Despite the past year’s market challenges, there was no shortage of enthusiasm among the more than 6,000 attendees at NFT.NYC2023 in April. The presentations from over 1,300 speakers offered many perspectives and predictions. In this article, we highlight five major themes we took away from the event for those who missed it.
1. Regulation: Navigating Current Events as Legal Issues Evolve
Not surprisingly, "regulation" was a major theme of the event, with a continued focus on how enforcement actions and court cases were shaping the regulatory landscape. Creators and counsel discussed legally defensible avenues to launch new projects and highlighted the open questions facing artists and brands today. Speakers addressed the implications of several recent court decisions, including the recent (separate) trademark infringement decisions in favor of Yuga Labs1 and Hermès.2 Also front-and-center for many participants was the legal theory alleged in an action against the creators of the NBA Top Shot collection3 that NFTs could constitute unregistered securities. In general, speakers highlighted their focus on compliant building of NFTs and the challenges this creates in the current US regulatory environment.
2."Phygital": Bringing Designer Products into the Digital World
From Jordans to Birkins and streetwear to couture, the fashion industry is built on the curation of exclusive experiences designed to develop brand loyalty. NFTs now enable these brands to create limited-edition digital goods that can be displayed, traded and used in other ways online, all tied to their existing or future products. Several high-profile collaborations have recently emerged showcasing the potential of NFTs to play a role in brand development and loyalty in the luxury market. For instance, the collaboration between Gucci and Yuga Labs offered owners of existing exclusive Yuga NFTs the opportunity to mint a new NFT, tied to a metaverse game, in order to receive exclusive Gucci pendant jewelry. Tiffany & Co. launched a new NFT collection, titled "NFT TFTiff," which entitled purchasers to have their Cryptopunk NFTs made into bespoke pendants and raised the equivalent of $12.5 million before selling out in 22 minutes. Nike's latest collection takes a different approach—the “Our Force 1” (OF1) collection, launched on its .Swoosh Web3 community platform, consists of an uncapped number of Air Force 1 digital sneaker NFTs available to mint, with token holders receiving access to exclusive physical products and experiences. Collaborations such as these have allowed designer brands to expand their existing market share into online communities that may not have otherwise engaged with them, all while expanding the brands’ reach into the burgeoning digital realm.
3. Entertainment: Empowering Interactivity
While NFTs have commonly been used as collectibles, they can also empower holder participation in voting conducted via blockchains. The entertainment industry is increasingly embracing this technology to revolutionize content consumption and user experiences. One example highlighted at the event was FOX Entertainment's Blockchain Creative Labs, which is launching a blockchain and accompanying on-chain NFT store for FOX’s upcoming show "Krapopolis" that will use NFTs to offer fans exclusive content and experiences. Along with major media brands, individual artists were also well represented; their focus was largely centered on the community-driven aspects of NFTs, which are being utilized to promote exclusive events for token holders, enable voting on future content or the direction of ongoing animated shows, and allow fans to chat directly with the artists. By using NFTs as the medium to generate and enable fan interaction, artists and entertainment brands alike are able to leverage their intellectual property in novel ways while developing more active and invested fan communities.
4. Gaming: Driving User Adoption
Gaming has been viewed by many to be a key to onboarding the next generation of Web3 users. While titles such as Axie Infinity have achieved some success, blockchain gaming has not yet gained broad traction in gaming communities. Despite that, companies such as Immutable and Vulcan Forged are creating entire ecosystems of games on-chain, while triple-A developers such as CCP Games are creating Web3 sequels to storied games such as EVE Online. This year's conference made clear that developers are more engaged than ever and are seeking to utilize NFTs to enable digital ownership, asset portability, and player-driven economies.
5. Tokenization: Streamlining the Investment Process
According to some commentators, tokenization—the process of recording ownership of real-world assets via tokens on blockchains—is expected to represent trillions of dollars in securities and other financial instruments before the end of this decade.4 As a result, a number of speakers at this year's conference described efforts to bring a broad variety of assets on-chain, including everything from small business loans to emerging market debt and private equity secondaries. While transaction speed, transparency and lack of intermediaries were all touted benefits, speakers working with developing markets in South America and Asia highlighted how Web3 enables businesses in regions with less access to sophisticated markets to connect with investors from across the globe. Creators also focused on methods of building out the infrastructure that will enable these transactions to function safely, such as the use of untradeable (i.e., "soulbound") NFTs to automate know-your-customer (KYC) procedures or identify accredited investors, and fractionalizing otherwise unitary positions through NFT minting and trading.
1 Hermès Int’l v. Rothschild, No. 22-cv-384 (S.D.N.Y. Feb. 10, 2022).
2 Yuga Labs, Inc. v. Ripps, No. 22-cv-4355-JFW (C.D. Cal. Dec. 16, 2022).
3 Friel v. Dapper Labs, Inc. et al, 1:21-cv-05837 (S.D.N.Y.)
4 See, e.g., Money, Tokens, and Games: Blockchain’s Next Billion Users and Trillions in Value, Citi GPS: Global Perspectives & Solutions, at 4 (March 2023).
