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The NFT Boom
A scene in a movie only a few years ago seemed to be reflecting a great future. Today with the advent of Metaverse, we know we are only a few steps away from it. Metaverse is utilized as a new economic model and a way to expand businesses for most of the existing corporates. Thanks to games and untact environment stimulated by COVID-19, Metaverse is permeating our lives.
Non-Fungible Tokens (or NFTs), another megatrend in 2021, are also growing rapidly by accelerating Metaverse-based economics. The definition on NFTs, however, still has not reached a global consensus; whether they are classified as virtual assets or not will have a great impact on their future because regulations will greatly differ based on classifications. According to the Updated Guidance for a Risk-Based Approach by Financial Action Task Force (FATF), NFTs are generally not considered as virtual assets because they are 1) “unique, rather than interchangeable” and 2) “used as collectibles rather than as payment or investment instruments.”
Moreover, Act on Reporting and Using Specified Financial Transaction Information of South Korea defines virtual assets as “electronic certificates (including all rights thereto) that have economic value and that can be traded or transferred electronically,” excluding those “that cannot be exchanged for money, goods, or services and the place and purpose of use of which is restricted by the issuer.” Since an owner of an NFT cannot send his/her NFT to the other, it is not a virtual asset according to the Act above. However, there is still a grey area for various interpretations, which means that NFT trade platforms (i.e., Opensea) might have to meet a wide range of legal obligations as VASPs if NFTs are to be defined as virtual assets.
Despite the concerns, industries utilizing NFTs are expected to continue the rapid growth in 2022. NFTs will be used to trade intellectual properties such as collectibles, artworks, and sports, obviously in addition to the current use in game and virtual worlds.
Forgery prevention or authentication are some other ways to utilize NFTs in industries. In fact, efforts to verify and prove expensive premium brands or jewelry via NFTs are consistently occurring.
Finance-Based Blockchain: Web 3.0, DAO 2.0, DeFi 2.0, and CBDC
Let’s look back to the blockchain market in 2021. First-world countries such as the US, European Union, and China take up more than 70% of the industry spending. Financial blockchain, such as DeFi, digital custody, and CBDC, was the leading industry, taking up about 60% of the market, followed by manufacture, distribution, and public sector. Disregarding the current development stage, more than 80% of the world’s biggest 100 companies have implemented blockchain technology.
Although more than half of the enterprise blockchain is based on private chain – especially Hyperledger fabric – rather than public chain, the blockchain trend in 2021 demonstrated the need to increase multi-chain use in accordance with the expansion of blockchain technology and its application. As the awareness on the need for appropriate chain is increasing, development of a platform supporting multi-chain as well as bridge technology supporting between-channel communication will keep accelerating.
The acceleration of blockchain will be led by the three waves of 2021 – Web 3.0, DAO 2.0, and DeFi 2.0.
Web 1.0 was a basic homepage, a one-way window to promote what a company has. In Web 2.0, two-way communication was the biggest concern. Users could communicate via writing, in contrast to passive reading in Web 1.0. Web 2.0 brought about the development of mobile environment and social platforms based on user-generated content. The unreasonableness of Web 2.0, however, was that user-generated content was owned by the platform service provider, not the user, and it was the reason the initial Web 3.0 focused on individualization; that is, the nature of Web 3.0 was hyper-individualism, offering optimal information and service necessary for an individual. Nevertheless, Web 3.0 merged with blockchain strives for a bigger value. Rather, it seeks to revolutionize the internet ecology which is centralized and monopolized by few Internet giants and create digital economics that is fairer and decentralized. In other words, by offering an infrastructure which enables horizontal value exchange, blockchain-based Web 3.0 provides a protocol for participants to freely exchange values without an interruption from centralized institutions, like platforms. New technologies such as smart contracts, dispersed infrastructure, decentralized finance, digital certificates, proof of ownership, and DAO will be imperative in Web 3.0 era.
Blockchain-based Web 3.0 is also changing the form of companies, and it is called Decentralized Autonomous Organization (DAO). DAO is a futuristic organization operated by smart contracts. Its very first model, “the DAO,” defined itself as a new form of consultative group reclaim novel business opportunities for participants’ improvement.
DAO operates consensus rules based on smart contracts, so it works autonomously once rules are set. This structure is in stark contrast with original incorporations which implement a top-down structure grounded on shareholders because it seeks to achieve a goal set by DAO members, not the profit of shareholders. Thus, it may look more like a co-op. DAOs include, but is not limited to, Uniswap (DeFi DAO), Neptune (investment DAO based on Venture Capital), constitution DAO (collector DAO), or other fan club DAOs run separately from agencies.
