Is the value logic of "cross-chain NFTs" solid enough?

Author: 0xCookie, Rhythm BlockBeats

Recently, the rise of "cross-chain NFTs," led by Gh0stly Gh0sts and tiny dinos, has attracted attention.

As a Free Mint project, such an increase is indeed astonishing.

These "cross-chain NFTs" do not require holders to use cross-chain bridge tools for transfer; they only need to call the traverseChains function in the contract. Platforms like TofuNFT quickly followed suit by providing a more user-friendly encapsulation of the contract function call, helping holders achieve one-click transfers. It is so easy for NFTs to traverse across chains like FTs, and the rapid growth of FTs from single-chain applications to multi-chain applications has made NFT players full of expectations for "cross-chain NFTs."

Many NFT players have a good "first impression" of "cross-chain NFTs," mainly from three aspects— "universal" social value, "maximizable" returns, and "more interesting" game expansions. However, these good "first impressions" seem not as beautiful as imagined. As the short-term FOMO gradually calms down, let us rethink whether "cross-chain NFTs" have a sufficiently solid value logic.

Delving into "First Impressions"

"Universal" Social Value

Social value is one of the core values of PFP NFTs. Simply put, it is the "show-off" aspect. PFPs that cannot circulate across chains have "non-universal" limitations in social attributes— suppose a popular application appears in another chain ecosystem that is not on the ETH mainnet, how can CryptoPunks, BAYC, Azuki, etc., which were bought heavily on the ETH mainnet, "show off"?

A friend expressed such concerns to me: "Take StepN on the Solana ecosystem, for example. If it later updates with some features that have strong social attributes, like joining sports groups to display one's exercise trajectory on a world map, or being able to schedule runs with other users, how can my PFP on the ETH mainnet be used as an avatar in Solana ecosystem applications?"

Gh0stly Gh0sts and tiny dinos can indeed address such concerns. Both use the Layer Zero protocol, which simplifies the cross-chain process to destroying the transferred NFT on the current network and minting a new NFT on the target chain. This does solve the aforementioned problem, but two new issues arise:

• "Robbing Peter to pay Paul": Cross-chain transfers will destroy the corresponding asset on the original chain. Suppose today I transfer a PFP from the ETH mainnet to another chain; it indeed meets my social needs on the other chain's dApp, but the cost is that the dApp on the ETH mainnet cannot use that PFP as an avatar.
• "Transaction costs": Taking tiny dinos as an example, when Gwei is in the range of 25~30, transferring from another chain to the ETH mainnet requires approximately 50~60 dollars in gas fees. Frequent operations may be bearable, but what about frequent gas fees?

"Cross-chain NFTs" led by Gh0stly Gh0sts and tiny dinos are one answer, but it does not seem to be a good answer. What we should consider is whether it is necessary to go through such trouble just to use PFPs as avatars.

The implementation process of using PFPs as avatars is quite simple. First is "verification of rights," where users sign with their wallets to allow the application to confirm that the user indeed holds the corresponding NFT asset. Next is "image retrieval," where the corresponding image is loaded based on the URL pointed to in the corresponding NFT metadata. Outside of "cross-chain NFTs," other solutions have already emerged:

• "One account, multiple wallets": Taking the online NFT gallery application OnCyber as an example, users can add multiple wallets from various chains, including ETH, SOL, Tezos, etc., with each address corresponding to an independent gallery. After signing for "verification of rights," different APIs can be used to retrieve the images of NFT assets under each address, allowing users to display NFTs from different addresses across different chains in one gallery.
• "NFT Passport": The game DeFi Kingdoms on the Harmony ecosystem provided an "NFT Passport" feature for BAYC holders in February. As long as the address connected in the game holds a BAYC, the corresponding BAYC can be directly used as the game avatar. Since "proof of ownership" was generated for BAYC holders on the Harmony network, players do not need to transfer NFT assets across chains.

Of course, the feasibility of this method depends on Harmony's mainnet being EVM compatible. If it is a mainnet like Solana that is not EVM compatible, we may still need to return to the "one account, multiple wallets" solution. Considering that environments like Neon that support EVM have already appeared on Solana, there is reason to expect more applications of this method.

It can be seen that "cross-chain NFTs" do not possess the irreplaceability of "universal" social value—freely using PFPs as avatars has more flexible solutions. Additionally, let us look at another piece of data:

Observing the calls to the traverseChains function of Gh0stly Gh0sts on Etherscan reveals only 9 records. This means that Gh0stly Gh0sts has only transferred from the ETH mainnet to other chains 9 times. Furthermore, there are a total of 3085 Gh0stly Gh0sts minted on the ETH mainnet, while the total circulating Gh0stly Gh0sts on the ETH mainnet is close to 6500, indicating that the vast majority of Gh0stly Gh0sts minted on other chains have mostly flowed back to the ETH mainnet.

