Mapping the NFT Ecosystem
NFTs have been the hottest topic and frothiest market of 2021, with sales volumes increasing by 100x while also becoming a topic of discussion on evening talk shows.
It took crypto nearly a decade to really penetrate the mainstream, but NFTs only needed a couple of years to capture people’s attention. As brands like Budweiser, Visa, and Adidas have purchased NFTs and entered the space, it’s clear that NFTs are more than just another hot new trend.
This infographic sponsored by Next Decentrum defines NFTs and explores the flourishing ecosystem that has quickly grown around them. Discover what non-fungible means, where NFTs are being minted and traded, and what the future holds for this asset class.
What are NFTs, and What is Fungibility?
NFTs are non-fungible tokens that have their history of ownership and current ownership cryptographically secured on a blockchain. These tokens can represent anything, whether it’s a piece of digital art in the form of a jpeg or a song as an mp3 file.
By storing transactions of these tokens on a blockchain, we can have digital proof of ownership and markets for these digital goods without the fear of double spending or the tampering of past transactions and ownership.
Figuring out Fungibility
This all sounds pretty similar to cryptocurrencies, so what makes NFTs so special? Their non-fungibility. Unlike cryptocurrencies like bitcoin or ethereum, non-fungible tokens represent goods or assets with unique properties and attributes, allowing them to have unique values even if they are part of the same collection.
Fungible: A good with interchangeable units that are indistinguishable in value. Examples: U.S. dollars, bitcoin, arcade tokens
Non-Fungible: A good with unique properties, giving it a unique value when compared to similar goods. Examples: real estate, paintings, NFTs
The most popular NFT collection, Cryptopunks, is a collection of 10,000 pixel art “punks”, with varying attributes like different hats, glasses, hairstyles, and more. The random combinations of attributes with differing scarcity results in each punk having a unique value.
Scarcity and subjective aesthetic preferences drive valuations for cryptopunks and other NFTs, with other factors like their historical significance, and even the blockchain they’re hosted on affecting their value.
The NFT-Capable Blockchains Compared
There are many different blockchains that are able to mint and host NFTs, with Ethereum currently the largest and most used by market cap and transaction volume.
Ethereum uses the energy-intensive proof of work consensus method but the network is planning to transition to proof of stake next year which should reduce energy usage by about 99%.
|Blockchain||Market Cap||Consensus Method|
|Ethereum||$526B||Proof of work|
|Solana||$63.93B||Proof of stake|
|Avalanche||$26.22B||Proof of stake|
|Polygon||$12.41B||Proof of stake|
|Tezos||$4.57B||Proof of stake|
|Flow||$4.07B||Proof of stake|
As of Nov 29th, 2021
Along with concerns around its energy intensity, minting and transacting on the Ethereum blockchain incurs significantly higher fees compared to other blockchains.
The average Ethereum transaction fee varies between $30-80 (depending on the specific transaction) and the current NFT minting fee is ~$130, every other blockchain in the table above has transaction and minting fees that remain below $1.
While these high Ethereum fees have driven many users to explore other blockchains to mint NFTs, many secondary marketplaces help cover a portion, or even all gas fees, when minting on Ethereum.
The Secondary NFT Marketplaces
Alongside the primary blockchain networks where NFTs are minted and hosted, there are a variety of secondary marketplaces for NFTs where the majority of NFT exchanges take place.
These marketplaces enable users to more easily mint, buy, and sell NFTs, with OpenSea having emerged as the leading secondary NFT marketplace. It’s estimated that OpenSea had $1.9 billion of traded volume in November 2021, making up over 95% of NFT trading volumes.
|Marketplace||Trading Volume (November)||Supported Blockchains|
|Hic et Nunc||$4.48M||Tezos|
Source: The Block
Although some of the marketplaces (like OpenSea) allow anyone to easily mint and offer an NFT for sale, other platforms like SuperRare limit the art and artists on offer, resulting in a more curated marketplace. Similarly, some marketplaces like OpenSea host NFTs from multiple blockchains like Ethereum and Polygon, while other marketplaces like Hic et Nunc are faithful to one blockchain (Tezos).
While OpenSea currently dominates the secondary market, cryptocurrency exchanges are likely to offer some fresh competition soon. Coinbase is currently building out its own NFT marketplace, and FTX’s marketplace with Ethereum and Solana NFTs is up and running.
Digital Art, Gaming, The Metaverse, and The Future of NFTs
NFTs made a huge splash in 2021, giving creators digital and decentralized networks where they could host and exchange their work.
