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While multichain optionality and blockchain interoperability have become increasingly desired traits for many crypto enthusiasts, some also question the usefulness of certain solutions like wrapped crypto — wBTC and wETH for example. Why do I need wBTC if I just want to send BTC on Bitcoin? What’s the point of wrapping my crypto? While you don’t have to wrap your crypto, many crypto enthusiasts appreciate having the option to do so.
In much the same way that some crypto users question the benefit of wrapped fungible tokens that can migrate blockchains, many also question the need for multichain non-fungible tokens (NFTs). With the dominance of Ethereum within the NFT sector, some are simply content with merely interacting in the Ethereum-only NFT space. Others believe that NFTs — like other crypto assets — are on a trajectory to become more interoperable as the blockchain sector continues on its march toward multi-blockchain compatibility, interoperability, and integration.
While we have already discussed the technical details and options available when using Holograph-created NFTs (hNFTs), it is worth breaking down all possibilities that are opened up when NFTs can be securely moved between disparate blockchain protocols.
The Benefits of Multichain NFTs
While some restaurants specialize in serving only one dish, most restaurants give you a menu with a host of ordering options. Even if you order the same soup every time, you probably like the idea of being able to eat something else should you have the desire to. For multichain NFTs, the answer is largely the same; in this case, it gives you a menu of blockchain options. While you may order different food based on your mood, appetite, or a different diet, you may also decide to move between blockchain protocols based on minting costs, NFT market activity, and a host of other factors.
For NFTs, there can be a variety of benefits to having NFTs that can be transferred between blockchains. While you may be an avid Ethereum NFT enthusiast who is perfectly content to remain on Ethereum, wouldn’t you want the option to be able to migrate your NFTs in the future? While there are a lot of upsides to having options within the NFT space, there aren’t any major downsides to having multichain NFTs. Blockchain interoperability only becomes a big deal when you need it — and realize you don’t have it.
The Use Cases of Interoperable hNFTs
Having the ability to mint or sell NFTs on a variety of chains can confer a host of benefits. Through the ability to compare and contrast various blockchains, you may be able to save crypto on transactions — or make more crypto on NFT sales. Let’s cover just a few of the benefits that may be available to you when migrating an hNFT.
Arbitrage is the process of profiting between the price of assets found on distinct exchanges or markets. For example, many crypto traders make profit by arbitraging the price differential found on different crypto exchanges (such as the famous kimchi premium). Through NFT migrations, Holograph allows for arbitrage opportunities within the NFT sector. For example, let's say that NFT Example1 was trading on Polygon for 1000 MATIC while also trading for 3 BNB on BNB Chain at the same time. At current prices (MATIC at $0.88, BNB at $316), Example1 would be $948 on BNB Chain and $880 on Polygon. Via Holograph, you could buy the NFT on Polygon, bridge it to BNB Chain, and sell it for a profit of $68 (minus any transaction fees). This process could be profitably repeated until the price on both chains reaches equilibrium.
Another interesting use case is the process of arbitraging mint fees. In order to create NFTs, you must pay a minting fee. This can vary based on the blockchain. Let’s say you want to sell your NFTs on Ethereum but don’t want to mint them on Ethereum due to the associated costs. You could mint your NFT collection on Avalanche initially to benefit from the lower minting costs. You could then bridge your NFT collection over to Ethereum to benefit from the larger pool of NFT traders found there. There is even the option to create a private EVM chain that can be used for NFT minting. Following this, the NFTs can be bridged to Ethereum (or another compatible chain) in order to sell them on a popular NFT marketplace (where liquidity and capital is better) such as OpenSea, Rarible, or Nifty Gateway.
For NFT creators and developers, another option is the ability to create dynamic NFTs with properties and characteristics that change when they are bridged to a different blockchain. For example, the jewelry and hair color of an NFT would automatically change based on what protocol it is located on. This could create the rarity that is often sought after in an NFT collectible. For example, NFT Example2 has pink hair on Ethereum, blue hair on Polygon, and rarer gold hair on Avalanche where it could ostensibly fetch the highest sale price. This could be used to incentivize NFT market activity on less well known protocols that could lead to a variety of chain-specific NFT marketplaces. In keeping with other NFT protocols, Holograph lets creators profit from subsequent trading activity by allowing them to charge royalties for NFT secondary sales.
- While some question the utility of multichain crypto tokens and contracts, the choices and optionality that multichain enables is becoming an increasingly desired feature by many crypto sector participants.
- Holograph’s multichain NFTs allow you to profit via NFT price arbitrage on various blockchain protocols or access more popular — and capital rich — NFT ecosystems.
- Holograph’s hNFTs allow for dynamic trait variability when migrating between compatible chains.