Groucho Marx once said ‘I wouldn’t want to be part of any club that would have me as a member.’
That’s got nothing to do with this piece, but it makes for a nice opening sentence.
No, this piece is about the proliferation of community based NFT projects and how I see things playing out.
Bored Apes Yatch Club showed the awesome power of creating a strong, focused community where your digital avatar doubled as your membership badge. Apes could come together in discords, and bump into each other on twitter where a second membership benefit ‘Ape follow Ape’ reigned supreme. For a mint price of 0.08 Eth you gained access to the club, potentially thousands of twitter followers, and a seat at the table. Now, that’s good value.
This value was confirmed as the price grew steadily to a current floor of just under 2 Eth. Clearly showing that there is strong demand to be part of this community, and people are happy to pay a high price to get in.
Ok. So we’ve established that there’s a demand to be in BAYC. But what happens now we have Cats, Yetis, Aliens, Bulls, Pirates, countless punk derivatives and more communities launching by the day? Well, in my opinion at least;
There is a diminishing return to every subsequent community based generative avatar project.
At least for the moment. While the NFT space is still small, the overlap between the people in Punks, BAYC, Gutter Cats and onwards is significant. This means that when it comes to the value of your community, every project you join has a decreasing marginal utility.
Think of it this way. How much would you pay to be in a book club with Elon Musk, Mark Cuban, and Cathie Woods? I’d guess quite a lot. Now, if you were already part of that book club, how much would you then pay to join a fantasy football league with Elon, Cathie, and Elon’s buddy Phil? The answer is most likely that you’d pay a lot less, if anything at all.
Now, to be clear, I’m not saying that people will only be active in one community. We can already see that’s not the case. But the diminishing returns are real, and as more projects launch without bringing something new to the table, the more diminishing we will see.
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