as shown in the Figure 3 demo. A number of the metrics involved are shown, and whether they meet the FungyProof rubric scorecard requirements, even though we expect the weighting of those characteristics will remain hidden, although the basic characteristics for an “A” or an “F” grade are as indicated below:
“A” Grade
Highly interoperable contract
No back-doors or security vulnerabilities in contract
Assets and metadata are formatted well
Asset gateways have redundancy, low latency, browser compatibility
Distributed storage used for assets and metadata
Low minting and deployment energy use (kWH)
“F” Grade
Non-standard or not supported contract
Vulnerabilities exist
Asset and/or metadata missing
Gateways are broken
Broken storage
High minting and deployment energy use (kWH)
While this is a very new company that evaluates another relatively new asset class, it is indicative of the new world that is developing behind the often hyped Metaverse and Cryptocurrency products that have captured the minds and dollars of millennials across the globe. Whether this turns out to be just another form of ‘beanie babies’ (1986), ‘Furbies’ (1998), or ‘lava lamps’ (1963) is certainly open to speculation, but there is no doubt that there is money to be made supporting NFTs as shown above, and we have trouble keeping track of the funding that is going toward NFT support companies which seem to be popping up on a daily basis..
With company goals as simple as ‘…aiming to launch multimillion dollar NFT projects…” closing seed rounds in days, anyone who has marketing or blockchain coding experience is suddenly becoming the CEO of a new NFT related start-up and celebrities are helping to fuel the fire under these potential companies by lending their names and images to promotional efforts, usually for a fee or a share of the company. We don’t judge whether this is a good or bad thing, but we certainly understand that NFT valuation is not only emotional but also subject to little or no regulation and therefore become a wellspring for abuse and fraud. It is a positive that companies like FungyProof are making their services available to NFT collectors, but until there is an agreed upon basis for evaluation, all evaluations are subjective.
[1] Disputed by some who believe Kevin McCoy & Anil Dash created the first NFT in 2014.
A new start-up (2022) has just raised $1m in a pre-seed round including a number of VCs and Angel investors that can help NFT collectors better value potential NFT purchases by evaluating a variety of metrics and giving the particular item a “Mint Grade”, similar to the Numismatic Guaranty Corporation that has been grading collectible coins since 1987, or in the vernacular, a ‘CarFax (SPG)’, or Zillow (Z) ‘Zestimate’ for NFTs. FungyProof (pvt) gives the collector the ability to check a potential purchase or existing asset through the company’s software that evaluates blockchain and image metrics such as “Does the Metadata conform to applicable schema standards?” or “Does the Contract contain no permissions/backdoors and has ownership been relinquished?”
While we are relatively technology savvy, some of the metrics involved are so particular to the blockchain that they become almost meaningless (‘energy of token transfers’, ‘Metadata storage does not cause bloat to underlying blockchain’, etc.), but they all contribute to the items ‘score’ as shown in the Figure 3 demo. A number of the metrics involved are shown, and whether they meet the FungyProof rubric scorecard requirements, even though we expect the weighting of those characteristics will remain hidden, although the basic characteristics for an “A” or an “F” grade are as indicated below:
“A” Grade
Highly interoperable contract
No back-doors or security vulnerabilities in contract
Assets and metadata are formatted well
Asset gateways have redundancy, low latency, browser compatibility
Distributed storage used for assets and metadata
Low minting and deployment energy use (kWH)
“F” Grade
Non-standard or not supported contract
Vulnerabilities exist
Asset and/or metadata missing
Gateways are broken
Broken storage
High minting and deployment energy use (kWH)
While this is a very new company that evaluates another relatively new asset class, it is indicative of the new world that is developing behind the often hyped Metaverse and Cryptocurrency products that have captured the minds and dollars of millennials across the globe. Whether this turns out to be just another form of ‘beanie babies’ (1986), ‘Furbies’ (1998), or ‘lava lamps’ (1963) is certainly open to speculation, but there is no doubt that there is money to be made supporting NFTs as shown above, and we have trouble keeping track of the funding that is going toward NFT support companies which seem to be popping up on a daily basis..
With company goals as simple as ‘…aiming to launch multimillion dollar NFT projects…” closing seed rounds in days, anyone who has marketing or blockchain coding experience is suddenly becoming the CEO of a new NFT related start-up and celebrities are helping to fuel the fire under these potential companies by lending their names and images to promotional efforts, usually for a fee or a share of the company. We don’t judge whether this is a good or bad thing, but we certainly understand that NFT valuation is not only emotional but also subject to little or no regulation and therefore become a wellspring for abuse and fraud. It is a positive that companies like FungyProof are making their services available to NFT collectors, but until there is an agreed upon basis for evaluation, all evaluations are subjective.
[1] Disputed by some who believe Kevin McCoy & Anil Dash created the first NFT in 2014.
A portion of the 10,000 Cyberpunk character collection - Source: Larvalabs
Bored Ape yacht Club Image & Score - Source: FungyProof.com
- "Stirred. Not Shaken" image - Source: Kassie Patton
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