Sustaining NFTs

Abstract

Identifying learnings and winning traits from early entrants into the ‘Eco NFT’ space, with a view to using NFTs in regenerative or circular economies and projects.

What are NFTs?

In two words, ‘digital collectibles.’

Unlike cryptocurrencies, which can be traded, divided, two fives exchanged for a ten, and so on, i.e. they are fungible, like normal (fiat) currency, non-fungible tokens (NFTs) are so-called because they are unique, cannot be broken down or exchanged for other tokens.

The token itself is a piece of code that occupies a unique position on a distributed ledger called a blockchain. Ownership of the token is recorded, and all users of the blockchain own the records. There is no centralised store of data.

What are they for?

NFTs are collectible digital assets. The uniqueness and collectability is very much by collective agreement, and the existence and operation of a marketplace, whose transactions are executed and recorded on the blockchain.

The art world has taken to NFTs in a fever. Indeed, NFTs are almost synonymous with digital art. There is something of a goldrush going on, as speculators hope to get in early and pick up the virtual equivalent of a Jackson Pollack, a piece of future prime virtual estate, or in-game collectibles. A digital artwork by 3D artist Beeple sold recently for $69 million.

Smart Contracts

Bitcoin, the first and most famous crypto currency, is analogous to gold, an inert metal that everyone agrees is valuable. You can exchange it for other currencies, or for goods and services.

Ethereum, the second and second most famous, is programmable. Smart contracts open up new kinds of decentralised finance (DeFi) applications. This is the fastest growing space in cryptocurrency.

NFTs based on smart contract-capable blockchains, can also be programmed. Digital artists, for instance can program their tokenised artworks to provide a commission on resale of the artwork, not just the original sale.

Eco Activism

I use this term to refer broadly to any person or group concerned to take action in response to, or adapt to, the signals from global and local ecosystems. For some this might be direct action, like occupying sites intended for the HS2 railway in England, or forests designated for fracking in Alberta, Canada. For others it might mean protecting an endangered species, or founding an ecovillage on low carbon principles. Early entrants into the

Activists have been eyeing the NFT space as a new way of raising project funds. I shall argue here that, while there are short term gains to be made from selling tokens, more effective and sustainable fundraising depends on the ability to use the tokens in some fashion. This might be trading or reselling, customising, personalising, using the tokens in a game, or staking them in a DeFi platform that earns the owner a return on investment, like earning interest on savings. Things get especially interesting if we can link the opportunities of smart contracts and DeFi to action on the ground.

Recent Examples

Shark Conservation

Ocean conservation NGO Beneath the Waves launched a ‘drop’ of 68 NFTs in relation to its work conserving shark species. The NFTs were ‘minted’ i.e. created and programmed by NFT platform Blockparty. While there are variations, the basic principle, according to the token blurb is:

Purchase of this piece will be connected to an acoustic transmitter tag, safely implanted into the shark. This tag sends out a ping every 90 seconds, for 7 years.When the shark swims near an installed beacon, the transmission is logged and data is collected once a year. Purchaser will name the shark and gain long-term updates on its movements

Other options include naming sharks thus tagged, and getting a mention in scientific research involving those sharks. Prices range from $1000 to $10,000. Launching on April 22, 2021, so far over $70,000 has been raised.

Project Ark

The World Wildlife Fund’s Panda Labs is running Project Ark, a pilot project in Romania in conjunction with CarbonBase, to use NFTs and blockchain to incentivise and empower local communities to solve ecological challenges related to carbon impact and loss of biodiversity.

Visually, the NFTs are 3D virtual versions of the famous Romanian jewelled eggs, ranging from Bronze to Platinum, with increasing prices and rewards. The exact mechanics are still being worked out but idea is to link NFT buyers to real conservation by having the NFT egg ‘hatch’ a secret reward if project goals, like a fundraising target, or a target number of wild bison, are reached.

Local communities are involved and incentivised by, for example, turning hunters into data gatherers, for which they are paid. The data they gather can be used as inputs to the NFT smart contracts. The project thus hopes to create mutually incentivising links between NFT owners, local communities and conservationists.

Crypto Kitties

The original smart contracts application was a game called Crypto Kitties that ran on the Ethereum blockchain. The changing state of the game elements — the kitties — was stored on a distributed ledger. Kitties could be fed, clothed etc, increasing their scores, and be traded for cryptocurrency (Ethereum).

While the game was blamed for congesting the Ethereum network, it was a successful pilot of tradable game collectibles, paving the way for in-game assets like cars, guns, spaceships, spacesuits, magic spells to be traded in-game, and also in open inter-game marketplaces. The world of G-Commerce I anticipated in a paper I wrote in 2001, is now seeing mass adoption.

Learning

The possibilities offered by DeFi, like running your own finances with nothing more than a phone — and we’re not talking a banking app, there are no banks — herald a new era.

Innovative projects in the conservation space recognise the opportunity not only to raise funds but to create community and market around their work, tokenised into a set of collectible NFTs. There should be a finite number of unique items in the collection. Uniqueness might be absolute, as in an original artwork, or via limited editions, like a limited number of prints.

Some launches will likely be a flash in the pan. How can interest be maintained? What if not only buying but owning/using a token remains worthwhile? What if the token could generate further revenue for its owner and the project?

NFTs and smart contracts provide the technological platform to link and incentivise eco activists, funders and local communities. For a while at least there is also the PR benefit that comes with the sheer novelty.

Linking Virtual and Actual Spaces

NFT’s could be minted for say 100m2 parcels of Amazon rainforest. Each token is unique because it relates to one particular parcel of land, identified e.g. by GPS.

