When Community, not Art, Gives NFTs Value
If you have been seeing odd, colourful avatars replace the profile pictures of your friends on social media, you are not alone. Profile Picture (PFP) NFTs have been taking the world by storm. As if acknowledging their popularity, social network Twitter even recently added a feature to integrate such NFTs into user profiles.
Well-known PFP NFT collections include Bored Ape Yacht Club (BAYC), CryptoPunks and The Sandbox. Contrary to how traditional art is created from scratch, the art featured by these NFTs are code-generated art, earning them the moniker of generative NFTs.
A Layered Approach
Generative NFTs are built using layers of different traits. Each trait is graphically represented, and can be split into categories like background colour, skin, hair, etc. Creators are only limited by their own imagination. These traits are then mixed and matched randomly before being minted.
The quantity of NFTs follow a bell curve as the number of traits increases. Different traits differ in rarity as well - some are more common than others. Therefore, an eventual PFP NFT can consist of a combination of 10 different traits randomly generated through code.
Community and Friendship
How did these PFP NFTs boom in popularity? Why are they so popular? This is a phenomenon that can be hard to understand.
NFTs don’t have intrinsic value, and if we were to only evaluate them through the lens of an artist - it can be easy to lose sight of why some PFP NFTs are so valuable.
PFP NFTs are valuable because they offer access to groups and networks that are traditionally gated. Much like how businessmen join country clubs, people who own A-list PFP NFTs are greeted as part of an exclusive community. This affords them intangible value - the opportunity to build relationships with people previously not accessible to them.
And the benefits don’t stop there. For instance, buyers of Yuga Lab’s NFTs - BAYC, Mutant Ape Yacht Club and Bored Ape Kennel - were airdropped multiple ApeCoins to their wallets.
How much they received and can claim depended on the NFT they possessed. This leveraged on the prestige associated with these PFP NFT collections, and the FOMO on possessing such coins.
Some PFP NFTs even function as a representation of membership within a Decentralized Autonomous Organization (DAO), where members collectively pool resources to achieve a common goal.
It goes without saying that such PFP NFTs can be enticing to purchase, but you should always do your own research (DYOR) before doing so.