Mr Nakamoto sees Bitcoin as a self-enforcing prophecy. By analogy, if NFTS can achieve the same homology of belief and choice as Bitcoin, it is reasonable to assume that NFTS can be consistently strengthened in the Nash equilibrium in the long run. Of course, the anchor of belief and choice is floating, and the current NFT is far from reaching the consensus level of Bitcoin, so it is naturally difficult to control or ensure this anchor.

It is not hard to see that the market has evolved two ideas to open the demand side:

A Step to the Right to Enhance Investment Attributes -- NFT Financialization;

A Step to the Left to Enhance Consumption Attributes -- NFT Commoditization.

1. Financialization of NFT: DeFi x NFT = NFT Fi

Financialization of NFTS is not a novel topic. Because NFT itself is a kind of on-chain token standard, including ERC20, ERC721, ERC1155 and other protocols, it is a very direct and robust logical chain transmission to treat it as an investment product and to further extend and explore its financial attributes and derivatives. The questions then are :(1) can financialization of NFTS solve demand? (2) To what extent can NFT financialization open the NFT demand side? We believe that financialization of NFTS can greatly help to expand and enhance demand, mainly based on the following two points:

1. Enhance NFT consensus by combining DeFi gameplay. NFTS, when combined with DeFi protocols, can lower the barriers to participation in the NFT market and the cost of education. Because the barriers to entry for trading in non-traditional financial instruments are relatively high, players who lack knowledge of such unique or exotic assets tend to take higher trading risks, preventing more long-tail buyers from entering the market. And lack of sufficient trading depth and market confidence, will naturally delay the accumulation of NFT overall value consensus.

2. Enhance tradability and stimulate liquidity through securitization. By converting illiquid NFTS into tradable securities, NFTS can be used as collateral like traditional securities to help slice and diversify the underlying asset pool and credit risk. With the birth and application of NFT assets and their derivatives, Web3 participants can benefit by diversifying their risk into a wider range of categories.

2. NFT commercialization: New consumption X NFT = NFG

Basically, consumer goods exist to solve and calm the widespread appeals and annoyances of Maslow's pyramid. The primary purpose of buying and consuming commodities must not be speculation or profit, but to use their unique functional value to alleviate some short-term pain. To give a few simple examples, we buy rice for food, cars for transportation, games for entertainment, and coffee for refreshment. By contrast, when a commercial item is purchased mainly because people want to use and exchange its own functional attributes, rather than seeking profit return, it should be regarded as a consumer product.

We believe that all have (1) not completely homogeneous and (2) benefit from ownership of digital credentials. Any product with these two attributes can actually be expressed in the form of NFT. And an interesting concept arising from this will be non-fungible Goods (NFG). This narrative concept of the combination of virtual assets and real economy can further broaden the actual use value and future application scenarios of NFT to a large extent.

Closing Thoughts

NFT is a romantic and idealistic concept, with Romain Rolland mixed in with Neruda. But poetry does not solve our real problems, nor does it provide the basis for a strong consensus. The development of NFT needs more Machiavelli to actually increase the marginal utility of users, otherwise NFT2.0 progress may be utopiastic.

We believe that the demand-side growth of NFTS will achieve further leaps in the context of both financialization and commercialization. However, niche products such as NFTS have the opportunity to explode into larger value increments in the future, changing the Web3 process and the way people live in a real sense.