If people will buy such tokens even if it does not grant title to physical land, they will be doubly motivated if they can benefit from token economics. While everyone benefits from conserving the rainforest or oceans not everyone remembers this.

NFTs provide the possibility of Green Commerce — of going beyond the paradigm of benefactors giving gifts, and actually earning money by doing good.

Data as Raw Material

We can take a leaf out of the tech giant’s playbook. As Shoshana Zuboff documents in Surveillance Capitalism, Google, Facebook et al are extractive industries masquerading as service providers. What are they extracting? Data.

Coming back to our tokenised 100m2 of rainforest, geographical and biological data could be gathered by conservation staff or local communities. Other data is available via e.g. satellite imaging and global data aggregators.

If our token is to generate funds, we could rely on donor goodwill or we could program our token so that its value increased with e.g. numbers of trees or macaws or jaguar sightings in the respective area of actual rainforest.

The data could be brought to life in a virtual map that listed token owners by area. The token for a wildlife hotspot, say a lake where animals come to drink, would generally increase in value, attracting bona fide benefactors and speculative traders alike. The project on the ground benefits by if the token is programmed to yield a commission each time it is resold.

Keeping tokens ‘alive’ via real world data is an option. The GPS tags on tokenised sharks in the Beneath the Waves project provide the token owner with a trace of the sharks movement for 7 years.

Perhaps the life of a tree or jaguar can be linked to a token. Or token value can be driven by more generalised data measurements, like the regional number of trees or jaguars. Data collected rewards token owners, and keeps the project alive via regular updates and goal tracking.

Gathering data from remote or vulnerable regions, or about endangered species requires organizational management and incentives for workers on the ground. As Project Ark realised, hunters will only prefer to photograph bison if it pays more than hunting them. The hunters, as well as the bison, are a potential source of data.

Gameification

As well as using field data to drive project ecologies and economies, we can learn from Crypto Kitties and program our NFTs so that they can interact with each other in some way. Given the idea of collectibles central to NFTs, one idea that comes to mind derives from the venerable Trump Cards of long ago.

Imagine that one acre of rainforest wins in a ‘battle’ over another when it comes to biodiversity. The ‘win’ yields micro revenue for the winner, and of the project actually conserving the ‘winning’ acre of rainforest. Or perhaps for the ‘losing’ acre. Or we could focus on different species of tree, or even actual individual trees. Or in theory, if sharks can be painlessly tagged then so could jaguars, or ant eaters, providing revenue streams deriving from the data produced by tracking transmitters.

Gameifying the NFT ecology provides a secondary, and perhaps self-sustaining source of revenue, on top of processes based on gathering data. What if my token can be programmed to automatically mint another one, if my tokenised jaguar mother gives birth to a cub? And so on and so forth.

From Activism to Regenerative Economy

I used active ecological conservation projects as examples and thought experiments, as these are often at the sharp end of issues driving the rationale for sustainable and regenerative communities and economies.

What we can learn from the application of NFTs at the sharp end can be applied to longer term projects. If something can be tokenised, it means that something’s uniqueness can be translated into the digital, specifically the decentralised finance space.

One more idea—Ecovillage Timeshare

The permaculture principles of closing loops, and re-economy principles of plugging leaks, can be applied directly to the programmable DeFi space.

For example, eco-tourism is a suitable social enterprise for ecovillages. However most ecovillages will need to raise capital in order to build accommodation for guests. They could do this by minting and selling NFTs equivalent to a long term lease, with the token owner(s) relative to the space/room/bungalow earning a percentage of revenues from eco-tourist stays. This would operate like the invest-in-a-hotel-room schemes — some of which, before the pandemic were very successful.

The eco village has complete control over how the token is programmed. There is no bank or insurance firm underwriting the deal, thus no economic leakage.

If a token owner wishes to sell their token, the new owner is still bound by the rules of the smart contract. In fact, the token owner’s identity or motivation is not particularly relevant to the functioning of the ecotourism or ecovillage. They might be a member of the village, or a speculative trader on the other side of the world. As long as smart contracts are programmed for win-win, I don’t see a problem.

Conclusions

While in their infancy, NFTs allow project fundraising and by extension, regenerative or circular economies to participate in the imminent decentralised finance revolution on their own terms.

Tokens can be linked to conserving land, planting trees, eco-tourism, events, goals — and can be sold to raise funds. The goals of the real world project can be reflected in the programming of the tokens, e.g. to release rewards if project goals are met.

Furthermore, the project can benefit from a kind of passive income generated by interactions purely in the NFT space. Driving economy this way depends on programming of smart contracts, which likely demands an upfront investment to pay the programmers. But it provides passive income, rather than depending on e.g. teams of local workers or ecovillage members gathering and organising data from the real world project.

Finally, success in this area would help develop links between the decentralisation and eco-conscious movements. While there are concerns over the carbon footprint of crypto assets, linking these two areas of human Shift would be Good (capitals intended).

References

Beneath the Waves NFT project

https://beneaththewaves.org/nonprofit-makes-splash-in-times-square-with-1st-nfts-for-ocean-conservation/
https://blockparty.co/creator/GB5Y7QPW7RK6L3OIIYZFB3O2L7ONXFD3NEXW7ZCITKFFGDXT 2UBZSZLQ

WWF Carpathians project

https://wwf.panda.org/?2033466/Testing-digital-collectibles-to-incentivise-community-led- conservation-in-the-Carpathians
https://project-ark.co/

Reconomy Project

http://reconomy.org/

Surveillance Capitalism

https://news.harvard.edu/gazette/story/2019/03/harvard-professor-says-surveillance-capitalism-is- undermining-democracy/

G-Commerce

Integrating E-Commerce and Games, Nizami Cummins in Personal and Ubiquitous Computing, Springer 2002.

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