Brick-and-mortar brand NFTs are attracting new users to web3 ecosystem

Written by: mrodin

NFTs (non-fungible tokens) have been one of the fastest growing digital asset classes, as a new way for creators and brands to monetize and authenticate their digital content. Unlike physical money and cryptocurrencies, NFTs are unique and cannot be replaced, making them valuable collectibles that brands can leverage to connect with fans.

Major brands from sportswear giants Nike and Adidas, to top sports leagues like the NFL and NBA have all been involved in branded NFTs. In most cases, the NFTs sold out within hours of going live. NFTs might look like toys but the concept and technology behind it have allowed brands to create an entirely new (and huge) market that they can get their customers engaged with.

Delving deep into brand NFTs

NFTs are approaching a critical mass to go mainstream - more than 65 percent of Americans are familiar with NFTs and 9.3 million have purchased one. At MetricsDAO, analysts Ali3N and 0xHaM-d delved deeper into this world using data from Flipside Crypto. Their analysis focused on:

• Comparing each project and analyzing if the choice of chain impacted their success
• How the projects have fared since launch
• Comparison of non-web3 native brands’ NFT collections (brand NFTs) with a popular web3 native NFT collection (Azuki)

The analysts’ dashboards analyzed the following NFTs on three chains:

• Polygon: Reddit NFTs and Chicken Derby (web3 native)
• Ethereum: Adidas Impossible Box, RTFKT Nike, Azuki (web3 native), and Porsche 911
• Flow: NFL All Day, NBA Topshot and Seussibles (web3 native)

What the analysts found

The analysts’ findings were fascinating, providing a view of the fast-growing world of branded NFTs, and giving us insights into the performance and popularity of these collections.

• Most of the people buying brand NFTs are first-time buyers with little previous experience of the NFT marketplace or DeFi ecosystem. They came onboard because they follow major brick-and-mortar brands and want to have a deeper connection.

• In most cases, the popularity and sales volume of web3 native collections (such as the bestselling Azuki) is higher than brand NFTs. Web3 native NFT prices have also been more stable over time, compared with the median price of brand NFTs, which fell shortly after launch.

• Among brand NFTs, the NFL All Day has the highest sales activity by far, measured by number of sales, traded tokens, active traders and minters. However, the value  generated from Nike (with Adidas a close second) were much higher than other projects, showing they are able to sell NFTs at higher prices and make more revenue with a smaller group of brand-loyal buyers.

• Topshot NFT has the highest hold time by fans, probably because of the popularity of the league and fans wanting to collect the NFTs (video highlights from their favorite teams and players) instead of trading them.

• The majority of NFT collections have a high-peak time period, when there is a lot of interest and purchases in the first few days after launch. Sale activity declined significantly thereafter. The “buy in hype” was higher for brand NFTs, because of the brands’ popularity among a large fanbase.

• NFT sales volume depended on the popularity of the brand, and also on the cost of the blockchain network. The high cost of using Ethereum worked for brands with bigger budgets like Nike, Adidas and Porsche but made it less cost-effective for smaller brands’ collections. However, Ethereum remains the most popular blockchain for NFTs, because it is relatively secure, is the biggest and most well-known chain after Bitcoin, and has a huge community of developers and users. And it supports auctions, which helps sellers market their collectibles to the highest bidder and set a floor price for NFTs.
• Polygon, a layer 2 chain running on Ethereum Virtual Machine, has exploded in popularity for NFTs with at least ten major brands launching their NFTs. Polygon’s Ethereum scaling solutions and partnerships with top global brands have accelerated the brands’ adoption of web3, metaverse and NFTs. Lower fees and faster transactions helped in its wider adoption.

Final takeaway: The successful NFT experience of leading brands is likely to accelerate their expansion in this space, just like cellphones did after the iPhone was launched.

As technology evolves, we can expect to see more brands finding creative ways to utilize NFTs to connect with existing customers and expand their fan bases worldwide.