What exactly do you buy when you purchase an NFT? Especially a pfp NFT? A Moonbirds-inspired meditation.

Moonbirds owl NFTs (Image courtesy: Blockhead)

Why do people pay insane amounts of money for pfp NFTs?

This question has been on my mind a lot lately, especially with the recent Azuki debacle which generated a lot of debate on Crypto Twitter. In order to attempt to answer this question I went down a Moonbirds rabbit hole trying to learn all I could about the project and making notes along the way. These are those notes, mostly unedited.

MOONBIRDS

Moonbirds is an NFT project consisting of owl-themed NFTs launched by PROOF Collective, one of the more famous groups in the NFT space. The general Moonbirds structure itself is pretty simple:

1. 10,000 Moonbirds

There are 10,000 unique Moonbirds NFTs, each with a unique combination of traits and sub-traits. There are several of these traits to choose from and combine for each bird. All Moonbirds are fully “in-chain,” and they all have custom backgrounds.

Scarcity and differentiation. You can buy a Moonbird but there will only ever be 10,000 Moonbirds thereby ensuring scarcity. And each Moonbird has a unique set of traits entrenching this scarcity even further, you can buy a Moonbird but if you want a particular one with certain particular traits then you are likely going to have to pay more.

2. Nesting

This feature is very similar to staking in the DeFi space and the idea is the same, you hold your Moonbirds for as long as possible and the longer you hold your Moonbirds the more rewards you get.

This is something I find quite interesting actually because the rewards aren’t exactly anything special (socks, a snapback, branded merch generally). This is obviously supposed to get people to hold on to their Moonbirds instead of selling them off but the incentives are not exactly the greatest.

(Addendum: The upcoming Mythics NFT project will only be initially available to long-time Moonbirds nesters. This means that another reason to hold/nest would be access to future potential projects and experiences.)

The benefits of nesting right now are not that great. But this represents one area the project can leverage for future growth. Increasing the value of nesting rewards will increase both the price of Moonbirds and the likelihood that people will hold them for a long time because they are anticipating rewards.

3. Sub-parliaments.

In their own words, “A whole host of community-created sub-groups, ranging from trait-based collectives to regional or shared interest groups.” Bird holders with different traits can join special sub-parliaments for birds with those traits, or you could join a sub-parliament with other people from a geographic location, and so on.

Even more exclusivity. Your NFT opens up the possibility of joining these sub-parliaments. The value of joining a sub-parliament we cannot be sure about because they are closed off. But, if joining sub-parliaments becomes really important to people, the price of Moonbirds will probably increase to match demand.

4. The Lunar Society.

This is the name of the DAO-like organisation (they say they are not a DAO!) which oversees the Moonbirds project. The Lunar Society also oversees the aforementioned Mythics NFT project, another project by PROOF Collective, the entity that created Moonbirds. Moonbirds holders are officially members of the Lunar Society (Exclusivity).

Moonbirds holders can bring up proposals and vote on proposals deciding how to spend the money from the Lunar Society treasury (Power). This money is typically spent on projects that are aligned with the Moonbirds brand and that will increase the reach, visibility and brand recognition of the Moonbirds brand (Returns; if the brand gets more valuable, you win if you own a Moonbird).

So far votes passed by the Lunar Society include voting to let an Airbnb cabin owned by a Moonbirds owner use the Moonbirds/Lunar Society trademark and giving $13,000 to Healthybirds, a health and wellness brand. (As always the problem with these things is how to measure ROI on them, but that’s alright for now, they’ll experiment and hopefully get better).

Exclusive events. Moonbirds holders also get a free pass to exclusive events by the Lunar Society. And in a world where NFT projects are beginning to purchase sports teams (hello DeGods), that exclusivity can become really valuable really quickly, which could be fun. There’s also the opportunity for the Lunar Society and Moonbirds to go the ETH conferences path and just let people who own Moonbirds in several places do up Moonbirds-themed events to increase brand awareness and foster connectivity. (Grow brand awareness and make the overall brand more valuable.)

A FEW MORE THINGS

Some interesting developments to keep an eye out for in the Moonbirds ecosystem right now include:

1. The CC0

Moonbirds are now in the public domain.

The project founder Kevin Rose has said that the popular owl-themed NFTs would be moving to a CC0 public license along with Oddities, their companion collection. “You’re now free to use any Moonbirds and Oddities art in any way you see fit — forever,” he tweeted. A Moonbirds DAO will be formed to oversee licensing of the Moonbirds and Oddities trademarks.

What the effects of this announcement will be in the long run is not yet clear but I imagine it should serve to increase brand awareness as Moonbirds-themed projects proliferate. We will see.

2. Mythics

From the same studio that brought you Moonbirds comes a new NFT project: Mythics.

What’s interesting is that there are only two ways to get a Mythic, you can burn an Oddity (another PROOF Collective NFT project), or you can receive them as a reward for your nested Moonbirds. So far Mythics just offer you a gateway into the PROOF Discord and all that, nothing astonishingly new as of yet. However, it does provide a reason to hold Moonbirds as well as decrease PROOF NFTs in circulation via burning Oddities.

Personally, I think PROOF is wise to keep their ecosystem intertwined as such for possible future developments, but I remember Luna and I know I could be wrong, we’ll see.

3. $Talons

Talons are coming apparently. It seems like this will be a token-esque points-based system of rewards for nesters of Moonbirds. The longer you hold your Moonbird, the more talons you accrue over time. NFT projects launching tokens have not exactly had a great track record so far. But if it does work out, it could be one more reason to hold on to your Moonbirds.

CONCLUSION

So, what exactly do you buy when you buy a Moonbird? Well, mostly you buy exclusivity, but there are limited spots so it’s scarce exclusivity. Of course, this is only valuable if this exclusivity means something to the wider public. If other people want a seat at the table then your seat at the table is valuable.

It’s both very similar and very different from say buying and holding ETH. Very similar in that you buy and hold both in anticipation of future rewards, and that public perception is a decider of the value of both (although to varying extents I’d imagine).

But it’s very different in that the value of ETH is directly related to the success of the product Ethereum sells, namely block space. If more projects want to be located on Ethereum, that makes ETH more valuable. In the case of Moonbirds, the product being sold is not so clear. Is it the NFT itself? If so what makes the NFT valuable?

The problem I see is this: Why should anyone want a seat at the Moonbird table? Right now the only answer I can see is that other people also want a seat at the table! It’s like an ouroboros in a never-ending circle, very much like the relationship between LUNA and UST which ultimately destroyed both of them.

All this could change overnight of course, If Moonbirds suddenly become the only way to get into the super bowl, they’ll obviously become a whole lot more valuable. So exclusivity itself might not be a problem, the problem may lie in the status/value of what is being gated.

But maybe I just don’t get pfp NFTs. Maybe.

NFTs Sell A Scarcity Of Exclusivity was originally published in CryptoStars on Medium, where people are continuing the conversation by highlighting and responding to this story.