By Bernabe L., Gate.io Researcher
The cryptoverse and everything related to it evolves at great speed. Constant new innovations and ideas become novel use cases that expand into yet more projects, compounding its growth. NFTs have been without a doubt the biggest “hype” in this cycle, reaching unexpected levels of adoption and price action if looking back only a few months ago. The NFT space is most likely still in a discovery phase, with many projects centered on art or tokenizing real world assets, but more recently, we have seen the emergence of a new NFT approach. One that reverts the usual process, offering not a final product in itself but rather a means to build on top. This is the Loot project.
Released at the end of August as an “experiment” by Dominik Hofmann, co-founder of Vines, Loot NFTs are simple lines of text describing an adventurer’s gear. Completely open project, being able to mint for free as long as gas fees are covered.
Only 8000 of these bags were initially made available. Along these, Loot has an associated token, Adventure Gold (AGLD), which was airdropped to original bag holders. The popularity of the project was immediate, with Loot bags reaching several hundred thousands USD in value during this first half of September and an overall volume far surpassing any other NFT project by far.
The Loot NFT itself is only data to be eventually implemented somewhere else in the NFT metaverse. In this case, a few lines of text describing items akin to those of a role-playing character (think: Dungeons & Dragons). The text acts as a base layer to build on top. The NFT is not the final product, as it is often the case with other forms of NFTs, but rather a tool for something larger. The foundation of a new infrastructure.
When examining the characteristics of Loot, the concept of composability comes to mind, as the project follows the principles of leveraging the work of any participants in an ecosystem in order to expand and create new applications. This is precisely what DeFi is based upon and made it so popular in the first place. The same model is now imported into NFTs through Loot. The founder refers to this as the “Hyperverse”, as opposed to the Metaverse.
This opens up a large amount of possibilities by combining NFTs or building new use cases for them. This is precisely what occurred once the bags were released, as seen on the resources page of the Loot Project.
From Guilds regrouping users that share the same type of items to AI generated characters, the initial Loot bags have spawned a flourishing ecosystem. Barely being over two weeks old, it is still early to have a clear picture of where this is all heading to, although it is all in the hands of the community, not a particular development team or company. A full fledged role-playing blockchain game? Markert places to trade items? Anything can happen and already does, to some extent. The announcement of a hackathon, LootHack, currently taking place anticipates this is just the beginning of something larger, with dozens of initiatives in the works.
Usually, an NFT collection is released by a creator (artist, developer, etc.) in a structured way, and its value relies on what the creator offers through the NFT. It is a finished product. Instead, Loot flips over this concept, aiming to create a hyperverse that rolls out thanks to the community. The value lies in how the ecosystem might expand and evolve after the minting. This is a Bottom-up approach.
The concept of NFT gaming items adopting different forms is not new in the cryptoverse. Enjin is known to build their own ecosystem by incorporating cross-trading items through gaming platforms. All this in a typical NFT approach as they are tied to the specifications designed by Enjin. The innovation behind Loot is taking the NFT concept to a new level of decentralization and gaming in a permissionless way, untied from a developer’s roadmap.
However, the Loot project has gone through some changes in its very short life. The initial supply limited to 8,000 combined with the hype surrounding the release caused many interested users to be instantly priced out of the project if not grabbing a bag from the start. This tends to be a recurring happening whenever the flavour of the month NFT project appears and translates into parabolic price appreciation, on top of the prohibitive gas fees for the average user.
One could argue this is how a free market works, as the launch was fair considering anyone could mint a bag and there was a lack of price fixing. Instead, it is purely based on first come, first served principal and subsequent price discovery. This is very different from other blockchain-based projects that will raise funds before any release, engage in practices such as premining tokens, having private sales and inflating prices upon listing, or even wash trade NFTs in the hopes of pumping the selling price. As an experiment, Loot’s launch was truly decentralized and any perceived value or application built upon it stems from this decentralized nature, where the community is in control. As such, we can expect the prices to soar if the community continues offering desirable use cases that engage users. This is the aforementioned Bottom-up approach, not the average crypto-corporate release pumped and controlled by VCs.
In any case, Dom Hofmann announced shortly after that “Synthetic Loot Bags” could be minted by anyone. This prompted a steep price dump, as the initial idea of limiting the items in circulation appeared to be in jeopardy. Following the same logic as the original batch of bags, users can now participate in the Loot project by randomly generating their items with no apparent limit. Obviously, these synthetic versions of Loot are not considered original and thus, their perceived value on the market is nowhere near the initial craze. Simple supply vs demand. A lucky combination of items could, however, be useful and more importantly, the whole point does seem to be able to join the community and all the derivative projects. The proliferation of Loot items has led to a tier-system being implemented based upon the rarity of the Loot, adding yet another layer to the ecosystem.
The arrival of Loot into the NFT space has without a doubt created much buzz. Even Vitalik Buterin hails the project, mentioning it has the “right philosophy” in the sense that what matters is the extent other people build upon it. Reversing the concept of NFTs seems to be a groundbreaking point, paradigm shifting for this space. What will happen next to the burgeoning Loot ecosystem? Will other NFT projects follow the same path?
In these early stages, such questions remain unanswered, but one thing is for sure: this new way of tackling the metaverse (or rather hyperverse?) could be much more appealing to crypto enthusiasts genuinely interested in decentralization. The core principle behind blockchain and cryptocurrencies might have slowly been pushed aside lately in favour of other functionalities, such as scaling, particularly if it is a project with a recognisable brand behind it or replicating a popular NFT collection on another blockchain.
Loot changes the _script_ and returns to the fundamentals, even if only for the NFT space. A positive sign.
*This article only represents the views of observers and does not constitute any investment advice.
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