As the world relishes over the hype of cryptocurrencies, the next wave of blockchain has recently arrived. Enter Non-Fungible Tokens (NFTs). This gained prominence with the recent $69M auction of Beeple's digital art. A sector that I found intriguing is the gaming use-case, in particular, the trending "collectible" game - NBA TopShot. I first heard about NFTs when CryptoKitties made the news in 2017, curious to why animated cats were transacting for a few thousand dollars. I started paying more attention in early 2021 after realising that Topshot was produced by the same company, Dapper labs. This post is my take on the underlying technology behind this NFT use-case called FLOW, and why I am a believer.
TL;DR
FLOW is a token on the flow blockchain produced by Dapper Labs, the company behind some of the leading NFT games in the market like CryptoKitties and NBA TopShot. Its token is currently only available on less established exchanges like Kraken and Huobi, but I'm bullish that its value will appreciate as its application increases, especially when it starts listing on major exchanges like Binance and Coinbase.
In the following sections, I touch on X points:
1. Background context
2. Big-name partnerships, investors and clients
3. MVP management team
4. Timeline
5. Lingering concerns
1. Some context of the Flow blockchain and token:
Flow was started by Dapper Labs after experiencing first-hand, its limitations on the Ethereum network while they were building CryptoKitties.
Flow is a layer-one blockchain, while the FLOW token is a native asset for this blockchain. Just like how Ethereum is a layer-one blockchain, and ETH is the cryptocurrency for the Ethereum network.
FLOW is the native currency for apps, games, and smart contracts built on top of the Flow blockchain, and thus is the currency guaranteed to be available for developers and users to transact with on the network.
Traditional blockchains force every node to store the entire state of the network and perform all the work associated with processing every transaction in the chain. Comparatively, the Flow blockchain allows nodes to specialize into four “horizontal” roles, based on their financial stake and hardware capabilities (Collection, Consensus, Execution, and Verification).
This enables high performance and low cost, without compromising on decentralization or breaking up the network through sharding.
2. Major partnerships, investors and clients lined up with Dapper Labs:
NBA Topshot is a follow-up product from the Dapper Labs team after its success with CryptoKitties, once the most popular smart contract, accounting for 11% of all transactions on Ethereum.
Upcoming partnerships with large fan-base brands such as UFC, Samsung, Warner Music, and Ubisoft. We'll possibly soon see a Conor McGregor or Ed Sheeran NFT!
(Upcoming brand partnerships)
They already boast a list of A-star investors like a16z, Coinbase ventures, Google Ventures, Michael Jordan, Will Smith, and Ashton Kutcher. Not forgetting a long list of other NBA stars (current and previous) in their recent investment round which would help with scaling adoption.
(List of existing investors)
Existing crypto partnerships with influential players like Binance, Libra, Circle, Opensea, Alchemy, Coinlist, Finoa.
All in all, the ability to onboard these integral and necessary stakeholders should give credibility to the team, but also signal the potential of this venture.
3. Strong management team:
Pioneers in the NFT space with the success of CryptoKitties, and an experienced team that mostly came together from Axiom Zen, a venture studio that focused on prototyping emerging technology like AI, VR and blockchain.
Roham (CEO) was formerly the founder and CEO of Axiom Zen
Dieter (CTO) co-authored the ERC-721 proposal, the bible of NFTs, that defined non-fungible tokens on Ethereum. (The MVP in the team for me)
Caty (Head of Partnerships) spent her career in large sporting establishments like NHL, NFL, and ESPN. Which explains the number of high-profile sports partnerships.
Micky (SVP of Revenue) also previously Head of Revenue at Unity, with experience in gaming monetisation.
Its also a good sign that the management team has long term vesting periods to ensure alignment of interest.
In the process of researching about Flow (a viable solution), NBA TopShot (wide product appeal) and the team (proven track record and expertise) - these validated the credibility and potential of the flow ecosystem for me. Thus, I started digging on how I could get exposure. Since Dapper Labs is a private company, this led me to FLOW.
4. Timeline of the FLOW token:
Oct 2020: Community sale on CoinList
27 Jan 2021: Listed on Kraken (only staking rewards, as ICO has 1 year lock in)
2 Feb 2021: Listed on Huobi
12 Feb 2021: Listed on gate.io
18 feb 2021: Listed on crypto.com
23 Feb 2021: Listed on OKEx
Listing on Binance or Coinbase?
It should only be a matter of time since Binance and Coinbase ventures are partners. With the fundamentals of having a demanded use-case, large fan base partnerships, and strong management team in place, I feel that the catalyst for FLOW's popularity is their listing on major exchanges, which would not be difficult especially given their strategic relationships.
When FLOW held its public token sale on CoinList, it became the largest token sale on the platform, with more than 12,500 participants. A precursor to FLOW's potential.
Taking a step further, there is also research and precedence that supports the jump in token price within the early days of listing. A screenshot of the conclusion:
5. Lingering concerns:
The actual listing of FLOW on Binance or Coinbase is still dependent on being SEC compliant, and there is still little progress on their SEC filings. As seen from the reports, their most recent activities have been securities offerings.
However, an interesting finding on their SEC reports was their trademark filing for "THE NFT COMPANY", which further cements their long term intent in the NFT space.
The 1-year token lock-up expires in October 2021 which might trigger sell-off. Considering that early backers bought in from $0.1 onwards, and the current price is between the $15 - $12 range, its not illogical to assume that a significant amount of tokens will be liquidated.
Closing
Despite my bullish case for this project, FLOW tokens does not represent an equity stake in NBA TopShot or Dapper Labs. They continue to remain a private company. While it is not possible to participate in their fundraisers, an ownership of the native currency of this ecosystem might provide indirect exposure to the potential upside, even for its speculative nature.
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