Since the basic principle of DAO is to set a company’s goal via participants’ votes and fair distribution of profits, advocates of decentralization appreciate DAO. However, voting rights in DAO are determined by stakes, leaving a side effect – that a small part of participants invest most of capitals for voting rights – to be solved. Nevertheless, Wyoming, probably the most progressive state to new technologies, acknowledged DAO as a legal limited company in 2021. The progress is notable regarding the lack of legal ground to admit DAO as a legitimate company.
One way to apply DAO was DeFi 2.0. DeFi 2.0 supplemented drawbacks of DeFi 1.0, which has been criticized as a Phonzi scheme by some, by a simple logic: high liquidity backed by a high interest. By implementing a bond system which DeFi 1.0 lacked, Olympus DAO, a representative DeFi 2.0, created a system in which a protocol can manage liquidity pool. Thus, Olympus DAO is still holding the lower limit price – a culprit of the failure of DeFi 1.0 – quiet successfully so far, despite some cynical perspectives on it. More DeFi 2.0 models, like MakerDAO based on Ethereum security, are being created.
It is still necessary to monitor how and what financial authorities will regulate on DeFi users and service providers. Nevertheless, regulation issues did not stop DeFi from its sevenfold growth rate in 2021 alone, and it is only expected to accelerate this year. As virtual assets are occupying more spaces of the portfolios of institution investors, DeFi industry related to digital custody is almost doubling annually.
Competition over CBDC Supremacy
Throughout the history of humankind, in the center of authorities always lied a financial supremacy. The United States of America took over world’s supremacy by making dollars a key currency right after the World Wars. The emergency of Bitcoin is probably the first variable of the dollar-based US supremacy. China performed Central Bank Digital Currency (CBDC) test before anyone else and is seeking to expand its use via 2022 Beijing Winter Olympics.
China’s effort to promote its CBDC is one of the reasons the US and some of its alliances are politically boycotting the Olympics. China, probably the only threat to the US supremacy, is actively looking for a chance to shake the dollar supremacy. The intention is pretty clear reflecting that the US government regulated the effort of Facebook – currently Meta – to issue a new coin named Libra, worrying that it would threaten dollar supremacy. Facebook moved on to issue Diem, on which Facebook also gave up. Eventually the only coin Facebook issued was Paxos, a stable coin only for American users.
The political concerns complicate the hidden intentions of each country. The biggest concern of the US is to preserve the existing financial ecology while that of China is to preoccupy digital currency ecology. Hong Kong and Singapore, two center mediators of world’s finance, are seeking for profits by mediating new and original financial ecologies. The Bank of Korea is planning to initiate the first step of a pilot program of Korean CBDC by June, 2022, and the second step in the second half of the same year. Regarding the cautious attitude of financial authorities so far, however, completion of the pilot program will not determine its launch. Korea should carefully consider that neighboring countries are progressing CBDC based on their own benefit; we hope that Korea makes a strategic move, rather than a conservative one, regarding CBDC.
Industrial Areas: Manufacture, Retail, and Public Sectors
The recent ESG standards in industries are significantly influencing business activities. ESG stands for Environmental, Social, and Governance, demonstrating that the value of a company will be acknowledged only if all three values, not just profits, are pursued. Blockchain industry will not be an exception, and ESG will potentially be both opportunities and concerns. The enormous energy consumption of blockchain mining has been an issue for years, and Ethereum, the most prevalent blockchain platform in the industry, is on its way to convert from PoW to PoS. The European Union’s recent implementation of Carbon Border Adjustment Mechanism (CBAM) will also have a significant impact on Korea’s export – especially that of vehicles and steel – to EU, possibly reducing more than 10% of all exports.
BlackRock, a global investment management corporation, announced that it will only invest in moral companies which reduced a certain amount of carbon emission. Otherwise, BlackRock will retrieve funding in those companies that do not meet the new standard. In fact, a Dutch pension fund APG already withdrew its investment in Korea, which is exporting coal-based power plants. Green energy is the key requests of the change in business environments. Via large-scale funds, Europe is actively supporting businesses that are converting from gray- to green-jobs. Conversely, South Korea’s import still heavily depends on – more than 90% – fossil energy. In terms of renewable energy ratio, South Korea is far behind OECD nations with only 8%, compared to the OECD average of 30%, ranking last among all OECD nations.
