What is the true value of an NFT?

Which is why we combed through the top 200 projects to determine what "utility" actually is. 🧵👇

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<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: This thread was co-authored by @slorgoftheslugs. If you enjoyed reading it, give him a follow.

https://pbs.twimg.com/tweet_video_thumb/FpxwJdeaYAAQi76.jpg

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<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: You've seen it before. A new person enters a project and immediately asks:

"What is the utility of this NFT?"

More often than not it is unclear what they actually mean, and often, they don't even explicitly know.

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"How can you reassure me that I will make more money than I spend on this investment?"

The ask also generalizes "utility" into one static item, when, in reality, it is much more complex than this.

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Tangible Utility
Intangible Utility
Governance
Revshare
Inbred Utility

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<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: The broad ask of “what is the utility” has conflated all of these categories together — when each of them has a very different value proposition, and implications for the project itself.

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Tangible Utility ———————— Tangible utility is grounded in reality and can be objectively evaluated based on its ability to solve a real-world problem.

Although it can be influenced by speculation, this does not typically end well.

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At its core, people were incentivized to exercise in exchange for financial compensation. "Walk to Earn"

People were making thousands of dollars of day working out — it was too good to be true.

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<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: When it inevitably crashed back to reality and assumed its actual value, the perception of the project was harmed, and many users left disillusioned.

If you attach a speculative system to an activity that doesn't produce monetary value, you're in for bad time.

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<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: There are several examples of successful projects that have real Tangible Utility, but, they don't have absurd evaluations:

@NetrunnerNFT — NFT/crypto tax software (3 SOL floor)

@atadia_io — on-chain credit scoring & analytics (9 SOL floor)

https://pbs.twimg.com/media/FpxwOZraIAIWsIX.jpg

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<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: The benefit/curse of tangible utility is that you're going to be anchored to the value of the problem you solve.

The floor price likely won't go much higher or lower than that perceived value.

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<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: —————————— 2. Intangible Utility —————————— This is the utility of luxury goods — social or emotional utility. It is what most “brand” projects are striving for and in which 99.9% of projects fail long-term.

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It is typically comprised of a mix of two things :

A. Social utility B. Emotional utility

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Most often it is:

• Trait Signaling (MAGA hat, religious & political attire) • Status/Value Signaling (stunting, expensive clothing, expensive PFP)

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To put it simply: social utility is something that you can action to influence the way you are perceived.

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<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: “Emotional Utility” is something that placates our emotions, soothes our minds, or sparks joy, fear, anger, love, or hate.

It is an appeal to emotion — it can be art, shared experiences, stories, exclusivity, safety, & more.

https://pbs.twimg.com/media/FpxwSRQagAAYKuv.jpg

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<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: It is extremely difficult to create Intangible Utility in NFTs because more often than not it is accomplished by manipulation.

You can read more about this in the thread below:

<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: —————————————— 5. Illusory, manipulative value ——————————————

Things with tangible value props have to be grounded in reality. If someone were to sell you a bag of oranges, most people would not buy them for more than a few dollars at most.

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<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: ——————— 3. Governance ——————— Governance operates on a simple primitive: The whole is greater than the sum of it’s parts.

Governance most often means collective action — a group of people operating, on-chain, together as an individual entity.

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<aside> <img src="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" alt="https://pbs.twimg.com/profile_images/1622430550857338881/FAYzHaDE_400x400.jpg" width="40px" /> KEMOSABE @KEMOS4BE: Governance ultimately amounts to the ability to help steer an entity larger than yourself through action.

The most potent example of it in in NFTs is @nounsdao.

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• Social — “you should comply”; like a sports team or a small club, break the social norms and you will be ostracized/face repercussions within the community.

• Literal — “you must comply”; laws, rules, on-chain contracts.

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