As the digital horizon expands, Non-Fungible Tokens (NFTs) continue to evolve beyond the art and collectible space, deeply integrating into various sectors of the economy and our daily lives. 2024 is poised to witness significant transformations within the NFT market, propelled by innovative applications and broader adoption. Here's an exploration of the 5 key trends that are shaping the NFT landscape.

Trend #1: Hybrid NFTs

Hybrid NFTs aim to combine the best of both worlds: the uniqueness of NFTs and the liquidity and divisibility of fungible tokens (FTs). This innovative class of digital assets has been propelled into the spotlight by the ERC404 standard by Pandora, which is an experimental token standard blending the features of ERC20 and ERC721 tokens. ERC404 has been pivotal in fostering the Hybrid NFT trend by allowing for the fractional ownership of NFTs. This means that an NFT can be divided into smaller parts, which can be owned by multiple individuals, thereby solving one of the most significant challenges faced by the NFT market: liquidity. With ERC404, investors can own a piece of highly valuable digital artwork or NFT art piece, for instance, without needing to purchase the entire piece, making high-value NFTs more accessible to a broader audience.

The use cases for Hybrid NFTs on the blockchain are vast and diverse. They range from art and collectibles, where pieces can be partially owned and traded, to real estate and virtual land, where ownership can be distributed among several investors. In gaming, Hybrid NFTs can represent shared ownership of in-game items or characters. Furthermore, they hold potential in the music industry, where fans could own a fraction of a song or album, and in intellectual property rights management.

The ongoing trend towards Hybrid NFTs, expected to become a significant movement in 2024, is fueled by evolving technology enabling fractional ownership, enhanced liquidity, and broader market access. As blockchain sophistication increases and mainstream cryptocurrency adoption grows, demand for more accessible NFTs is likely to surge. Hybrid NFTs attract both creators, who can monetise their work innovatively, and investors, gaining access to previously inaccessible assets. This trend is anticipated to spur ongoing innovation, with new projects and platforms emerging to capitalise on this momentum. As blockchain technology progresses and the community seeks integration between traditional finance and DeFi, Hybrid NFTs are poised to play a pivotal role in bridging these worlds.

Trend #2: Real-World Asset Tokenisation

Real World Asset (RWA) tokenisation transforms the investment landscape by turning tangible assets like real estate, art, and commodities into NFTs on the blockchain. The impact of RWA tokenisation is profound and multifaceted. In real estate, tokenisation breaks down high-value properties into smaller, purchasable tokens, dramatically lowering the entry barrier for investors and democratising access to investment opportunities previously out of reach for the average person. For art and collectibles, it ensures transparent provenance, bolstering trust and liquidity. In commodities, tokenisation enables fractional ownership and smoother distribution, optimising supply chains and global trade. This innovation has made investments more accessible, increased market liquidity, and simplified transactions. In 2023, significant strides were made with projects tokenising buildings and art collections, paving the way for expansion into new asset classes and unprecedented opportunities for investors and creators in 2024.

*An artistic impression of RWA tokenisation generated using DALL.E*

Successful projects like tokenised commercial real estate and fine art in 2023 illustrate RWA tokenisation's potential. For example, investors could acquire tokens representing stakes in real estate properties, earning rental income and capital appreciation with platforms like RealT and Fraxtor. Similarly, limited edition tokens for art ownership simplify investing in valuable artworks. Experts anticipate broader applications, spanning luxury goods, intellectual property, and even intangible assets like carbon credits. Tokenising energy credits, for instance, could transform the renewable energy market, while luxury goods tokenisation offers secure ownership transfers, opening new investment avenues.

Trend #3: NFT Gaming Expansion

The gaming industry's adoption of NFTs marks a transformative shift in player engagement and game development. NFT integration grants players true ownership of in-game items, empowering them to trade, sell, or utilise assets across various gaming platforms. This trend promises to introduce innovative gameplay mechanics, heighten user interaction, and cultivate dynamic in-game economies. Several successful NFT games and anticipated releases in 2024 highlight the potential of this technology. Square Enix, a veteran in the gaming industry, has expressed interest in integrating NFTs into its future projects, recognising the potential for blockchain to create new gaming experiences and revenue models. Mythical Games is another notable player, with its title "Blankos Block Party" serving as an example of how NFTs can be seamlessly integrated into games to enhance player ownership and the overall gaming ecosystem.

The integration of NFTs on a blockchain into the gaming industry represents a significant shift in how games are developed, played, and monetised. By facilitating the tokenisation of in-game assets, such as characters, items, and even segments of game worlds, NFTs confer genuine ownership upon players, enabling them to own, buy, sell, or trade their digital assets on the blockchain. This innovation not only renders gaming more engaging by adding tangible value to players' efforts, but also decentralises game economies, allowing players to profit by trading assets across various platforms, a marked shift from the traditional gaming model bound to single platforms. Developers are leveraging NFTs to stretch the creative envelope in storytelling, character customisation, and providing players with ownership stakes within the game world.

