Digital Collectibles: State of cNFT on Solana
Discover the World of Compressed NFTs and their Impact on Art, Gaming, and More
Remember when Non-Fungible Tokens (NFTs) burst onto the scene, revolutionizing how we perceive digital ownership and art? These unique digital assets opened a whole new world, offering a way to own, trade, and celebrate digital creativity. But just as we started getting comfortable with NFTs, the blockchain world has spun up its next marvel: compressed Non-Fungible Tokens, or cNFTs on Solana blockchain.
Imagine NFTs as the trailblazers, laying the groundwork for a digital renaissance, and now cNFTs are here to take this revolution to the next level. cNFTs are NFTs evolved, blending the original charm of NFTs with the innovative twist of advanced compression technology. This leap isn’t just about efficiency; it’s about accessibility, scalability, and opening a universe of new possibilities.
As we delve into the heart of cNFTs, we’ll explore how they’re not just an upgrade to NFTs but a whole new chapter in the blockchain saga. They’re transforming how we interact with digital collectibles, making it easier, more economical, and more exciting. Whether you’ve been a part of the NFT journey from the start or are just joining in, the world of cNFTs promises a fresh, exhilarating adventure.
Join me as we journey though new landscape, where cNFTs are redefining the boundaries of art, ownership and community in the digital age. Let’s uncover the secrets behind their growing popularity, their impact on the digital collectibles market, and what the future holds in this exciting chapter of blockchain tech. Are you ready to explore? Let’s dive in!
Product Use Cases
Exploring the innovative world of cNFTs on Solana, we uncover diverse applications transforming the digital collectibles space. Let’s delve into standout examples like DRiP, Solarplex, and Dialect, each showcasing the unique capabilities and impacts of cNFTs in various domains. These cases not only highlight the versatility of cNFTs but also underscore how they are revolutionizing user interactions and content accessibility in the blockchain space.
DRiP
DRiP Haus is an NFT based platform that has come up with a unique way of interactive model between fans/users and creators (memes, art, comics, music etc). It started with a simple idea of launching new artists every week with their collections on DRiP. In certain cases, these collections encompass a staggering one million NFTs. DRiP uses NFT compression for conducting mass airdrops.
DRiP’s innovative positioning on Solana has been a game-changer in the NFT domain, with over 40 million compressed NFTs minted, reaching more than 1.2 million unique wallets. This staggering achievement reflects a seismic shift in the NFT ecosystem, showcasing DRiP’s commitment to diversification and accessibility. Their approach goes beyond reshaping the digital collectibles landscape, making it more inclusive and dynamics for users and creators.
Problem Addressed
The problem was cost. Prior to cNFTs, the NFT ecosystem was fraught with prohibitive costs and scalability issues. Traditional blockchains like Ethereum demanded high fees for minting NFTs, making large-scale projects infeasible. For instance, creating a billion-item game universe with tradable NFTs would be economically unviable, with costs on a platform like Polygon potentially soaring to $50M. This financial barrier severely limited a creative and practical application of NFTs, confining their use case to smaller, more exclusive digital assets rather than expansive virtual economies.
Solution Offered
DRiP has responded to this market challenge by harnessing the power of compressed NFTs on Solana, dramatically reducing minting costs. With this cost-efficient method, DRiP has introduced strategies like distributing free NFTs, further amplifying accessibility. The invite-only model curbs bot interference and ensures fairness in distribution, while their support for various collectibles — from art and music to games — cultivates a rich and dynamics ecosystem.
DRIP’s key strategies includes allowing artists to establish channels for regular drops, akin to a subscription service, they foster a loyal following. The integration of wallet features creates a seamless user experience, positioning the wallet as a gallery and vault for collections, not just utilizing as transaction tool. This strategy solved the problem of cost, access and thriving content-rich NFT landscape.
