More Than Just a JPEG: What is NFT Utility?

The days of merely attaching a JPEG to a token are fading away.  


If you have been following the NFT space, you have probably seen news of 7-figure sales of digital art and rock collages on the blockchain. With these headlines, the skeptic in you may be wondering how these valuations were derived. Who decides if one image is worth more than the other? 


Most people probably associate NFTs with digital art and collectibles like Crypto Punks. However, NFTs are much more than that, and there is a lot more to discover. 


Increasingly, investors are seeking out NFTs that have real utility, use cases, and tangible value in Web3 ecosystems. 


In this article, we are going to go over NFTs and the reasons behind them,  common types of NFT utility, and how they are used. 

What is NFT Utility? 


In the context of an NFT, utility means the value or offer that’s attached to an NFT. That is, aside from the arts,  what other use cases are there for the NFT? 


These projects include anything from tokenization of the NFT asset you own to alpha access for their game or even real-world applications that extend beyond the digital metaverse these projects are cultivating.  


The NFT market is still in its infancy; therefore, its full integration into society is yet to be fully realized. Nonetheless, NFTs are moving towards providing more real-world value, rather than just the provision of digital art. 

NFTs are indeed becoming the new way to gain access to profitable opportunities that are largely not available to the general public. Such valuable access is often generated through access to exclusive perks and opportunities for holders. For example, holders of NFTs can get access to products at a discounted rate, exclusive access to a community of entrepreneurs, a steady stream of passive income, etc. 

The options are endless and are limited only by the limits of creativity.  

Thus, NFT utilities are becoming more widespread and varied, expanding into many aspects of both the digital and real world. NFTs are soon going to be a part of everyday life.  


Types of NFT Utility in 2022 


These are the types of utilities that NFT projects are using right now: 

  • DAO 


Decentralized Autonomous Organization (DAO) serves as an NFT platform’s decision-making tool. NFT platforms come in a wide variety and numbers. Let’s examine how DAO participation enhances the user experience on a gaming NFT platform. 


Users have the right to evaluate the rules governing content moderation, asset policy, and auctions using DAOs. The concept of a CEO and leadership from any NFT platform is eliminated by DAOs, who own the smart contracts and digital assets (NFTs) that bring autonomy. 


In order to receive benefits from the dApp, users can stake both their NFT and the native token. 

Even when NFTs are staked or provided to the market, users maintain full control over them. 

  • Staking/Utility Token 


Staking will allow you to earn the project’s crypto token by locking up your NFTs and earning a passive income in the form of cryptocurrency. 


While some collections have stringent restrictions on how long NFTs must be staked before being unstaked, others allow users to deposit their NFTs for an endless lockup period. 


Additionally, there are specialized, collection-neutral platforms that give token rewards to NFT collectors for staking NFTs from other projects and blockchains. 


  • Burning 


Burning gives a use case for NFT. The burning of an NFT can be accomplished in a variety of ways. The aim is to reduce the number of tokens that are currently available, thereby increasing their value. 



Burning can be used to replace your NFT with something else. E.g., replace NFT with a physical product. For instance, in the fashion world, we are seeing brands like Unisocks invite NFT owners to burn them in exchange for physical products.  


Burning can also induce scarcity and increase the price and value of NFTs. In some games, users are incentivized to destroy NFTs, which increases their scarcity and value through the potential to receive other valuable NFTs. 


The simplest way to burn is to transfer ownership of an object from the blockchain to a generic, null address that no one owns or has access to. Although it does not destroy the token, it is now controlled by the “digital garbage bin.” 


  • Breeding 


Another significant way project creators are injecting utility into their projects for the long-term benefit of collectors of their NFTs is through breeding. 


Breeding NFTs is a mechanism that allows two breedable NFTs to bond and produce a new NFT offspring. To illustrate how the system works, imagine two creatures pairing to produce offspring. 


