Ask someone about NFT, and they will instinctively think of digital art – CryptoPunks, Bored Apes, and Ether Rocks that have sold for amazing sums.
In some circles, non-fungible tokens have been dismissed as a means of speculation, with critics lamenting that the demand for these assets is fueled by greed.
But this argument does not give us the full picture. We hardly scratch the surface of what these unique tokens can achieve – and new use cases are constantly emerging.
The music industry is initially exploring what NFT has to offer. Live Nation, one of the world’s largest entertainment companies, has begun offering digital copies of ticket counters – giving fans a virtual keepsake of the parties they attended. Other platforms allow consumers to invest in new music and receive a share of the royalties. TV shows and movies are funded by NFTs too — and despite the backlash from gamers, game brands are also indulging in the technology.
NFTs also have the potential to improve existing cryptographic services, with DeFi being one of them. What if this technology could be used to unlock access to certain authorized services… and could we see popular crypto holdings being widely used as collateral?
While the “NFTification” of the decentralized sector is seen as inevitable in some crypto circles, there are some hurdles to overcome. Let’s explain why.
The cost of NFTs mint
Inevitably, any discussion of what prevents NFTs from playing a larger role in the DeFi ecosystem must start with the cost of minting these tokens.
Even in a powerful Layer 2 network, transaction fees mean that it is often uneconomic to create, distribute, and trade NFTs. This particularly explains why these crypto-collectives are so expensive — not to mention why new use cases for non-fungible tokens are only being explored at an icy pace.
With traders eagerly awaiting the launch of Ethereum’s Proof of Stake network, this blockchain has become unsustainable for many casual users. While faster, cheaper, and more scalable competitors have emerged in recent years, some of them have been spoiled by frequent outages — which have called their reliability into question.
But what if users are offered a completely gas-free experience while making transactions? Could this be the magic solution that will attract tens or hundreds of millions of users into space – people who might be drawn to the development that will encourage them?
Such an approach would be beneficial to NFTs and the DeFi sector alike, giving crypto enthusiasts the freedom to transact however they wish without worrying about cost. But from an infrastructure perspective, there are other issues that need to be taken into consideration.
Innovation in DeFi
At the moment, high gas fees mean that trading and farming is financially impractical for smaller users – while the slow bridges connecting the Ethereum mainnet to the second layer are causing frustration. There has also been a lack of stickiness in the DeFi space – users frequently move from one platform to another in search of the best short-term opportunities.
Of course, a bigger hurdle involves getting people to see what decentralized protocols and automated market makers (AMMs) have to offer. Poor user experience — and more advanced features on centralized platforms — often give investors little incentive to make the jump to DeFi. The downside here is that consumers end up giving up control of their cryptocurrency as a result.
But it doesn’t have to be this way — one team says they built the first NFT-powered AMM that was designed “from the ground up to solve a series of critical issues for DeFi.”
Ruby.Exchange is building its infrastructure on SKALE, which is described as a powerful multi-chain solution for Ethereum. SKALE chains have zero gas costs – and feature a decentralized and secure fast bridge to the main network where transfers in either direction can take minutes, rather than hours or even days.
And while the value of NFTs can be uncertain, but in the limited ways they can be used, Ruby offers gems – “beautiful and generative works of art that pay loyalty by embodying true utility as well as artistic value.” These assets play a distinct role in AMM.
This exchange says it offers a rich and enjoyable user experience as cash is minted in user profiles, as vouchers for trading fee reductions, and to ensure customers have access to the premium features they have come to expect – original charts and advanced analytics among them. Crop boosters are another use case.
Moreover, the lovable trading and farming experience provides that elusive “stickiness” that DeFi protocols currently lack – rewarding long-term engagement and benefiting all users by helping prevent capital migration elsewhere, affecting liquidity.
Looking to the future, new classes of NFT gems will be created – and as Ruby’s Liquidity Provider and Analytics management dashboard