Introducing the “NFT Chain Rule”
Definition: a meme’s value is proportional to the number of derivatives based on it.
Thread (including some thoughts on @lootproject) below ⬇️ (1/21)
We increasingly live in a meme economy. Look at $GME, $DOGE, Punks, Glyphs, Loot and EtherRocks — not all of these projects are equal in their artistic or social merit 😝 but all accrue value as their core meme spreads. (2/21)
The meme economy isn’t new. More people are just buying into it now.
Don’t believe me? Take a look at the traditional art world which celebrates artists who found movements, representations, approaches — especially when their ideas are adopted + evolved by contemporaries. (3/21)
IMO, the most interesting NFT projects are on chain with a unique point of view and potential to create many derivatives. No project exemplifies this potential more than @lootproject. (6/21)
Launched just a few weeks ago, Loot is an especially interesting meme economy experiment. Created by @dhof, the co-founder of Vine, the project was a call to action for creators to remix, create derivatives and build in the Loot universe. (7/21)
To date, dozens of @lootproject derivative projects have launched. Most will never accrue value but some will become canon and have tremendously valuable over time.
How do we know which derivatives matter? (8/21)
Going back to the “NFT Chain Rule” — a derivative’s value is proportional to the number of derivatives based on it.
If you want adoption for your @lootproject derivative, you want the maximum number of Loot holders to mint your project. (9/21)
Some good news: there are a few principles you can follow to make this happen! (10/21)
Principle #1: Make minting free for loot holders during some time period, then charge a fee. (Or use bonding curve) At least at the moment, gas costs a lot, so even if free forever there is still a real cost to minting. The free period will encourage more people to mint. (11/21)
Principle #2: Don’t make a limited mint period for loot holders. The most vocal members of the loot community will be long term holders of Loot. So if you give them a reason to adopt by allowing indefinite minting, they will support you.(12/21)
Conversely, if you don’t allow these long term holders to adopt, they might fork your project if it does somehow pickup steam. And that’s annoying / confusing for everyone. (13/21)
Principle #3: Derivative NFT’s should be maximally on chain. Loot was started with this ethos. If NFT’s are not on chain they don’t compose and other smart contracts can’t reference them easily. (14/21)
Plus, it’s important that all foundational projects in the ecosystem stand the test of time. Storing data in an impermanent way puts that at risk. (15/21)
Principle #4: The project should be a “yes, and” to the @lootproject lore canon. It shouldn’t contradict “history.” (16/21)
Side note: we need a way to identify what lore is canon. We also need to figure out what we will do when major “branches” of lore occur in the Loot universe. (17/21)
“Branches” are bound to happen because people who make multiple projects will connect them to each other. We might even see “clusters” of projects compete for what is canon. (18/21)
We are just at the start of Loot’s journey but I couldn’t be more excited about what’s ahead. It’s a pure expression of decentralization and one of the most interesting social experiments I’ve ever witnessed 🙂
Lastly, a meta point: if you agree with this “NFT Chain Rule” definition…. spread it! By definition, every tweet / blog post / NFT purchase that references it makes the thesis more valuable 😉
OK… off to sleep now! Looking forward to some fun internet debates tomorrow 😛
Sleep well all and enjoy the week ahead! (21/21)