Real World Applications and Outlook
DRiP would look out to expand in the NFT space by introducing new artists and collectible types, enhancing user engagement with innovative features. Few popular collectibles that range from art, music, poems, PFPs, etc from top artists like Degen Ape Academy, Solana Poet, Vault Music, Floor and many more. It has onboarded 27+ artists and 1M+ wallets airdropped. Other anticipated applications would be -
Consumer application that addresses user demands for a more integrated experience, facilitating a richer interaction with multimedia NFTs and embedded wallet functionality. Social graphs or interactive media could focus on metrics like dwell time, creative contributions, user-led innovations that can enrich digital tapestry.
DRiP could empower creators with micro-patronage cNFTs, where fans support creators through NFTs representing exclusive content access or patron status. Another approach is to utilize cNFTs for collaborative projects, where each contributor holds a cNFT representing their share and contribution, streamlining royalties and ownership distribution.
The potential of advertising which allows for unique airdropped promotions, while the growing ecosystem encourages third-party developers to create tools enhancing user interaction with their NFT portfolios.
DRiP has the potential to collaborate with online learning platforms to issue certificates or badges as NFTs, providing a secure and verifiable record of achievements.
Solarplex
In simple terms think of Solarplex as “Reddit” on Solana. It is a social protocol that enables users to find and access the most up-to-date information about projects, communities, and ecosystem developments. Through collective voting, community members effectively select and prioritize discussions on projects and ideas, thereby creating authoritative, blockchain-recorded compendiums of communal knowledge and perspectives.
Solarplex currently focuses on Solana ecosystem. But it’s not limited to discover only best ideas or products, it also curates most relevant news too. It has a mix of artificial intelligence (AI) and human intervention. Solarplex utilizes a bot to scan key Solana news sources, employing machine learning to craft and present headlines. Users can post and upvote news items, choosing between AI-generated and user-submitted content. The platforms offers the flexibility to switch between these two curation methods according to user preference, enhancing the news-feeding experience.
Unique Offering
Solarplex stands out with its unique system rewarding users with cNFTs for daily interactions transforming these tokens into interactive elements within the app. This enhances user engagement and opens new avenues for creators. These are not just digital tokens; but served as interactive icons within the app enhancing the gamifying experience of a user.
Provided secondary market for these cNFT icons, it could potentially open opportunities for creators to increase their credibility and value of their work. Given cNFTs economic aspect, Solarplex is using this tech to distribute tokens daily to its users as rewards creating a sticky app for participation without increasing costs.
Solarplex also allows creators to directly mint from posts. Tweet:
Thoughts on Outlook
Solarplex’s future prospects could involve diversifying into various content forms and enhancing user experience with advanced features, maintaining the platforms’ relevance and appeal in the dynamic digital landscape.
Few features that could potentially impact:
Introducing dynamic NFTs where these cNFTs change based on user activity or external data, adding unique and engaging aspect to the platform.
Implementing tiered access or privileges based on the rarity or type of cNFTs held, encouraging users to stay active and trade more.
Helium
Helium is a unique project that utilizes cNFTs. In short, it is a decentralized network that facilitates wireless connectivity for Internet of Things (IoT) devices. It utilizes blockchain technology and native cryptocurrency (HNT) to incentivize participants to build and maintain the network. The projects main focus is on providing low-power, wide-area networking for IoT devices, enabling various applications and use cases in IoT space.
Helium recently pivoted to Solana blockchain embracing its technology. This shift was taken to enhance the way Helium manages its extensive network of hotspots. Hotspots are nothing but enabling manufactures and vendors to produce and supply hotspots that can mine Helium tokens for providing wireless connectivity.
The amount of tokens distributed to Hotspots depends on the type of work each hotspot performs based on the value to the network. This is measured by a work algorithm called Proof-of-Coverage (PoC), which was created to establish network coverage. As the Helium Network grows and matures, the reward system will evolve, shifting more towards rewarding data transfer and less towards PoC activities, aligning the incentives with the network’s evolving needs and contributions.
Look at the recent data where we can evidently point out that Helium is breaking records in the IoT sector. The metrics shows upward trends and active wallets giving a picture of overall adoption. Helium so far has minted 1 million compressed NFTs. The minting cost was ~ $30,000 which is way cheaper than any blockchain (period). Looking at below pie chart, Bobcat has major share in total mint collection with 30.4%.
