NFT's Capitalization Path and Future Trends
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NFT's Capitalization Path and Future Trends
Both analytics tools and trading platforms have the potential to give rise to unicorns in the next cycle.
Navigating Web3 tides with focused insights
Author: 0xMoonda
Meme Symbols Born from Communities
In 2005, Pepe, the comic protagonist from Boy’s Club, became an internet sensation due to his unique appearance and humorous style, quickly becoming one of the most beloved online characters. Soon after, Pepe became a creative prototype among members of the 4chan forum, leading to an explosion of diverse derivative artworks.
As more people began creating derivative works based on Pepe, two issues emerged: 1) It became difficult to identify the true creators; 2) Following the principle that "rarity equals value," the widespread use of Pepe diluted its uniqueness and individuality, prompting artists to become more conscious about copyright protection. As a result, derivative Pepe images were naturally listed for sale on eBay for public use.
In 2016, a wallet engineer named Josh Finke created a dedicated platform on the Bitcoin network to trade Pepe images. The use of the Bitcoin network effectively clarified ownership and authorship rights, marking the beginning of this business—and at this moment, the "small pictures" in blockchain formally became linked with money, laying the foundation for a new era.
It then becomes understandable why someone would pay a high price for what appears to be an ordinary, even comical image not created by any renowned artist. The essence lies in the emergence of a new form of subcultural expression and the demonstration of a unique identity within such cultural circles. This thread will continue to run through the subsequent development of NFTs.
Flourishing Crypto Community Culture and Individual Belonging
In 2017, Hall and Watkinson, graduates of the University of Toronto, founded Larva Labs. Inspired by their niece's collection of dolls, they launched the first 10k PFP (Profile Picture) collection—CryptoPunks—on the Ethereum network. At launch, it attracted almost no attention. Later, they shifted focus to galleries and auction houses, and during a peak period in the crypto market, CryptoPunks achieved strong sales. However, success and downfall came from the same source—the following crypto winter caused CryptoPunks’ prices to plummet.
History often repeats itself, and this cycle continues today. With iterative releases of PFP collections and evolving market operations, distinct and vibrant crypto subcultures have gradually formed—such as BAYC representing "yacht millionaires," Azuki embodying Japanese street fashion, and 3D dynamic character Meebits. At this stage, the market cap ceiling of individual NFT collections depends on the project team’s operational capabilities, community size, and recognition within the ecosystem. Revenue streams remain relatively simple, primarily relying on NFT sales and platform trading royalties.
Beyond different collections, various analytical and trading tools have catalyzed the financial attributes of NFTs and the development of upstream and downstream industries. From late 2021 to early 2022, OpenSea recorded a historical peak of $2.162 billion in NFT trading volume on the Ethereum network. What began as a self-entertaining "tribal celebration" has evolved into a market worth billions of dollars.
While market caps reached their peak, further growth cannot rely solely on the crypto-native audience. To support larger valuations, grander narratives are required—pure community culture and symbolic identity are no longer sufficient.
Web2 Giants Enter the Scene and the Birth of Functional NFTs
The rapid growth and development of the NFT market naturally drew interest from Web2 practitioners, who keenly sensed the potential opportunities in this emerging space, moving from quiet observation to active participation. A representative figure is Kevin Rose, founder of Proof, an angel investor whose portfolio includes Twitter, Facebook, and Square in the Web2 realm, and Solana, Filecoin, Blockstack, and Art Blocks in Web3.
Leveraging his industry resources and social influence, his entry significantly raised the valuation ceiling for NFT projects and introduced a new concept—"Membership Token," also known as "Membership Pass." Beyond serving as status symbols, NFT holders now gain access to exclusive community resources as added value, thereby injecting practical utility into NFTs. This also means that similar projects' valuations will heavily depend on the founder's ability to deliver real-world value, making market expectations increasingly "visualizable".
As the industry structure becomes clearer, revenue models and economic frameworks are gradually taking shape, bringing narrative ceilings back to Web2-style valuation systems with defined upper bounds. However, this does not indicate regression but rather progress, as clear revenue models attract fresh talent and investment into the sector. Meanwhile, the NFT market entered its second peak, and with it, a second valuation ceiling emerged—this is the current reality the NFT market must face.
So, where is the future direction of NFTs?
We can consider this from three perspectives:
· Beta Return Direction
NFT “Top Three Titans”
The above chart details and categorizes the current leading projects in the NFT industry, offering several insights:
* IP: First, note that most IPs mentioned earlier originated from the Ethereum ecosystem, following a vertically integrated single-variable development path. Now, shifting to a horizontal comparison perspective, we can examine how IP development is progressing within competing Layer 1s and next-generation L1 ecosystems, looking for viable opportunities—for example, Dust Labs, which recently secured funding in the Solana ecosystem.
* Pass: As previously discussed, the ceiling for Pass-type projects hinges on the value of resources provided by the founder or organization. However, we cannot rule out the possibility of more Web2 elites transitioning into Web3 and delivering new surprises.
* Game: Observing the broader market landscape, gaming is likely the most promising gateway for Web2 users to transition seamlessly into Web3, with NFTs currently playing a crucial role in blockchain games. Even projects backed by top-tier IPs may eventually pivot toward game development to enhance user engagement and extend their lifecycle in pursuit of higher valuations.
Therefore, based on potential upside and projected investment returns, the investment priority ranking could be:
Game > IP > Pass
· Alpha Return Direction
Returning to the origin of the NFT story, the primary reason “small pictures” formed a closed loop with blockchain is that they solved real-world problems at the technical level, thereby creating economic value (though financial bubbles were inevitably part of the process). Following this logic, we can examine emerging token standards on Ethereum and other blockchains to analyze the practical issues they aim to solve and identify potential value spaces. Currently underutilized token standards include, but are not limited to:
ERC-1155
ERC-4626
ERC-3525
...
Another potential alpha opportunity lies in the upstream and downstream industries surrounding emerging token standards, particularly at the application layer—aimed at providing smooth user experiences and lowering entry barriers for protocol users. Whether through analytics tools or trading platforms, there is significant potential to spawn unicorns in the next cycle.
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