How can somebody call this moment a chance, then? The answer is blockchain. A number of South Korean companies have initiated to apply blockchain on supply and demand system of green energy. Since ESG is closely related to numerous regulation policies dealing with survival of companies, blockchain in green energy field is likely to grow at an astronomical rate.
As in 2021, retail corporates, especially the giants, will expand NFT use for loyalty marketing. Fintech, overseas remittance, and manufacture will apply blockchain more and more. The South Korean Ministry of Science and ICT has included blockchain as one of the key technologies for futuristic economic paradigm; plus, it is preparing for diverse pilot projects in collaboration with other ministries.
Recently, it is not uncommon to find clients who ask how far blockchain has come so far in terms of Gartner Hype Cycle. They do not doubt blockchain technology itself, but their questions probably reflect worries due to both memories of volatile prices of cryptocurrencies and recent NFT boom.
I think that blockchain, as a technology, has reached the “slope of enlightenment” at least. Therefore, I often tell my clients that 2022 will be a remarkable year with a myriad of application cases of blockchain to reach “the plateau of productivity.” I truly believe that blockchain will be expressed in various business cases in 2022.
Wanna learn more about Luniverse NFT? Ask email@example.com for questions!
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Dear Luniverse Comuunity,
We are excited to announce the first global NFT marketplace based on our Luniverse blockchain: “Cyphrly.”
In 2021, Lambda256 unveiled ‘Luniverse NFT’ — a fully-integrated NFT service that streamlines operations for NFT marketplaces and wallet providers. The platform is highly programmable and interoperable, but more importantly certified green. Luniverse’s high energy-efficiency is envisioned by a validation algorithm called LPoA (Luniverse Proof-of-Authority) behind the Luniverse sidechain, a system that produces 99.99% less energy than that of energy-intensive systems like Ethereum. With Luniverse’s proprietary NFT technology, Lambda256 has been at the forefront of the NFT landscape in South Korea, with the launch of Upbit NFT in partnership with Dunamu, and in the production of NFTs, with K-pop girl group Brave Girls.
Cyphrly is planning its launch in Q2 of 2022, with additional details yet to be announced.
Stay tuned in our official channel for more updates!
Luniverse, the sustainable future for NFTs
Mint, deploy, and sell NFTs without leaving a carbon footprint.
An efficient and ecologically sound solution, Luniverse’s Proof-of-Authority(LPOA) consensus algorithm addresses the environmental concerns tied to NFTs, leading to 99.99% greater energy efficiency than that of proof-of-work based networks like Ethereum.
Creativity should be a force for good – it shouldn’t carry a hefty burden on out planet.
If you’d like to try our NFT service, contact us via firstname.lastname@example.org.
We are glad to announce that Luniverse 2.0 now supports Hyperledger Fabric!
Luniverse 2.0 customers and users can now choose ‘Hyperledger Fabric 2.2’ option in addition to support for Hyperledger Besu.
Click here to learn more about details for the products and prices.
Why Hyperledger Fabric?
Hyperledger Fabric is one of the hyperledger projects led by the Linux Foundation, a permissioned blockchain that require participants to identify themselves and assign defined roles to perform only permitted activities. Unlike public blockchain networks, such as Bitcoin and Ethereum, where everyone around the world can access and explore data, Hyperledger Fabric retain control over access and data for the authorized users. Because of these characteristics, financial sectors, companies, and organizations mainly use Hyperledger Fabric for their new business while retaining the security of their data.
Luniverse 2.0 Hyperledger Fabric
Luniverse Hyperledger Fabric platform is a blockchain-as-a-service (BaaS) solution for Hyperledger Fabric networks. It allows companies to start blockchain operation for their business without a comprehensive understanding of the blockchain technology.
The latest protocol, Luniverse Hyperledger Fabric, provides easy network settings on the Luniverse console. We believe data visualization is a key concept to understand the blockchain processes without complexity, so we provide various management tools such as channel statistics and node monitoring for users to observe Organization, Channel, Peer, Order, and CA.
Jeonbuk National University Hospital and Chungbuk National University Hospital applied Luniverse Hyperledger, and signed a memorandum of understanding (MoU) with Jeonbuk National University Hospital’s Clinical Pharmacy Center in November to build a blockchain-based clinical trial platform. Pharmaceutical companies, CROs, and hospitals involved in clinical trials can participate as nodes on the blockchain platform and store data generated during the test on the blockchain to enhance transparency and reliability of the data.
If you have any question about Luniverse 2.0 Hyperledger Fabric, contact a Sales team via email@example.com.
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