This data can illustrate two points:

• "Capital effect": Although the ETH mainnet is often congested, its most diverse ecosystem and largest traffic ensure that it remains the preferred place for NFT projects and applications to take root. For NFT players, the ETH mainnet is still where they are most active—the latest and most interesting things generally appear here, and the best liquidity is also found here. If there is a continuous need for $ETH to seize new opportunities, then why not transfer assets back to the ETH mainnet for sale to facilitate the next purchase?
• "Application shortage": For a PFP to "show off," it must meet two conditions—its value must be widely recognized, and there must be sufficiently popular applications to support its display. However, currently, there is still a lack of such applications with "strong social attributes" across chains. The best "show-off" place may still be Twitter from Web2, but it only supports NFTs on the ETH mainnet.

The "universal" social value is indeed not as beautiful as NFT players imagine; what about the "maximizable" returns?

"Maximizable" Returns

Suppose a high APY NFTFi mine appears on a certain chain, how do you move over to mine?

Suppose the NFT market/lending market on a certain chain has better liquidity and lower gas fees, how do you move over to operate?

"Cross-chain NFTs" seem to solve the above problems to improve capital utilization, but what actually solves these problems is "cross-chain" + "high-value and liquid NFTs." Many NFT projects have applications for staking to obtain tokens, but for poor projects—low-value and illiquid—1 $xxxx indeed equals 1 $xxxx, and equals 0 $ETH. However, perhaps a "waste mine" could be opened to accept all these projects, and then the staking reward tokens could be speculated using meme coin logic to achieve a phoenix-like rebirth? The same applies to lending—the intrinsic value of NFTs determines whether there is a lending demand.

Therefore, if we are to believe that the value logic of "cross-chain NFTs" in terms of "maximizable" returns is sufficiently solid, we must find strong expectations for them to become "high-value and liquid NFTs." We must return to the traditional scoring items of NFT projects—art style, cultural core, community operation, market strategy, etc., for evaluation. Projects like Gh0stly Gh0sts and tiny dinos are still new and do not yet provide convincing strong expectations in this regard; they need more time to give us sufficient feedback.

"More Interesting" Game Expansions

It's time to get creative.

Imagine an MMORPG chain game that can be minted on ETH, BSC, SOL, and AVAX, with the mintable amount on each chain being 1/4 of the total. The players' first game begins at the time of minting—NFTs minted on different chains will have different character traits. For example, the ETH mainnet has the most robust ecosystem and is often congested, so characters minted on it have higher strength but lower agility. SOL has high throughput, so characters minted on it have higher agility. BSC has "pancakes" with ample calories, so characters minted on it have high stamina… Each chain has unique game tasks that require transferring character NFTs across chains to complete, after which exclusive equipment can be obtained, with different benefits/detriments for characters minted on different chains…

Imagine a farming chain game where different farms minted on different chains have different backgrounds, and seeds obtained through staking on different chains yield various plants in different farms…

Of course, there are many interesting ideas. However, these do not provide value logic support for the current "cross-chain NFTs" like Gh0stly Gh0sts and tiny dinos—they have not claimed they will do so.

"Cross-Chain NFTs" and "NFT Cross-Chain Applications"

"Cross-chain NFTs" cannot carry all the beautiful imaginations of "NFT cross-chain applications."

"Cross-chain NFTs" are ultimately NFTs, so when evaluating their value expectations, we cannot detach from the traditional scoring items of NFT value. "Cross-chain" as a technical means can optimize or solve some problems, but it is powerless regarding art style, cultural core, community operation, market strategy, etc. All the beautiful "first impressions" actually come from the Layer Zero protocol that gives NFTs "cross-chain" capabilities, allowing us to see the various possibilities of "NFT cross-chain applications."

The recent shortage of new concepts in the NFT market and compelling narratives has led to the FOMO surrounding "cross-chain NFTs." In the roadmap of PFP projects, physical goods, metaverse integration, staking for tokens, etc., are all too similar, and application expansions are severely homogenized. On the operational level, project parties have become competitive in hosting offline gatherings. Even in terms of art style, there are few refreshing breakthroughs, making "cross-chain" a timely new concept. Additionally, "cross-chain" resonates well with NFT players. First, open interconnectivity is certainly regarded by most NFT players as an important part of the Web3 spirit. Secondly, "NFT cross-chain applications" still have vast imaginative space, and this imaginative space is easily misprojected onto "cross-chain NFTs."

Do "cross-chain NFTs" have sufficiently solid value logic? No, not hard enough; do not be greedy.