Crypto VCs still love NFTs
NFTs are back, and VCs are looking for more "real world value" this time around.
Crypto is a cyclical industry that works something like this:
When the prices of “blue chip” coins, such as bitcoin and ethereum, increase, more money flows to the sector. Some of this money, chasing higher yield, flows to different, riskier assets, ranging from speculative “meme coins,” such as DOGE and SHIBA, to alternative blockchains like Avalanche and Solana. One group of investors always looking for the next big opportunity in crypto is venture capitalists.
Two years ago, the hottest trend in crypto was nonfungible tokens (NFTs), with Yuga Labs, the creator of the “Bored Apes Yacht Club” NFT collection, raising a monster $450 million venture funding round, led by Andreesen Horowitz, at a $4 billion valuation.
The value proposition of NFTs, at the time, was a combination of exclusivity and transparency. There are only 10,000 Bored Apes, for example, and ownership of these Apes could be tracked on the ethereum blockchain. Owners of Bored Apes gained access to exclusive, members-only events, and, more importantly, ownership of an Ape was a status symbol owned and displayed by celebs. Basically, a Bored Ape was a luxury asset that investors believed would continue to appreciate in value.
For context, around this time, some “investors” also paid hundreds of thousands of dollars for “EtherRocks,” which were, quite literally, animated pictures of rocks.
However, during the last crypto bear market, NFTs prices plummeted, with monthly trading volume on OpenSea, the largest NFT marketplace, declining from $5 billion in early 2022 to just $145 million in April 2024, according to Dune Analytics.
Now, two years later, the crypto market is hitting all-time highs, and VCs are once again bullish on NFTs. But this time, investors aren’t interested in pixelated primate JPEGs.
In a panel yesterday, Kate Laurence, founder and CEO of crypto investing firm Bloccelerate VC, said that we’re reaching an inflection point where “real assets,” such as real estate, will soon be on chain. Fellow panelist David Nage, a venture portfolio manager for digital asset investment firm Arca, also noted that NFTs are wrappers of intellectual property, and Laurence agreed, stating that NFTs for scientific research could “change the world.”
While it was not immediately clear what “NFTs for scientific research” would look like or how they would make a huge impact, one would hope that they have a bit more longevity than 2022’s NFT bubble. For what it’s worth, Laurence stated that she tried to “stay away from hype cycles,” citing the current AI boom as an example.