Currently, digital-first use-cases are at the forefront of NFT development, with ownership of in-game assets or goods in the metaverse two of the primary use-cases being explored. However, NFTs can be used to tokenize physical assets like real estate, physical artwork, and much more, opening up near endless possibilities for their application.
From removing the friction of paperwork and bureaucracy in today’s real estate exchanges to allowing for easy fractionalization of asset ownership, the tangible real-world use-cases of NFTs are just starting to be explored.
To learn more about NFTs, visit Next Decentrum.
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Operational Health Tech: A New Billion Dollar Market
Operational health tech is poised to be a multi-billion dollar industry. This graphic breaks down how its disrupting healthcare as we know it.
Operational Health Tech: A New Billion Dollar Market
Many lessons were learned throughout the COVID-19 pandemic, but what has become most apparent is the need to invest in healthcare on all fronts. In fact in just a few short years, businesses, governments, and consumers have had to entirely reassess healthcare in ways not quite seen before.
What’s more, this elevated importance placed on health could be here to stay, and one area in particular is poised for significant growth: operational health tech.
The graphic above from our sponsor Bloom Health Partners dives into the burgeoning market that is operational health tech, and reveals the key driving forces behind it.
What is Operational Health?
To start, operational health is an industry that provides health services to employees to help keep companies running smoothly.
A critical piece of operational health is workplace health, which is expected to soar in value. From 2021 to 2025, the market for workplace health is expected to grow 200% from $6.5 billion to $19.5 billion.
The industry is undergoing a tremendous amount of innovation, specifically in relation to technological advances.
Operational Health Tech: Disrupting Healthcare
The operational health tech industry is disrupting traditional healthcare by providing direct services to employees in the workplace.
For decades now, the U.S. has increasingly become a statistical outlier for healthcare spending relative to health outcomes. For instance, the average American incurs $9,000 in healthcare spending per year, nearly twice that of OECD countries, yet life expectancy is flatlining while other countries see rises.
A worsening and increasingly expensive health dynamic makes the environment ripe for disruption and is allowing for new ideas to be brought to the table.
In addition, people are already responding to these inefficient practices by shifting greater emphasis on health within the job market. For example, studies show that workers care more about healthcare benefits over the salaries when choosing an employer.
Going forward, employees will gravitate towards employers that provide standout health benefits like workplace healthcare options offered by operational health. Here are some additional factors that act as catalysts for this space.
1. Healthcare as Smart Business
What do companies that rank as some of the best to work for have in common? First, they all tend to outperform relative to the S&P 500 on a cumulative stock performance basis. Second, many offer superior healthcare benefits.
Moreover, from 2012 to 2022, companies that were the best to work for saw shares appreciate nearly 500%, compared to around 300% for the broader market. Data like this suggests investing in healthcare and keeping employees happy is smart business that pays dividends.
2. Healthcare as a Differentiator
Since 2020, labor markets have changed dramatically. As a result, employees now have more options and are much more selective about where they work. This is evident from the difference between job openings and hires which has risen to unrecognizable levels. For example, the data shows that there are nearly 12 million job openings, but only around 6-7 million hires in 2022.
Altogether, with an oversupply of jobs relative to workers, employers will have to find new ways to differentiate. One way to stand out is through healthcare and initiatives around operational health tech.
3. The Looming Mental Health Epidemic
Today some 700 million people suffer from some form of a mental health condition and COVID-19 has continued to exacerbate the problem.
Moreover, the cost of mental health for the global economy is estimated to be a whopping $6 trillion by 2030, over double compared to the $2.5 trillion figure in 2010.
Under the umbrella of services operational health tech covers, mental health will stand to benefit. Especially in the years to come as we look for new ways to combat its mounting costs.
Investing in Operational Health Tech
Bloom Health Partners is an operational health tech company looking to revolutionize workplace health by supplying employers with data to better understand their employee base and business.
One way Bloom stands out is with Bloom Shield—its flagship cloud-based big data platform for employee health data management. With Bloom Shield, new health insights become available to make better decisions. Employers can get insight into demographic data and age trends within the workplace, pre-screening detection for cancer and diabetes, and testing for management to tackle the spread of disease.
Click here to learn more about investing in operational health tech with Bloom Health Partners.
How Environmental Markets Advance Net Zero
The global price of carbon increased 91% in 2021. Below, we show how environmental markets are supporting a greener future.