Looking forward, NFTs are poised to further transform the gaming industry by melding virtual and real-world economies, thus boosting player earnings and offering more immersive experiences that empower players to shape game development and storylines. The continual advancement of blockchain technology is set to increase the presence of NFT-based games, solidifying their significance in the future of gaming. As a key player in the Web3 gaming sector, our aelevate Gaming Grant aims to further support the blockchain gaming landscape in the upcoming year, offering dedicated grants of up to US$150k per gaming studio to foster growth and innovation.

Trend #4: Ordinals (Bitcoin-based NFTs)

Ordinals offer a fresh take on NFTs by using the Bitcoin blockchain instead of the Ethereum-dominated market. They provide an alternative for creators and collectors who prefer Bitcoin's security and widespread adoption. The surge in popularity of Ordinals in 2023 indicates a growing interest in innovative solutions. Unlike Ethereum's ERC-721 and ERC-1155 standards, Ordinals embed digital artefacts within individual satoshis, Bitcoin's smallest unit. This approach showcases Bitcoin's capability for complex applications like NFTs without requiring protocol modifications. The growing experimentation and adoption of Ordinals underscore Bitcoin's potential for broader applications, with predictions for 2024 indicating a rise in projects and platforms leveraging this capability, pointing to a market keen to expand Bitcoin's use beyond traditional transactions. One forerunner of this concept was Taproot Wizards with their tagline to "Make Bitcoin Magical Again" through Bitcoin inscriptions and allowing for active creation by their community.

*Screenshot from the Taproot Wizards website*

However, the integration of NFTs into the Bitcoin network through Ordinals is not without challenges. One potential issue is the increase in transaction load, which could impact transaction times and fees on the Bitcoin network, traditionally not optimised for the high-volume, low-value transactions common to NFT marketplaces. The cultural challenge within the Bitcoin community has historically focused on Bitcoin as a pure currency rather than a platform for decentralised applications.

Trend #5: Phygital NFTs (Physical + Digital)

Phygital NFTs marry the physical and digital worlds, offering a tangible aspect to the traditional virtual nature of NFTs. This innovative concept leverages blockchain technology to authenticate, verify, and link digital tokens with physical objects or experiences, from artwork to concert tickets, enabling a richer interaction with digital assets.

*The Jacob & Co. Astronomia Metaverso Mars Watch*

An example of Phygital NFTs is the collaboration between luxury watchmaker Jacob & Co. and the NFT platform ArtGrails, which resulted in the tokenisation of a luxury watch, combining a tangible timepiece with a digital asset. Another example is Nike's acquisition of RTFKT, a digital studio, to merge physical footwear with digital assets, allowing buyers of certain sneaker models to receive a digital twin in the form of an NFT, which can be used in virtual environments or as proof of authenticity and ownership. These cases illustrate how brands are blending the physical and digital worlds, enhancing the value of traditional luxury goods and memorabilia with the innovation of NFT technology.

Successful deployments of Phygital NFTs have shown how they can boost customer engagement, verify ownership, and offer distinctive collectible experiences. With technological advancements, minting Phygital NFTs is set to broaden, further merging the physical and digital realms. Essentially, Phygital NFTs are leading the charge towards a new hybrid reality, pioneering ways to integrate our online and offline lives. As technology progresses and becomes more widely adopted, we can look forward to a future where Phygital NFTs transform our concepts of ownership, value, and interaction, spanning both our tangible and virtual environments.

Riding on NFT Trends in 2024

The NFT trends of 2024 — Hybrid NFTs, RWA tokenisation, Gaming NFTs, Ordinals, and Phygital NFTs — underscore the continuous evolution and maturation of the NFT space. These trends highlight the innovative applications of blockchain technology and signal a shift towards a more integrated, dynamic digital economy. aelf sees a plethora of opportunities within the NFT world and hence, we actively participated in NFT Paris 2024 where we jumped in on the NFT trends for this year! As we charge ahead, the electrifying potential of NFTs to revolutionise countless industries becomes crystal clear, heralding an exhilarating future of a tokenisable world.

‍

*Disclaimer: The information provided on this blog does not constitute investment advice, financial advice, trading advice, or any other form of professional advice. Aelf makes no guarantees or warranties about the accuracy, completeness, or timeliness of the information on this blog. You should not make any investment decisions based solely on the information provided on this blog. You should always consult with a qualified financial or legal advisor before making any investment decisions.

