This year, NFT has gone viral. While CryptoPunks remains popular, and the character NFT Loot has flourished. Loot was officially launched on Twitter on August 28. How popular is this project? Bo Feng, the founding partner of Ceyuan Ventures, bought Loot#1288 for 35 ETH, and even Ethereum co-founder Vitalik Buterin praised Loot as a game infrastructure. According to data from DappRadar, in the last two weeks, the turnover of Loot exceeded $230 million, and its daily turnover has surpassed that of Boring Ape.
18.88 ETH. Before this, Loot had been soaring. However, after September 4, the price plummeted. As of September 14, Loot bottomed out at 4.68 ETH, a 75% drop. How did this happen?
What is Loot?
Here is an example from the official Loot website:
Above is Loot#1337 illustrated on the official website. 8 lines of words? That’s it?
That’s exactly what Loot is, 8 lines of text. There are 8,000 Loot NFTs officially released, 223 of which are reserved by Loot developers and the rest are for free. As for its introduction, we can see no more than two lines of words on the official website: “Loot is randomized adventurer gear generated and stored on chain. Stats, images, and other functionality are intentionally omitted for others to interpret. Feel free to use Loot in any way you want.” Without any design or story, this simple text costs 4 to 5 ETH per item (just a week ago, the floor price of Loot stood at over 10 ETH). Once again, everyone has been impressed with NFT’s ability of rapid wealth generation.
Why are these 8-line texts so expensive and popular?
There are three mainstream explanations:
Loot created a new NFT paradigm.
Soon after the launch of Loot, Vitalik Buterin, co-founder of Ethereum, made an insightful comment on Loot: “I think the @lootproject philosophy has it right: pretty much anything that anyone creates ‘exists’, what matters is to what extent other people build upon it.” Loot is completely open. There is no artist and no core developers for ultimate construction. The 8-line words are building materials like brick and wood that Loot offers to the crypto community. Tapping into these building blocks, users can create whatever items they like, which may be a novel, a movie, or a game. Loot has created a brand new way of collaboration. Any individual or entity can develop its own story and create NFTs under Loot’s framework. This makes Loot an improved representation of what blockchain decentralization is. It is thus regarded as a new NFT paradigm, the infrastructure of NFT, and the Ethereum of NFTs.Loot is a bottom-up NFT.
Before Loot came out, trending NFTs were organized. In other words, before NFT projects go viral, there are always entities masterminding the creation, design, and launch of projects. Some of these entities (e.g. Bored Ape Yacht Club) also participate in the promotion, maintenance, and community building of the NFT project to maintain its popularity. In short, the mechanism that sustains the popularity of other NFTs is top-down, which is why they are evaluated based on, first and foremost, the time of launch and innovation. Due to the lack of content in such JPG NFTs, most users can only use them as icons, spending all that money just for fun.
Loot, on the other hand, is completely different. Although the NFT contains only texts in black and white, without any production or design, Loot also leaves more room for imagination as it is simpler. Through the equipment provided by texts, users can innovate and create whatever they want. The mechanism of Loot is completely bottom-up. In the future, this new NFT paradigm may give rise to increasing creativity and content. It is noteworthy that Loot’s future value hinges on the creative efforts of its community, which drastically differs from previous NFT valuations.Loot has the potential to become a universal asset of the metaverse.
Being programmable and fully open, Loot can be integrated with other protocols, making cross-protocol independence possible. Picture this: “Rings” programmed through Loot can travel from one chain to another. Isn’t it amazing? In the crypto community, even stablecoins that support conversions with other tokens have become a hit, not to mention a universal asset of the metaverse.
This is the reason behind the instant boom of Loot.
Given that Loot is so imaginative, should we invest in this project? Are there any flaws?
The most damning flaw of Loot lies in the fact that there are only a few direct stakeholders. There are 8,000 Loot items in total, 223 of which are reserved by Loot developers. That means the total supply stands at 7,777 and there are only 7,777 direct stakeholders. Upon its issuance, Loot did not create any incentive mechanism to attract more users for building its ecosystem. Not much can be built with only 7,777 users. Plus, as many users own multiple Loot NFTs, the total number of users can hardly reach that figure. To draw more stakeholders, Loot’s co-founder Will Papper launched AGLD, an ERC20 token based on Loot, with a total supply of 80 million. Early Loot participants can get an unconditional airdrop of 10,000 AGLD, which can be used for governance, future game scores, or creating a Lootproject mint, etc.
Moreover, on September 4, Loot’s founder Dom announced a new project called More Loot (MLoot) on Twitter. MLoot follows the same rules as the original Loot. Beginning from #8001, the supply of MLoot is significantly larger, with an annual issuance of 250,000 and an upper limit of approximately 1.316 million. The introduction of MLoot made Loot less rare. The day after Mloot was launched, the Loot price suffered a flash crash of almost 20%. Some Loot holders exited and sold all of their holdings. This is why the Loot price, soaring ever since its launch, fell dramatically after September 4. As such, it is difficult to say whether one should invest in Loot. Although Loot, born just two weeks ago, is clearly imaginative and promising, it may diminish at any time as the project is highly primitive. Furthermore, certain measures (such as the introduction of MLoot) adopted by the developer team also pose the project at great risk. Hence, think twice before any investment.