How Environmental Markets Advance Net Zero
In 2021, roughly 20% of global carbon emissions were covered by carbon pricing mechanisms.
Meanwhile, the global price of carbon increased 91%, bolstered by government, corporate, and investor demand. This puts traditional fuel sources at a disadvantage, instead building the investment case for renewables.
This infographic from ICE, the first in a three part series on the ESG toolkit, explores how environmental markets work and their role in the fight against climate change.
What are Environmental Markets?
First, meeting a goal of net zero carbon emissions involves limiting the use of the world’s finite carbon budget to meet a 1.5°C pathway.
Achieving net zero requires us to:
- Change how we utilize energy and transition to less carbon-intensive fuels
- Put a value on the conservation of nature or “natural capital” and carbon sinks, which accumulate and store carbon
Environmental markets facilitate the pathway to net zero by valuing externalities, such as placing a cost on pollution and placing a price on carbon storage. This helps balance the carbon cycle to manage the carbon budget in the most cost-effective manner.
What Is the Carbon Budget?
To keep temperatures 1.5°C above pre-industrial levels, we have just 420 gigatonnes (Gt) of CO₂ remaining in the global carbon budget. At current rates, this remaining carbon budget is projected to be consumed by 2030 if no reductions are made.
Each scenario based on a 50% chance of success
Source: IPCC AR6 WG; Friedlingstein et al 2021; Global Carbon Budget 2021
Across three different scenarios, the above table indicates the amount of carbon emissions humanity can emit to prevent the worst effects of climate change.
What are Negative and Positive Externalities?
Second, when companies compensate for CO₂ emissions, they can fall across two categories: negative and positive externalities.
- Negative externalities include pollution. Carbon cap and trade programs, using carbon allowances, put a cost on pollution.
- Positive externalities include renewables, such as wind and solar power that generate carbon-free electricity. The value of renewable energy can be expressed with a renewable energy certificate.
Natural capital is another example of a positive externality, which involves the capturing and storing of carbon. The value of this type of natural capital can be expressed using a carbon credit.
Environmental Markets and the Energy Transition
Next, environmental markets can drive the transition to cleaner energy sources by ascribing a cost to pollution and putting a premium on renewables, to change how we use energy.
As one example, in 2013 the UK government introduced the Carbon Price Support mechanism to complement the emissions cap and trade program and weaken the investment case for coal. Between 2013 and 2020, Britain’s overall CO₂ emissions fell by 31%.
Here’s how coal was phased out of the UK’s energy mix, while renewable energy sources such as wind, solar, and bioenergy played a greater role.
|Date||Coal||Gas||Wind and Solar||Bioenergy|
|Q1 2000||31 TWh||40 TWh||0 TWh||1 TWh|
|Q1 2005||41 TWh||36 TWh||1 TWh||2 TWh|
|Q1 2010||31 TWh||47 TWh||2 TWh||3 TWh|
|Q1 2015||28 TWh||23 TWh||13 TWh||6 TWh|
|Q1 2020||3 TWh||27 TWh||28 TWh||9 TWh|
Source: Digest of UK Energy Statistics (DUKES); BP; EMBER via Our World in Data (2021)
Today, less than 5% of the UK’s electricity is coal-generated, with remaining plants expected to be decommissioned by 2024.
How Environmental Markets are Advancing Net Zero
Finally, as governments increase their commitments to net zero, carbon prices are rising towards a level that requires industries to decarbonize and meet those goals.
In fact, between 2014 and 2021, the global price of carbon has increased over sixfold.
|Date||Global Carbon Price (Year End)||Annual % Change|
As indicated by the ICECRBN Global Carbon Price (CPW Weighted)
Source: ICE (Apr 2022)
As companies begin to treat their carbon footprints as liabilities, there will be increasing demand for environmental attributes, such as carbon allowances and carbon credits.
Managing Risk and Opportunity
Quoted markets like ICE Futures Exchanges and NYSE allow stakeholders to precisely value positive and negative externalities to:
- Manage emissions cost effectively
- Hedge climate transition risk
- Allocate capital to facilitate the energy transition and build carbon sinks
- Create an asset class for Natural Capital
- Invest in assets to meet climate obligations
Everyone is exposed to climate risk which means it needs to be measured and managed.
That’s why balancing the carbon cycle will be critical to managing the world’s carbon budget. Markets are providing greater access, liquidity and opportunity in supporting net zero ambitions.
In part two of the series sponsored by ICE, we’ll look at four motivations for using ESG data.
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