Problem-Solution in Real World
Helium Network is addressing the real-world problem of creating widespread and reliable network coverage for Internet of Things (IoT) devices. By incentivizing the deployment and maintenance of Hotspots, Helium ensures a robust, decentralized network that supports various IoT applications, enhancing connectivity in areas where traditional networks might be inadequate or costly to establish. This approach is crucial for the growing demand for IoT solutions in various sectors, including smart cities, agriculture, and logistics.
Dailect
Dialect is a web3 messaging application that combines the features of traditional messaging apps, like Telegram or WhatsApp, with blockchain technology. It allows users to communicate securely and harnesses the power of DeFi and NFTs to create a unique ecosystem for its users.
Problem-Solution Offerings
The primary use case for Dialect is to provide a messaging platform where users can have private, secure conversations without the oversight of centralized entities. In the context of Web3, it ensures that communications are not just end-to-end encrypted but also fully decentralized, giving users complete control over their data.
A significant problem that Dialect addresses is the lack of ownership and control users have over their digital assets on traditional platforms, such as stickers and emoticons. By minting chat stickers as NFTs, Dialect ensures that each user's collection is truly their own, offering a level of personalization and ownership that isn't available on other messaging apps.Dialect recently also came up with a unique way to get stickers playing fair, fun game.
This approach also opens up a new avenue for digital artists to monetize their creations by joining the platform and creating unique, collectible versions of popular emojis and stickers. With the initial costs of minting covered by Dialect, artists and users can create and own digital assets without any upfront investment, lowering the barrier to entry in the NFT space.
Outlook
The growth prospects for Dialect are closely tied to the adoption of NFTs and the expansion of the Web3 space. As more people become comfortable with the idea of digital ownership and the benefits of decentralized applications, platforms like Dialect that offer unique value propositions are well-positioned to grow. The success of their initial sticker minting campaign, with 500,000 NFT stickers created in a single month, suggests there's significant interest in this kind of feature.
Whether or not the concept of compressed NFTs (cNFTs) will become a standard on Solana or spread to other blockchains will depend on several factors, including user adoption, scalability of the technology, and cross-chain interoperability. If Dialect can continue to innovate and provide users with compelling reasons to use their platform, they may play a significant role in popularizing cNFTs beyond the Solana ecosystem.
State of cNFT Tooling
Compressed NFTs (cNFTs) on Solana mark a significant shift in the blockchain and digital asset world. Their introduction leverages Solana’s unique infrastructure, known for high-speed and low-cost transactions, to revolutionize the creation, distribution, and use of digital assets. As cNFTs address major challenges like scalability and cost, opening new possibilities for large-scale projects and diverse applications in the blockchain space.
Let’s look at tools and protocols changing the state of cNFTs.
Underdog Protocol
Underdog is an API that allows developers and users to integrate web3 seamlessly into their products or workflows, enriching user experience. Underdog tool helps to manage all NFTs in one place, mass airdrop NFTs with ease without needing to know how to code. Underdog NFT API can act as a bridge, enabling businesses to leverage the benefits of cNFTs seamlessly.
Use Case
This tool can enables in creation and distribution of cNFTs, allowing more people to engage with blockchain technology without delving into the complexities of coding.
Some use cases:
Digital asset management automating licensing and royalty systems ensuring fair compensation for creators.
Tokenizing crowdfunding. where cNFTs represent a stake in a project or idea, democratizing funding and investment opportunities.
Underdog Protocol could potentially be used for quadratic funding to support new business models. By utilizing cNFTs, the protocol can ensure more equitable distribution of funds, particularly supporting public goods and community projects.
TipLink
TipLink is a lightweight wallet designed to make transferring digital assets as easy as sending a link. User A with crypto can create TipLink and send that link to anyone over any platform (text, discord, email, etc). Amazing aspect is the link acts as a wallet!
