Embracing XRPL NFTs: The Prelude to XLS-20 Upgrade
Exploring the Landscape Before XLS-20 Upgrade
To decipher the acronym, NFT stands for Non-Fungible Token. These digital tokens are distinct in their non-fungibility, meaning each token possesses unique characteristics, making them different from each other and not interchangeable like traditional cryptocurrencies. A prime example of a fungible digital asset is XRP itself. XRP remains fungible because any amount of XRP obtained from various sources and held in different wallets is identical in value and properties, constituting the same cryptocurrency we know and love.
On the contrary, Non-Fungible tokens rely on the principles of scarcity and immutability. NFTs encompass a wide array of assets, ranging from digital artwork and gaming items to representations of real-world assets like clothing and property. What defines most NFTs is their exceptional level of uniqueness and scarcity. When considering investing in a project with artwork or a game you genuinely enjoy, it is essential to assess the supply and variability of the tokens these projects offer.
However, you may still be a little perplexed about the nature of these “NFTs” currently on the XRPL. This confusion arises because many of these tokens appear perfectly fungible, lacking the pronounced uniqueness usually associated with NFTs.
Following The Footsteps
Most XRPL NFT projects have opted to issue IOUs, also known as tokens that can be redeemed for Non-Fungible tokens of the respective projects. By examining the whitepapers of certain projects like XBOTs or Pixel Ape Rowboat Club, you can find the “redemption clause” detailing the amount of the fungible token required to exchange for the minting of one non-fungible token once XLS-20 is adopted. Assuming a fair minting process, think of these NFT IOUs as purchasing a face-down playing card. You know what is in the deck, but you are uncertain about the specific card you will receive.
Currently, these face-down cards (NFTs) can be traded in a decentralized market, acting as a representation of the entire project. However, it’s important to note that the prices of these NFT IOUs may not necessarily reflect the “floor price.” The term “floor price” typically refers to the lowest-priced NFTs in a collection, but due to the fungibility of XRPL NFT projects, this concept is not directly applicable.
Awaiting the Common Goal: XLS-20 Upgrade and XRPL NFTs
Amidst the rather protracted wait for the validation of XLS-20D and its eventual transformation into XLS-20, investors have come to realize that many XRPL NFT projects entail a waiting game characterized by moments of excitement and, at times, dullness. Some of my personal favorite projects like Club589 and XBOT have witnessed periods of soaring enthusiasm with impressive gains of over 500% during their miniature bull cycles, only to encounter moments of stagnation. The price movements in these projects are heavily influenced by the supply and marketability of the teams behind them. As the market becomes more saturated, projects must adopt creative strategies to maintain community engagement and sustain interest.
The introduction of the NFT amendment to the latest validator vote holds the potential to infuse fresh excitement among investors, leading to the rise of new promising projects. However, growth is currently hindered by the challenging onramp to XRP for US investors. Nonetheless, time will reveal the willingness of crypto investors to explore opportunities within the XRPL. Presently, dollar-cost averaging into NFT IOU projects is deemed a prudent investment approach. It involves setting limit orders and avoiding chasing projects during speculative runs when minting is yet to be initiated. By adopting a patient and measured approach, investors can navigate the waiting game more strategically.