There are many opinions on whether non-fungible tokens have utility. Some will eagerly point out most projects do, but things are a bit different in the real world. Finding that balance between “utility” and “gamification” remains tricky for most NFTs.
NFT Staking Adds Nothing
Some people will eagerly point out how staking non-fungible tokens gives these assets utility. It does so in the sense of “being able to do something with it”. However, users send their NFTs to a different address as if they initiate a network transfer. So it takes the NFT out of circulation for a while, but it isn’t “utility” in the stricter sense.
Staking altcoins doesn’t give them utility, either. It creates artificially skewed demand and supply unless the altcoin has an actual use case, such as paying transaction fees or farming DeFi yield. NFTs have neither of those traits, even though one can earn rewards with this method. However, those rewards are another problem and prevent NFTs from achieving utility.
Staking rewards for NFTs are often another token. That token will give users “exclusive access” to certain features or services. Moreover, they can use these new tokens within the newly created ecosystem no one asked for.
More importantly, few outsiders will show any interest in the “utility token“, generating a more negative perception of the NFT collection. Creating artificial utility isn’t the answer for NFTs, yet few creators seem to realize that.
Burning NFTs Doesn’t Equal Utility
Another popular trend in NFT circles is the concept of “burning NFTs”. It is another artificial way of skewing demand and supply for collections. Few projects need more than 2,000 NFTs, yet they were issued at 7,000+ pieces.
As such, developers use the clever method of letting users “burn NFTs” to reduce the supply. In return, users receive a random token with no demand or a brand new NFT with different traits.
It is common to see NFT burns gain traction among the so-called “profile picture collections“. Those NFTs have zero utility but are all about status and promoting collections via social media avatars.
The “burn” aspect is tacked on later to make the collection seem useful. Burning mechanisms will not provide utility for an NFT collection; it only lines the pockets of those who manipulate the market.
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