TipLink uses cNFTs which highlights the significant cost reduction in minting large-scale NFT collections using Solana’s State Compression Technology.
Use Cases
There are multiple use cases that can be utilized TipLink. Some of the prominent applications are:
Use cNFTs for event tickets, where access links are sent to attendees. This can prevent fraud and scalping, adding a tangible, tradable and fair ticketing system.
In e-learning, tokens representing course completion or achievements can be sent to students, adding a tangible, tradeable value to online education.
Organizations can utilize to represent their employees’ professional credentials which can be shared with potential employers via links making it open-source. This ensures authenticity and simplifies the verification process.
Pub Key
Pub Key uses token-gated approach with cNFTs. It enhances community building by allowing project creators to control access to their Discord communities using cNFTs as access keys. This method adds a new layer of utility to cNFTs, transforming them into keys for exclusive online spaces, thus automating the process of community gating and facilitating the creation of secure, engaged online communities.
The emergence of these tools represents a significant evolution in blockchain technology. These tools simplify interactions, making it more accessible and practical for a wide range of users and applications. Their ability to integrate seamlessly into existing workflows and platforms marks a crucial step towards the mainstream adoption of blockchain technology, demonstrating its potential to transform various sectors and create new economic models.
Adoption Metric Analysis
In this part, we’ll delve into the adoption metrics of cNFTs, comparing them to NFTs and evaluating the implications of this technological leap.
NFT Performance on Solana
The NFT marketplace on Solana has displayed a dynamic and intricate performance over the recent months. The graph delineates a striking total sales volumes of $4.46 billion, indicating the vast scale of the NFT ecosystem with Solana. It is accompanied with substantial based of 1,793,403 buyers and 1,375,546 sellers, suggesting a healthy and bustling marketplace. The total number of transactions exceeds 32 million, with 'wash' transactions accounting for 3.89% of the activities.
The Emergence of cNFTs
In the Q3’2023, the Solana blockchain witnessed an unprecedented boom in cNFTs. Nearly 45 million cNFTs were minted in this period, as seen in the data provided by Top Ledger and CryptoSlam. A notable 87.5% of these were attributed to the DRiP project, which partners with artists for large-scale free NFT art mints, far exceeding the conventional collection sizes.
NFTs Minted
The below chart shows the cumulative count of NFTs and compressed NFTs minted over time, with a steep increase of cNFTs observable in recent months.
Analyzing this graph, we can point that since March 2023, the count of cNFTs mints have increased from 15k touching a peak of 4.321M in July 2023. This shows how the adoption of cNFTs had skyrocketed in the ecosystem.
It’s easy to witness the take over of cNFT mints in the NFT landscape.
Unique Users
This chart indicates over 1.7 million buyers and 1.3 million sellers, which suggests a broad user base.
Looking at the numbers, the trends are fluctuating due to variety of factors including market sentiments, changes in economy and impact of cNFTs post April 2023. The sharp increase in both buyers and sellers in December could suggest a market event or a significant changes in the NFT space that has driven increased interest and activity.
Associated Costs
Looking at the charts, it shows cNFT mint transaction fees in both SOL and USD over a series of months in 2023. Let’s analyze the trend from these charts.
The consistent increase in both charts suggests that the cNFT market is experiencing growth in terms of activity, as more users are minting cNFTs, leading to higher total fees in both SOL and USD.
The steeper slope in the USD chart compared to the SOL chart from around June onwards could imply that the price of SOL in USD has been rising, or that the USD value of the fees has been growing faster than the amount of SOL used for fees, which could happen if the SOL price is increasing.
The increase in minting fees could also reflect growing demand for cNFTs, leading to higher network congestion and increased transaction fees.
Overall, the trend indicates that the cNFT space is becoming more active and possibly more valuable. This could attract more creators and investors to the market, but could also imply higher costs for minting.
Sales Volumes and Counts
Both the charts show that while there are fluctuations in the NFT market, there is a general trend of decreasing volume and count from the start of 2023 to around mid-year, followed by a period of relative stability with occasional spikes. The spikes could be related to specific high-value NFT drops or sales, promotional events, or changes in market sentiment. The decline could be due to market saturation, a downturn in the broader crypto market, or a natural cycle of hype cooling off.