‍

About aelf

aelf, the pioneer Layer 1 blockchain, features modular systems, parallel processing, cloud-native architecture, and multi-sidechain technology for unlimited scalability. Founded in 2017 with its global hub based in Singapore, aelf is the first in the industry to lead Asia in evolving blockchain with state-of-the-art AI integration, transforming blockchain into a smarter and self-evolving ecosystem.

aelf facilitates the building, integrating, and deploying of smart contracts and decentralised apps (dApps) on its Layer 1 blockchain with its native C# software development kit (SDK) and SDKs in other languages, including Java, JS, Python, and Go. aelf’s ecosystem also houses a range of dApps to support a flourishing blockchain network. aelf is committed to fostering innovation within its ecosystem and remains dedicated to driving the development of Web3, blockchain and the adoption of AI technology.

Find out more about aelf and stay connected with our community:
Website | X | Telegram | Discord

‍

Back to Blog

Tool/Platform	What's it about
ChainGPT	An AI-powered assistant for the blockchain and crypto industry, specializing in content creation, language translation, smart contract coding, and more.
aelf	A high-performance, customisable multi-chain blockchain framework with AI-powered smart contracts and a developer-friendly environment.
Quick Intel	An AI-powered crypto security platform that helps investors avoid scams, rug pulls, and honeypots by analysing smart contracts, social sentiment, and on-chain data.
Cogwise AI News Aggregator	An AI-powered news aggregator that analyses real-time news and global trends to predict market movements in the crypto market.
OpenAI Codex	An AI system that transforms natural language into code, automating code creation for smart contracts, blockchain applications, and other development tasks.
QnA3	An AI-powered Web3 knowledge hub that provides real-time information and insights on cryptocurrencies, blockchain projects, and the broader Web3 ecosystem, with unique Solana Actions integrations.
Fetch.ai	A platform that combines AI and blockchain to create autonomous economic agents (AEAs) for various applications, including supply chain optimisation and smart city management.
Octavia	A decentralised digital identity (DID) platform for creating and managing self-sovereign digital identities, empowering users to control their data and online presence.
TensorFlow	A versatile open-source machine learning framework used for building AI models that can analyse blockchain data, enhance security, and predict market trends.
Alethea	A platform that creates 'Intelligent NFTs' (iNFTs) with unique personalities and the ability to engage in conversations, powered by AI and blockchain technology.

Chain	URL	Explorer
AELF	https://aelf-test-node.aelf.io/	https://explorer-test.aelf.io/
tDVW	https://tdvw-test-node.aelf.io/	https://explorer-test-side02.aelf.io/

Feature	Description
Inheritance	ERC-404 inherits from the interfaces IERC-404, IERC721 Receiver, and IERC165, implementing functions specified in these interfaces, behaving as both ERC20 and ERC721.
Data Structures	Mappings track balances, allowances, approvals, and ownership of tokens. Double-ended queue stores ERC721 token IDs. Data for managing ownership and indices of ERC721 tokens.
Constructor	Initialises token name, symbol, decimals, and other necessary variables for ERC20 and ERC721 tokens.
Token Minting and Burning	_mintERC20 function for minting ERC20 tokens. _retrieveOrMintERC721 function for minting ERC721 tokens and retrieving from a bank. _withdrawAndStoreERC721 function for depositing ERC721 tokens into the bank.
Transfers	Functions for transferring ERC20 and ERC271 tokens between addresses. Distinguishes between token types based on ID. _transferERC20WithERC721 function handles transfers involving both types.
ERC20 and ERC721 Interactions	Approve function handles approvals for both token types. Functions like transferFrom, safeTransferFrom, and permit handle transfers and approvals.
EIP-2612 Support	Supports EIP-2612 permit functionality for ERC20 tokens.
Interface Compatibility	Implements necessary functions for ERC-404 and ERC165 interfaces, indicating compatibility with ERC20 and ERC721 standards.

Role	Max Number
BP	2N+1, N starts from 8 in 2022
Candidate node	5*(2N+1)
Voter	No limit

Benefits	Description
Makes smart contracts 'smarter'	AI-driven smart contracts can autonomously modify terms based on predefined conditions and real-time data input, ensuring that the contracts are not just automated but also intelligent and self-improving over time.
Levelled up data analysis	Data is the new oil, and AI is the machinery that refines it. It is possible for AI to reduce large-volume blockchain data analysis time by up to 90%.
Boosts security	Through machine learning models, AI can prevent frauds and detect security threats in real time. It can identify potential breaches, predict future threats, and adapt to evolving security measures.
Lowers carbon footprint	AI algorithms help optimise energy consumption in blockchain operations, given the flak drawn by activities like Bitcoin mining.

5 NFT Trends to Watch in 2024: Hybrid NFTs, RWA Tokenisation, Gaming NFTs, Ordinals and Phygital NFTs