The latest estimates of the NFT market show that it surpassed $40 billion by the end of 2021 according to Chainalysis Inc. This is a tremendous growth from the $41 million in 2018. NFTs exploded in popularity with the multi-million dollar NFT sales news, the involvement of major brands such as Cocacola, and celebrities such as Shawn Mendes and Melania Trump, the former first lady joining the NFT space. Two major reasons can be associated with people buying NFTs. First, owning an NFT of rare items offers a social status within the crypto community. Just like owning a Lamborgini would give some social status in the physical world. Secondly, looking at the consistent growth of the NFT market, investors believe in the possible long-term growth value of NFTs. Well, this might be the reason you’d also like to buy NFTs in 2022; have a stake in the huge market and its potential to explode further. Maybe you’ve been asking yourself: How do I know which NFT to Buy in 2022? Well, your answer lies in NFT utility.
The utility has become a necessity for NFT collectibles. However, if you’re looking to buy NFTs solely based on the rarity and vibe, it’s advisable to buy NFTs from artists who are on the rise. This way you may benefit from their growth. Why is utility important in choosing which NFTs to buy? The utility makes the different NFT projects sustainable and therefore great for long-term investment. With that in mind, what kinds of utility should you consider when choosing the NFT to buy in 2022?
Read also: How to Transfer NFT to Another Wallet
NFT Utilities That Are Phasing Out
Airdrops companion NFTs with no special purpose. This is when a collection promises to give you a companion NFT down the road. The airdrops utility was made popular by the Larval Labs and Yacht Club. For example, with the Bored Ape Yacht Club, the NFTs are tied to membership and you get airdrops down the road. The project experienced a huge success with the latest NFT sale of a bored ape being $3,4 million. Because of this success, this type of utility has been repeated by almost all NFT collections, even though, in most cases, they end up having no value without the added use cases. The companion NFTs need to do something more. Otherwise, you’re simply receiving a worthless JPEG.
Another form of NFT utility that’s losing its appeal is buying virtual land in the metaverse. Several NFT collections were offering the users an opportunity to buy land in Sandbox or Decentraland. This was exciting at first; especially with the talk around the limitless metaverse. However, the excitement fades as people realize they’re not using these virtual lands as much as they had expected. In the coming years, there will be more advanced utility NFTs with real-world benefits linked to them. A virtual land that you can’t physically own, may not be as appealing.
Finally, there are utilities such as buying up the floor of a collection or redistributing secondary royalties to holders. This was popular some months ago but it’s becoming less and less in value. It’s not a great way of creating long term and it tells us that the creators don’t have a better way of investing that money.
NFT Utilities That Are On the Rise Into 2022 And Beyond
NFT Decentralized Finance (DeFi)
This involves adding utility to an NFT by merging some mechanics from decentralized finance. Some examples include introducing the concept of staking as a form of passive earning, and liquidity mining. There are a number of platforms that have increased their NFT utility with staking. Recently, we had a wolf game that showed some fun gaming mechanics that you can build around staking. An example of an NFT project that includes staking is the Onessus Games; which has a staking platform called WhenStaking. The users can stake the NFTs from the Onessus blockchain and earn APY of up to 80%.
This mainly involves business development; getting partnerships that will add value and sustainability to the NFT collections. An example is the Bored Ape Yacht Club collections that formed several partnerships in 2021 including; Rolling Stone Magazine, Universal Music Group, Arizona Iced Tea and partnership with Adidas on their drop. The latest partnership is with Amonica Brands with the aim of creating an NFT game to be launched in the second quarter of 2022. This is a utility NFT that can keep growing in value because of the several use cases that the partnerships bring with them.
As more NFT projects are coming up, the biggest challenge getting attention to the projects and airdrops. Therefore, several entities have come up acting as launch pads for new NFT projects. They do this by offering their collectors access to waitlists and giveaways from the new NFT projects. Examples include the JRNY NFT club and 888 inner circles. This group of NFTs has a great potential to thrive in 2022; especially if the founders have good connections.
DAO Focused NFTs
These types of NFT projects have a mission statement that people can identify with and use the funds raised to achieve that mission. A good example is the Constitution DAO that recently tried to buy a copy of the constitution. For this purpose, they crowdfunded about $47 million in a week. Even though they failed to buy that copy of the institution, the project shows the capital formation possible with DAO NFTs. We’re at the beginning of what DAOs can accomplish and the possibilities are endless.
You can be on the lookout for trends such as the brands that are getting on board and creating their NFTs. Big brands started making an entrance with clone X, which is a Nike brand and Adidas Originals. Several other brands are watching this trend and its success. It’s reasonable to say that a lot more of big brands will join this in 2022; toy companies such as Lego, and media empires such as Disney. Olive garden has come out with NFTs representing one of 880 real Olive garden franchises in the United States, although the NFT is from a community of Olive Garden fans.
Also, looking at the top-performing NFT collections, the success and growth can be tied to the developers’ and creators’ track records. NFT collections created by developers with a good track record are more likely to succeed and grow compared to the others. Check the team section of any NFT project you’re interested in and see if they are linked to the social media pages.
In conclusion, knowing the utilities to look for and those to avoid answers the biggest part of your question; how do I know which NFTs to buy in 2022? 2022 is expected to have a higher number of utility NFTs; meaning the NFT space will be very competitive. This competition will be further increased by the mega brands joining the NFT space with the required resources to create compelling NFT products. Therefore, you need to invest in projects that have a team that can deliver on their promises.