Non-fungible tokens (NFTs) are the latest trend to take centre stage in the crypto economy with trading volume exceeding $10 billion in the third quarter of 2021. Artists, celebrities, influencers and large corporates are weighing in on the action further fuelling public curiosity and engagement. NFT tokens go beyond art generated on-chain, avatars and collectibles, they can provide a digital representation of a real-world or metaverse asset that has value and the capacity to earn.
NFTs make it possible for investors to create passive income models by giving short term benefits in the form of access to finance to projects, causes or people and gaining long term benefits from royalties/profits. These type of NFTs are a perfect match for decentralized finance (DeFi) models enabling people from across the globe to securely pool their resources together to provide financing to real-world assets. With the total value locked in DeFi reaching $200 billion in quarter three 2021 there is certainly a lot of scope to marry NFTs and DeFi.
Establishing a decentralized autonomous organisation (DAO) creates a more democratic approach to managing digitized assets. DAOs can be used to establish a Treasury, Community and Incentives management system ensuring each member gets a vote and contributes to the governance of the DAO. The fusion of NFTs, DeFi and DAOs are generating new value-creation models that will outperform legacy models and provide more access to the underbanked and forgotten middle.