What Are Utility NFTs: Here’s What We Know

Utility NFTs represent unique digital assets stored on blockchain, but they come with premium benefits for their holders.

Written by Radhika Parashar, Edited by Siddharth Suvarna | Updated: 17 November 2022 18:48 IST

What Are Utility NFTs: Here’s What We Know

Photo Credit: Larva Labs

The factor of utility can be added to NFTs offering access to physical rewards and meet-ups

Highlights

NFTs are built on blockchain and can be inspired by art, games
Utility NFTs can offer physical as well as virtual rewards to owners
RobotEra, Tamadoge, Silks were recently named top utility NFT projects

The market for non-fungible tokens (NFTs) has seen major ups and downs this year, after the crypto markets plummeted severely and NFT marketplaces recorded losses. Amid dropping sales values, the popularity of utility NFTs seems to have become quite the topic of discussion. Essentially, utility NFTs have a value that goes beyond them just being digital collectibles. These virtual pieces come with special use cases, that gives its owners advantages in the virtual world. Supported on the blockchain system, NFTs can be inspired by art, games, or products among others.

Utility NFTs work very similarly to normal NFTs. They represent unique digital assets stored on blockchain, but they come with premium benefits for their holders.

“Precisely, utility NFTs refer to virtual assets that offer privileges, benefits, or rewards to their owners which are otherwise not available for use. They bestow upon a ‘right' to extract a service or an advantage to the asset holder,” the Blockchain Council has explained in a blog post.

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The e-gaming and metaverse sectors are definite beneficiaries of utility NFTs. Utility NFTs, for instance, can be used to work as inbuilt assets representing the digital land pieces. Purchasing these could help the owners with exclusive access and unlock different unique features linked to the game or the metaverse.

The factor of utility can be added to NFTs by also offering access to physical rewards and meet-ups to the owners of these digital pieces.

Switzerland-based GainForest organisation present utility NFTs representing the real locations of the rainforests. The holders can use the NFTs for minting governance tokens and keeping a track of the forest's health easily.

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Other similar projects like VeeFriends and Doodles also offer utility NFTs to their holders, that allows them to take part in the project governance as well as relevant VIP conferences.

RobotEra, Tamadoge, Silks, and Lucky Block have been named as the ten best utility NFT projects for this year, a report by Cryptonews had showed earlier this week.

As per a Reuters report, monthly sales volume on OpenSea plunged to $700 million (roughly Rs. 5,500 crore) in June, down from $2.6 billion (roughly Rs. 20,600 crore) in May and a far cry from January's peak of nearly $5 billion (roughly 40,000 crore).

The NFT market will be a $231 billion (roughly Rs. 18,41,300 crore) behemoth by 2030 and it's too big a business to be ignored, believes, Tarusha Mittal, COO and co-founder of UniFarm, as stated in conversation with Gadgets 360. UniFarm is a multi-token reward staking programme.

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Further reading: Cryptocurrency, NFTs, Non Fungible Tokens

Radhika Parashar

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Radhika Parashar is a senior correspondent for Gadgets 360. She has been reporting on tech and telecom for the last three years now and will be focussing on writing about all things crypto. Besides this, she is a major sitcom nerd and often replies in Chandler Bing and Michael Scott references. For tips or queries you could reach out to her at RadhikaP@ndtv.com. More