The Importance of NFTs, DAOs, and Roadmaps

I thought it was hilarious when CryptoKitties launched. "Wait a minute," I thought, "So, you mean that this JPEG can have a relationship with this JPEG, and make a new little JPEG? Isn't that crazy?"

When CryptoPunks were born in 2017, many people thought they were silly. They are only 128x128 pixels. Who cares? They weren't really cool until Gary Vee had a planning call with influencers and said, "Crypto Punks are going to be hot, go get some!" They entered the market, cornered the market, and raised prices.

Bored Apes happens to be around the same time that Gary launched the project. They brought influencers together and said, "Let's buy these!" They all bought, and the price went up over time. At the time, these cost 2 ETH. It was already a high price back then! Now the floor price is 80 ETH. All of these NFTs—CryptoKitties, CryptoPunks, and Bored Apes—are making big bucks.

When I chatted with Gary in early 2021, he was thinking about NFTs. We discussed launching on Wax, a blockchain dedicated to NFTs. It’s like Walmart, but for NFTs. Wax's NFTs are much cheaper than Ethereum. Gary then chose to launch on Ethereum, completing the feat of raising $90 million himself. I just don't like Ethereum's gas fees, it's a big drain.

I'm starting to see the impact NFTs can have. Many people see NFTs simply as images; they are just jpegs, indistinguishable from screenshots. NFTs are so much more than that because they can really open up new experiences for you. NFTs represent a new era of digital rights management. Basically, your NFT can be video, image, text, audio, link, AR, VR, 360 video, they can be a combination of all of these. They can unlock specific venues based on geographic location.

NFTs can also evolve over time. You could have a baby NFT, maybe a tiny egg, which turns into a tiny dinosaur. Then it will become a baby dinosaur, an adult dinosaur, and it can mate with other dinosaurs and give birth to a baby dinosaur. The cycle starts again. The stronger and more powerful a dinosaur, or a certain lineage of dinosaurs, is, the more valuable it is. Believe it or not, this has many applications in the real world.

There are many more utilities for NFTs. If you have this NFT in your wallet, you can prove it's yours, perhaps giving you backstage access to a concert. There are a lot of loyalty rewards that can be done with these NFTs. If a band comes to your city, they can put something in your wallet to give you an extra experience.

An NFT is basically a programmable smart contract that can do anything you can imagine. It's not just a JPEG - it's proof of ownership of the item.

When you have an NFT, you become a member of a group with these specific NFTs. You can see on the blockchain everyone who is in this community with you - your fellow NFT holders. On top of that, you can also airdrop something to them. Such an organization can be called a DAO.

DAOs

A decentralized organization (DAO) has no employees, no boss, no headquarters (physical location), no place to call and find someone to complain about.

DAO is managed by code. Suppose there are three DAO members. Each of us has the right to vote and participate in the DAO because we hold NFTs. We can participate in the governance of a particular organization. Not every DAO needs an NFT. Similarly, not every DAO needs a cryptographic token. Either way, if you have X amount of tokens, you can have some level of voting power. Or, if you have a specific NFT or a certain number of NFTs, you can also have certain voting rights. It's a foolproof way to vote and run an organization the world has never seen before.

There are not just three people in this type of organization. There will be thousands of them. If you have a specific NFT in such an organization, you will have more voting power, which will be related to the NFT you hold (either the specific NFT, or the number of NFTs you hold). DAOs operate quite differently than traditional organizational hierarchies, which consist of at least one employee, a manager, a director, a vice president, a president, a CEO, and perhaps a Composed of directors. In DAO, none of these exist.

DAOs are organizations governed by code, not leadership. This is a paradigm shift considering these algorithms and smart contracts replace traditional corporate structures. They are automatic in many ways - if one thing happens, the next thing happens.

Smart contracts are supposed to automate and enforce certain rules. For example, if you are a freelancer who wants to get work done for a client, smart contracts are handy. What if smart contracts were automatically generated and executed when the work was done, and you got paid immediately? This is much more convenient than having to wait 30 days in the accounting department to process the last month's salary.

Currently, the largest NFT and DAO platforms are on Ethereum. After all, it is the first smart contract platform. You can execute code based on what you have written into the contract. In particular it eliminates many of the problems encountered in the digital realm. It also removes the need for trust and intermediaries. Most businesses will want to enforce some kind of smart contract in their business.

There is no fraud in DAO because it is on the blockchain and programmed into the code. We know who owns which NFTs or tokens, and which votes it corresponds to. It cannot be denied, and trusted. This is how voting will be organized in the future.

A driverless car is like a DAO. It's self-driving and can drive around town by itself. You can make it go to a specific place. It will follow directions and monitor the road to keep you safe - all managed by code. As long as your code is clear, it will do what you propose. DAO brings a community component to NFT projects. You can collaborate on and contribute to projects.

If you want to create a DAO, make sure you have a proper legal governance framework, see Andreessen Horowitz for details.

route map

Roadmaps are important. The application of your NFT also matters. If you just create an NFT collection, and the imagery looks cool, few people will care. A roadmap shows people that you have the necessary long-term plans for the project. A roadmap shows that you care about the project, shows that you have long-term goals for the project, and ultimately shows that you are not trying to grab money. Many NFT projects are just about getting money fast. People see other people making millions of dollars on NFTs, they want a piece of it too, and they get out. This is not good for the community.

The roadmap lists project goals for each quarter. In Q1, we did that. In Q2, we did that. Being clear about your goals will show your community that you are serious and not a scam. Sometimes what looks like a legitimate project attracts a large audience, only to sell out and find nothing. They took the money and ran away.

In the future, projects will not only have a roadmap, but also have utility beyond images. We are already starting to see NFTs with better functionality than the first generation. For example, the concept of how NFTs fit into the Metaverse has become popular. They will be more than just an avatar, but play a larger and broader role.

Advice to Investors

If you are an investor, only invest in NFT projects whose teams are known and have already done it themselves. You can access the social media profiles of each team member and make sure they are public and active—especially including executives and key developers. And the marketing team and so on. Many NFT projects currently hide behind avatars and pseudonyms, and I believe this will change.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.