Dapper Labs Launches Genies NFT Platform 'The Warehouse'

The Evolving Landscape of NFTs: Balancing Present Gains with Future User Acquisition

As the year draws to a close, marking a period of substantial growth for Non-Fungible Tokens (NFTs) – exceeding $10 billion in transaction volume – NFT project developers are currently grappling with a critical decision. This involves weighing the benefits of capitalizing on immediate revenue opportunities versus investing in strategies to attract and retain users for the long term.

Dapper Labs and Genies Collaborate on "The Warehouse"

Dapper Labs, the company behind the popular NBA Top Shot NFTs, is actively seeking to demonstrate to investors its commitment to fostering developer engagement and prioritizing future user growth. Recently valued at $7.6 billion, the startup is now unveiling the results of its partnership with Genies, a company specializing in celebrity avatars.

This collaboration has produced an ambitious NFT storefront, intended to function as a central hub for web3 digital identity. The platform will enable users to design animated avatars and personalize them with a variety of NFT accessories.

Platform Launch and Initial Access

The new platform, known as The Warehouse, is initially launching with a limited number of invite-only users. Both Dapper Labs and Genies have indicated that access will be gradually expanded to a broader audience in the coming months, as reported by TechCrunch.

Users will be able to customize 3D cartoon avatars created within the Genies application with digital accessories such as masks, shoes, and backpacks. These items will be minted on Dapper Labs’ blockchain network, Flow.

Pricing and Marketplace Considerations

Genies has stated that the majority of items within the store will be priced under $20 for initial sales. However, it’s important to note that this applies only to primary market transactions; owners will ultimately determine pricing for secondary market sales.

Notably, The Warehouse will not feature a secondary marketplace at launch. The Genies team believes this will allow the community to focus on the platform’s features and user experience before the dynamics of resale values come into play.

Genies' Previous Ventures and the Advantages of Flow

Genies has previously experimented with the sale of digital apparel and accessories within its mobile app, though this earlier iteration did not incorporate blockchain or NFT technology.

This move into NFT economics represents a strategic investment in Dapper’s blockchain, Flow. Flow offers several advantages over more decentralized networks like Bitcoin or Ethereum, including reduced transaction fees, increased processing capacity, and a developer-friendly environment that supports features like credit card processing and simplified password recovery.

Competition in the Blockchain Space

Flow is not the sole blockchain aiming for a more user-friendly experience with lower fees and streamlined onboarding. Dapper Labs has secured approximately $600 million in investment based on the potential of its technology.

Other Layer 1 chains, such as Wax and Solana, have also attracted NFT projects seeking to leverage their respective strengths. Furthermore, venture capital has fueled the development of “rollup” solutions for Ethereum, designed to enhance scalability while maintaining the network’s security.

Shifting Market Dynamics and Competition

NBA Top Shot experienced rapid growth earlier in the year, with monthly transaction volume increasing from under $1 million in December 2020 to nearly $225 million in February 2021. However, current transaction volume and user activity on Top Shot are significantly lower than those of its primary competitor, Axie Infinity.

Axie Infinity recorded over 520,000 unique buyers in November, compared to Top Shot’s 64,000, according to data from CryptoSlam. The majority of new, high-traffic NFT projects have chosen to build on the Ethereum network, capitalizing on the substantial liquidity within that ecosystem.

Learning from Past Experiences and Future Growth

The launch of The Warehouse is a pivotal moment for Dapper Labs, as it seeks to attract developers and regain momentum while addressing the challenges encountered with NBA Top Shot. Early issues with scaling and concerns from early adopters regarding NFT value depreciation have prompted a focus on improved platform stability and user experience.

“The Genies Warehouse is the biggest release on Flow since NBA Top Shot and we’re looking forward to a similar success,” stated Roham Gharegozlou, CEO of Dapper Labs.

Genies' Unique Position and Celebrity Partnerships

While Genies may not yet be a widely recognized brand, the startup has cultivated a network of high-profile celebrity partnerships. Avatar companies have emerged in recent years, aiming to establish a foothold in the “digital identity” market. However, game developers have generally been hesitant to adopt third-party systems, and celebrities have often prioritized social media influence over virtual world engagement.

Genies has been particularly successful in forging partnerships with prominent entertainers, including Justin Bieber, J Balvin, and Cardi B. This success has been further bolstered by recent investments, including a $65 million Series B round led by Mary Meeker’s venture fund, Bond.

Consumer Skepticism and Industry Challenges

Despite the growing interest from the tech industry and venture capital, consumer adoption of NFTs remains cautious. Many consumers are skeptical of the value proposition of expensive digital items that closely resemble those available within traditional gaming environments.

Discord, a popular chat application, recently faced significant user backlash after CEO Jason Citron shared a screenshot of a potential integration with the MetaMask NFT wallet platform. The ensuing criticism prompted Citron to clarify that the integration was merely an “internal concept” and that Discord had “no current plans to ship” the feature, acknowledging the need to address existing challenges within the Web3 space.

Addressing Industry Concerns and Future Vision

Both Dapper Labs and Genies aim to address these industry concerns with the launch of The Warehouse.

“This is not an avatar 10K profile picture project or us bringing culture to NFTs and crypto,” emphasized Akash Nigam, CEO of Genies. “We see this as the first step in creating a digital identity across the metaverse for consumers and plan to give the wearable creation tools to consumers and talent down the road.”