NFT project creators and startups use NFT breeding to produce long-term utility for their NFT collectors. Rather than relying on the ever-changing value of NFTs based on public sentiment, project designers go the extra mile to develop practical techniques and ways for collectors to gain from purchasing their NFTs. 



Breeding NFTs to create a new NFT (which is usually considered more precious and distinctive) is a significant way for NFT collectors to profit from their initial investment. When a project uses NFT breeding to provide usefulness for its NFTs, some or all of the NFTs in the game collection become breedable. 


In general, each NFT in a collection or game is distinct from the others. This is how people estimate their worth. When the NFTs are breedable and mate with another breedable NFT, a new NFT that did not previously exist is created. This NFT will have a blend of the parent NFTs’ distinct qualities (typically the best traits). 


Because of these distinguishing characteristics, the NFT offspring is a rarer and more distinct NFT, enhancing the collector’s portfolio value. 


  • Launchpad 


Launchpad NFT project is where new NFT projects looking to launch and need help with marketing will come to a launchpad project and offer up a large percentage of their NFT collection in exchange for marketing help and spread the word about the NFT project. 


The launchpad is one type of project that will always have a use case and, as long as all of the other boxes are checked, represents a decent investment opportunity even in a bear market. 


  • Event Access 


An NFT could be utilized as an event ticket-like access pass. The distinctive tickets are verifiable to offer entrance to various exclusive events by owning the NFT because blockchain technology makes it simple to track possession. This idea can be applied to several industries, including Discord for exclusive channel access, music streaming services for tracks that didn’t make the cut for official albums, private podcasts, and more. 


The event access tool is timed to coincide with, an NFT platform co-founded by Tom Brady that brings together renowned athletes, iconic businesses, and wealthy collectors. In addition to gaining access to special events and activities like exclusive Discord forums for Autograph holders, their marketplace enables users to buy legendary, one-of-a-kind artifacts. 



  • Gaming NFT 

When it comes to NFTs, one benefit that practically all blockchain games have is the concept of digital asset ownership. Items, skins, characters, and any other type of digital asset in traditional games exist only within the game and have no value outside of it. Depending on the game’s terms of service, the player may not even own anything they make in the game. 


Users hold a certificate of ownership of online assets with NFTs, allowing them to be traded, staked, or sold to other players. This is also the first step in establishing the NFT metaverse, which will allow users to transfer and even utilize their digital assets across platforms. Consider transferring an item from one game to another. All of these elements are made feasible by the primary principle of play-to-earn gaming, which is to give the players ownership of digital goods. 




Top 7 Projects With Interesting Utility  


Cyberkongz is one of the most well-known NFT project on Ethereum. It has been in circulation since March 2021, making it one of the first PFP NFT projects to be released. In the year since CyberKongz has consistently implemented some of the most inventive methods of engaging their audience. 


Cyberkongz has expanded from its original Genesis Cyberkongz into a full ecosystem, from introducing the $BANANA coin to launching a “Play and Kollect” game on Polygon this year. 


As for utility, collectors can use $BANANA to participate in the community DAO, change your Kongz’ name and origin story, and soon to purchase wearables for your CyberKongz VX. $BANANA can also be used to list and place offers on CyberKongz on OpenSea. 




By market capitalization, the largest NFT avatar is the Bored Ape Yacht Club, or BAYC. 


The BAYC collection has 10,000 distinct NFTs that were generated algorithmically from over 172 potential features that determine the rarity of each ape. Laser eyes on 69 apes, blue beams on 49 apes, solid gold fur on 46 apes, and “Bored Unshaven Pizza” lips on 26 apes are among the most sought-after traits. 

About its utility, The BAYC collection grants members exclusive access to the Yacht Club, as well as a members-only retail store and a Discord server. BAYC holders are eligible for further NFTs, such as a free membership to the Bored Ape Kennel Club. In some ways, owning a BAYC is similar to having a continuous subscription to new NFTs and assets. 


Another factor is its appeal to the local community. BAYC holders have actively promoted their NFTs on social media as profile images. 