Magic Eden's Role: As a popular marketplace, the activity on Magic Eden is significant. Spikes on Magic Eden are likely driving overall market activity, which indicates the platform's influence on the NFT market.
To conclude, the marketplace volume and sales count trends suggest that the NFT market experienced a period of high activity at the beginning of the year, followed by a decline, and then entered a phase of lower but consistent activity with occasional peaks. The presence of compressed NFTs in the data indicates they are a part of the market but have not yet reached the volume of traditional NFTs. Magic Eden appears to play a pivotal role in the market dynamics for Solana-based NFTs.
Split cNFTs vs Traditional NFTs
The above donut illustrates the current split between traditional NFTs and compressed NFTs. The chart indicates the cNFTs make up majority of the market share, with 71.09%, while traditional NFTs constitute 28.91%.
This suggests that compressed NFTs have gained substantial traction and could be preferred for reasons such as lower storage costs, improved transaction efficiency, or other benefits associated with their compressed nature. The substantial lead in market share could also point to a trend where users and creators are increasingly adopting cNFTs over traditional NFTs, potentially due to the advantages they offer in terms of performance or cost.
Community Dynamics
In the realm of traditional NFTs, clubs such as the Bored Yacht Club epitomize a culture steeped in exclusivity. Ownership here transcends the digital art itself and becomes a symbol of elite status, granting access to a world of private soirees and exclusive networks. This model engenders a sense of prestige and exclusivity but at the cost of accessibility, often reserving membership for those who can bear the steep financial entry costs.
Contrastingly, the ethos of cNFT communities is grounded in accessibility and open participation. These communities, exemplified by platforms like Drip House, eschew financial barriers, enabling anyone to engage with the ecosystem at no initial cost. Here, the exchange and appreciation of digital artwork are not limited by economic means, paving the way for a more inclusive and diverse community fabric.
This shift toward cNFTs signals a transformative approach to digital art, one that prioritizes broad-based engagement over exclusive ownership. Such democratization not only challenges the traditional art marketplace dynamics but also fosters a richer, more inclusive community dialogue around art. As this trend gains momentum, it could potentially redefine the contours of digital art interaction and ownership, ushering in a more accessible and equitable digital art culture.
Technical Background
Enter the game-changing solution of NFT compression on Solana. This innovation empowers developers and creators to mint vast quantities of NFTs at substantially reduced costs. Imagine a massive multiplayer online role-playing game (MMORPG) where each game item is a tradable NFT, and the in-game economy is intricately woven into the global financial tapestry. Such an ecosystem would naturally encompass millions, if not billions, of items, each of which would be prohibitive to mint on blockchains like Ethereum. Compression technology on Solana renders this vision feasible, drastically reducing the financial barrier to entry.
To illustrate, minting a billion NFTs on a platform like Polygon (a scaling solution on Ethereum) might run a tab of around $50 million USD. On a compressed Solana system, this cost plummets to approximately $11,000 USD—a staggering reduction that heralds a new era of blockchain economy.
But how does this sorcery of compression work? It all boils down to a clever use of data structures known as Merkle trees. A Merkle tree is a binary tree where each leaf node is a hash of data, and each non-leaf node is a hash of its two children's hashes. This structure allows for efficient and secure verification of large data sets. The "root" of this tree, a single hash, can verify the entirety of the data it represents, ensuring data integrity with minimal storage on the blockchain.
On Solana, compressed NFTs leverage this technology, storing the bulk of NFT data off-chain—on the much cheaper Solana ledger—while keeping a digital fingerprint on-chain. If any data on the ledger is altered, the fingerprint will no longer match, signaling tampering. This ensures that while the NFT data itself isn't stored on-chain, its integrity is verifiable and protected.
To delve a bit deeper, Solana manages tokens through mint accounts, which hold global token information, and token accounts, which associate tokens with user accounts. For example, if User A were to receive 1500 USDC, their USDC token account would reflect this balance. This is akin to having various compartments in a physical wallet, one for each currency you hold.
