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Exploring NFTs, drop culture, and the blockchain technologies that make it all go

Megan Kaspar, managing director at Magnetic Capital, talks about Ethereum's role in underpinning NFT drops and explores the role of blockchains in the metaverse.

Video Transcript

- As we've been discussing 2021 has been a banner year with the explosion of NFTs providing a huge boost to Ethereum and prices their activity on that chain, as well. And for more on that, I want to bring on an expert in the area of NFTs. Megan Kaspar, Magnetic Capital Director, joins us here, as well as a member of the dao, Red Dao. And Meghan, appreciate you coming back on. You're sporting the NFT earrings here, of course, which kind of just goes to show you are indeed an expert in the NFT area.

As we've discussed, it's been an explosion in terms of NFTs, wearable NFTs even. But let's back up and talk about Ethereum, too. Because as we discussed this year, you had some lofty goals. Obviously, based on a lot of upgrades to that network, you saw a potential chance to hit $8,000 to $10,000 as those upgrades were I guess pushed back a bit. So maybe we'll wait a little bit for that, but talk to me about where you see Ethereum going in the short term here.

MEGAN KASPAR: Well, we did anticipate to see a market cap for Ethereum hitting around a trillion, which would put the price point for Ethereum between $8,000 to $10,000. And that was based on technical analysis and two Ethereum network upgrade conditions that were set to trigger over the course of this year, before the end of this year. One of them did, and that was EIP 1559. And that's drastically decreased the gas prices on Ethereum, but it's also burned over 1,100 Ethereum, which is equivalent to about $5 billion.

So that's been great for the network, but the one other network upgrade that we anticipated to see is the transition from proof-of-work to proof-of-stake, and that's called the Ethereum 2.0. And in November, the Ethereum Foundation did an announcement that they'll push that network upgrade to about June 2022. So there's a good outlook next year for Ethereum, but Ethereum did still outperform Bitcoin this year by over 350%. So it's keeping it the second largest crypto out of all the highest market caps for all the cryptocurrencies.

And I still foresee there being greater upside potential and Ethereum being a more superior asset to invest in than Bitcoin.

- Yeah, it's been interesting to watch that play out this year, especially as we've talked about the explosion of NFTs and options there to reduce some of the loads on Ethereum. We've seen polygon really take off when it comes to, maybe, people transacting. Also, these other chains popping up, Avalanche and Solana, to also build out capabilities there in the NFT space. When it comes to, I guess, how investors should look at NFTs, though, you've obviously been investing in specific projects. But even backing up, if people watching this don't even know the specifics, or the granular projects themselves, there's still a way to invest around that, right?

Ethereum might still have the most activity, but there are other chains out there that are gaining some now, too.

MEGAN KASPAR: Yeah, there are layer one alternatives like Solana and-- Solana and Near. I would say Near is a good layer one alternative for Ethereum, but the alternatives still don't have the same ecosystem. Ethereum has the strongest ecosystem. There is more total logged value in DeFi, about $96 billion on Ethereum. The NFT sales for this year were over $12 billion on Ethereum. No other chain has anywhere near that amount for NFT sales. Also, all the top NFT collections, like the collections that Red Dao also invests in, Axie, CryptoPunks, Bored Ape Yacht Club, Artifacts.

One of the artifact drops that recently happened a few weeks ago. So these were all on Ethereum, and even the metaverse platforms, Sandbox, Decentraland, Zombie Space, everything is happening on Ethereum, and that's why reallt there's the most upside potential there in the ecosystem. But not to say that-- we can't discredit the other the alternatives. These are still good ecosystems to pay attention to. And then I think for 2022, the layer 2 Ethereum solutions like Polygon, pretty much every startup company that I speak to, they're all building on Polygon.

So I think that that speaks volumes to what the possibilities are for the growth in that ecosystem. As well.

- Well, if people watching this are new to crypto, they might be kind of blown away by the fact that you're wearing virtual earrings, and also, those NFTs we just showed on the screen there, Clone X, obviously, you own them through Red Dao. And when we talk about-- maybe what's important there is Nike just acquired the company behind them, Artifact, that push those out. And we've seen Facebook this year change the name to Metaverse. So much attention being placed on that, what makes projects like those stand out?

And Clone X, and I was looking at the prices, and some of these are 40 ETH, right? We're talking about tens of thousands of dollars behind those things, but they're not just art anymore. Talk to me about where that space is going.

MEGAN KASPAR: Well, Clone X, Artifact did the drop with Clone X, and they also did a collaboration with the artist Murakami. So some of these clones have Murakami DNA in them. The drop itself, people could mint if they had prior items from artifact for around 0.05 ETH, up to three Ethereum. And now the floor prices for these clones and the virals have several multiples, up to four and five-x. So the project itself has done very well, and it's very nascent. The announcement of Nike acquiring Artifact happened on Monday, but there's a lot of utility that's going to come out of these clones.

The functionality that they're offering, if you own a clone, you can have a space pod airdrop. So it's a really cool augmented world that your clone can live in. And I think that we'll see play-to-earn and wear-to-earn models come out of clones from Artifact and just greater utility beyond what you can do with any of the other existing NFTs today.