In November 2021,digital sneaker maker RTFKT partnered with Japanese artist Takashi Murakami to create an NFT collection of 20,000 avatars called Clone X. Clones give their holders utility, including access to the RTFKT ecosystem. 


RTFKT’s unique ecosystem revolves around a virtual world in which humans no longer exist in their organic form, instead being represented by a digital avatar. The process of self-expression is done through customizing your clone and traveling across virtual galaxies, while partaking in a variety of experiences. 


All in all, the launch of Clone X will offer 20,000 3D NFT avatars with unique features. 


As for utility, collectors will be able to use each avatar in videos, games, social media and other types of content within the meta-universe. 




CryptoKitties are non-fungible tokens (NFTs) that represent one-of-a-kind digital kitties. CryptoKitties, which was created on the Ethereum blockchain, became one of the world’s earliest and most well-known blockchain games. 


In 2017, CryptoKitties was founded as a gamified NFT collection with the goal of making blockchain technology more accessible to new consumers. CryptoKitties was one of the first NFT collections on Ethereum, and it helped to rethink both the gaming and collectibles marketplaces. Its novel functionality and large user base have enabled CryptoKitties to maintain a high NFT floor price and monthly user base long after its first introduction. 


Collectors who own more than one CryptoKitty NFT can “breed” them. Each new NFT resulting from the breeding process has a distinct set of qualities drawn from its pedigree. These characteristics are known as “cattributes” in CryptoKitties parlance. Each bred CryptoKitty NFT is a one-of-a-kind collectible with its own unique qualities recorded on the blockchain. 





Wolf game is one of the most recent entrants into the play to earn NFT space. The game, which now has a large ecosystem of players, became quite popular shortly after launch thanks to honorable mentions from celebrities like Gary Vee and Beanie.eth. So far, Wolf Game and its associated cryptocurrency have enjoyed a total trading volume of over  $10 million in total trading. 


Wolf Game is a play-to-earn game. The game, which is built on the Ethereum blockchain, includes elements of non-fungible tokens and the concept of Decentralized finance (DeFi) to help players earn profit from playing the game. 


Wolf game recently announced its utility in-game as artifacts in the form of  “1-to-1 GIFs” under the label of the Wolf Game Relics. Players can own this through spending precious $Wool, which is the in-game governance tokens.  




Collab.Land is a Discord bot that manages token-gated channels and roles.  

It includes functionality to: 

  • Verify whether a user owns a given digital asset (ERC token) necessary to enter a given channel or have a certain role, and if they do, give them access. 
  • Automatically kick a user out of a gated channel or role if they sell or otherwise get rid of the token required to be in it. 
  • Tip other users within a server. 





VeeFriends debuted with 268 characters and 10,255 tokens, combining collectible NFTs and social token utility. Each of the 268 characters, which are based on the Ethereum network, has an alliterative name such as “Adventurous Astronaut,” “Courageous Cockatoo,” or “Empathetic Elephant.” This naming practice highlights the most admirable qualities in people that Gary Vee admires. In reality, he conceived and drew all 268 characters in VeeFriends Series 1. 


Gary Vee titled the collection “Friends” because he believes that “doing business with friends can be pleasurable.” Essentially, VeeFriends is more than simply a collectable project for him; it is an IP empire that he will work on for the rest of his life. 


VeeFriends is all about convenience and accessibility. The VeeFriends NFT collections have two primary selling points; Veecon, which is the year’s most anticipated NFT event and actual access to Gary Vee. 





While many projects are using utility as a way to get more attention, there are actually some very amazing ways NFT projects can implement utility. 


The current NFT space must address issues of identity, provenance, security, and utility to achieve widespread adoption. Utility NFTs can be integrated into our daily lives. It raises the bar for security and reliability and opens up new use cases for NFT technology in the financial industry. The rise of NFT utilities in different sectors would prove helpful in the NFT industry.