The Token Metadata Program on Solana attaches metadata to NFTs, further enriching them with information like name, symbol, and imagery. Compression streamlines this by allowing the creation of Merkle trees to store data, where developers can add or update information as needed. All interactions with the tree are recorded on the ledger, with the tree's root hash stored on-chain for verification.
Compression doesn't just simplify data storage—it also ensures data integrity and security. Even if the off-chain data provider is compromised, the integrity of the NFT data can be reconstructed from the blockchain's transaction history. This effectively makes Solana's system not only cost-effective but resilient and trustworthy.
NFT compression, exemplified by the program Bubblegum, eliminates the need for separate mint, token, and metadata accounts, cutting costs and streamlining the process. Minting a compressed NFT becomes a simple act of adding data to the Merkle tree.
My Thoughts
cNFTs for me are more intriguing innovation in the blockchain technology and digital collectibles. Significant advantages:
Efficiency and Cost-Effectiveness - By compressing the data associated with NFTs, they significantly reduce the storage requirements on blockchain making it scalable and cost-efficiency which dynamically impacted community dynamics.
Accessibility - Given cNFTs power to democratize access to the world of NFTs, leading to more diverse and inclusive NFT ecosystems.
Scalability - It makes easier for blockchain to handle a larger volume of transactions and data, which is essential for the growth of NFT markets and applications ranging from gaming to digital arts.
Innovations - cNFTs have the potential to drive innovation in how NFTs are used. Creators have the opportunity to experiment with new forms of digital art and combined with different economic models which were impractical earlier.
Overall, cNFTs offer a promising solution to traditional NFTs enabling creators and businesses to experiment with low-cost, accessibility and scalability advantages. However, like any emerging tech, we should look out to solve more problems and create innovative economic models while addressing the evolving challenges in this space.
New Use Cases
I can think of potential new use cases with cNFTs. Hope this would help in the adoption in these sectors. It goes as follows:
Dynamic Content Licensing - Automating content licensing and royalty distribution. It can make content licensing more accessible and streamline revenue sharing.
Cross-Platform Interoperability - Easy go as it would enhance scalability by allowing cNFTs to move seamlessly between blockchain opening up new services within this space.
Gamification and Utility - I am looking out to interactive, sticky gaming stories with cNFTs that can attract users because of the game is exciting. Usability is a key factor to gain massive adoption in this space.
References and Additional Resources
https://twitter.com/ledger_top/status/1703078010528968898
https://www.investopedia.com/terms/a/airdrop-cryptocurrency.asp
https://drip.haus/discover
https://twitter.com/drip_haus
https://twitter.com/solarplex_xyz
https://phantom.app/explore/app-spotlight/solarplex
https://www.helium.com/
https://tiplink.io/
https://www.underdogprotocol.com/
https://www.dialect.to/
https://twitter.com/TipLinkOfficial/status/1665034666817060868
https://twitter.com/PubKeyApp
https://messari.io/report/state-of-solana-q3-2023
https://www.cryptoslam.io/blockchains/solana?timeFrame=month&headerPeriod=all
https://flipsidecrypto.xyz/marqu/%F0%9F%8C%9E-solana-nf-ts-minted-tokens-incl-compressed-all-time-count-solana-nfts-minted-tokens-incl.-compressed---all-time-count-nkbF5Q
https://analytics.topledger.xyz/messari/public/dashboards/3l6K5BLj0vcox2gJ4ewfr4cvU6EhsoNKzRq7PluD
https://www.simplilearn.com/tutorials/blockchain-tutorial/merkle-tree-in-blockchain#:~:text=A%20hash%20tree%2C%20also%20known,of%20its%20child%20nodes'%20labels.
https://www.helius.dev/blog/solana-nft-compression#compression-background
https://blog.xp.network/solana-introduces-compressed-nfts-f73de64ae34b
https://solana.com/news/state-compression-compressed-nfts-solana