Why splitting your NFTs into different traits could be the next big thing in web3

Randy Ginsburg
July 20, 2022

An NFT trait economy would let you put an adidas headband on your Bored Ape, and could unleash the next NFT bull cycle. Psychedelics Anonymous is hoping it does, and plan to be the ones to make it happen. Randy Ginsburg spotlights the enormous potential of their Divine Entities marketplace.

Since the introduction of CryptoPunks in 2017, PFPs and their traits have been crucial components of digital identities. Rarity and inherent value aside, many NFT holders have aligned their digital avatars with their physical appearance, perhaps on the basis of skin or hair color, interests, or values. Others have taken the inverse route by making a trait within an NFT a staple of their IRL identity and personal brand.  

Take Manifold.xyz founder Richerd. He's the owner of CryptoPunk #6046, a mid-level rarity Punk sporting a cigarette and blue and red 3D glasses. To align his digital and physical identities, Richerd wears a real pair of 3D glasses wherever he goes. Then, in October 2022, he turned down an offer of 2,500 eth (almost $9.5 million at the time) for his Punk.

RTFKT included blue red 3D glasses as a trait to tap into Richerd's brand.

Richerd knew that the offer far exceeded the value of the NFT itself – the sale would have been comfortably the highest CryptoPunk sale at the time. But he argued that “to me, my brand, identity, and what I’m building in the NFT space will be way more valuable in the long run.” #6046 was a key part of what made Richerd, Richerd. Since buying the Punk in early 2021, he has built his brand around the iconic blue and red through his DAO, Manifold, and his public web3 presence.

There's method to the madness. Our physical appearance is one of the biggest outlets for self-expression. Fashion, accessories, and tattoos all serve as opportunities for us to express our authentic selves, and digital identities are no different. Nobody in web3 should be surprised that Facebook, Instagram, Snapchat, and Twitter are all experimenting with letting users show their NFTs. 

This same behaviour will continue as we spend more time in the virtual world. That’s why widely-respected projects like Psychedelics Anonymous (PA), are betting big on the next wave of digital identity. 

Divine Entities

In December 2021, Psychedelics Anonymous was introduced to the world, the brainchild of Lewis Gale, who as founder of the brand agency Vultura has accumulated decades of experience in tech and media. The highly-anticipated project featured four collections (Genesis, IRL Pass, Metaverse Pass, and Component #1), each of which sold out almost instantly. Since its first mint, PA has continued to develop its expansive PAverse ecosystem and build a community around psychedelic therapy and reducing the stigma of mental health.

Image from 2nft.org.

Now, the organisation has introduced its biggest bet yet: the Divine Entities marketplace. 

Divine Entities (DE) is a platform designed to drive the next wave of customisable NFT-powered digital identities by allowing collectors to deconstruct their DE-enabled ERC721 tokens into individual traits. Psychedlics Anonymous envisions a world where users can buy, sell, and trade their traits on the open marketplace, equipping their avatars however they see fit. The team believes opening up a trait economy will create an ecosystem in which “millions of users will buy, sell, swap, and equip traits to customize, profit, and/or express themselves progressively through their NFT digital identities.”

To start, Psychedelics Anonymous will launch its own collection of traits on the marketplace, releasing new masks, suits, hoodies, faces, pins, and patterns. All traits will be swappable and customisable to the Genesis avatars, PA's original collection. Meanwhile, a second collection from the PA sister project Ezu will follow shortly after. The marketplace will be powered by a new token, $PSY, and governed by a DAO.

Introducing: trait economies

It is important to note that Divine Entities is a groundbreaking innitiative and that the Psychedelics Anonymous project is very much a work in progress. However, if executed properly, the ability to buy, sell, and swap traits at a trait level will have massive implications for the web3 ecosystem more broadly, affecting creators and collectors, artists and project founders, and developers and builders.

For creators and collectors, the possibility to exchange individual traits has enormous potential. It allows community members and collectors to embraced more nuanced and individual forms of self-expression, customising their NFTs as their preferences evolve alongside broader trends in fashion and culture.

Meanwhile, it gives artists and project founders an addition tool to engage their communities and drive additional revenue, through the sale of exclusive traits and utility-based add-ons. Blockchain games can release trait packs, similar to downloadable content, that provide various forms of utility, in-game performance boosts, and other expansionary features.

Of course, developers must be cautious of both creating a game that devolves into pay-to-win, as well as attempting to extract value from players without creating a better game or experience. But there is merit in the idea in principle, and there is enormous scope for creators to introduce deeper value and innovative uses of a trait economy. The recent and highly successful entrance of GameStop to the NFT marketplace sector reflects the natural synthesis between gaming and NFTs and the significant value proposition that exists for gamers and developers alike.

Perhaps the most promising angle is the ability to onboard web2 brands to web3 through licensing and partnership deals. Take the Snapchat Bitmoji store for example, where brands like Ralph Lauren, Jordan, Converse, and Warby Parker have invested heavily in partnerships, offering virtual garments and accessories to Snapchat’s 332 million global daily active users (70% of whom have a Bitmoji). 

Fronted by Chance the Rapper, Ralph Lauren began their Bitmoji partnership with a twelve-piece "Max and Match" line inspired by IRL designs.

The same concept applies here. People value the ability to express their digital identities, and until now, the ability to mix and match traits in web3 has been only a pipe dream. With Divine Entities, PA wants to let Richerd collaborate with Moonbirds on a set of 3D glasses or let Bored Apes put an adidas headband on their PFP. The possibilities are endless: leveraging a supply of traits can create markets similar to those of collectibles like streetwear and sneakers, the latter of which has grown to a billion-dollar resale market. And just as there are NFT flippers, there will be those who focus solely on NFT traits. 

The opportunity is widely acknowledge, and organisations like TraitSwap have emerged to build the next step for NFTs. As with Divine Entities, TraitSwap’s infrastructure allows users to buy, sell, and trade existing PFP traits on their marketplace, whilst empowering companies to launch new trait collections. TraitSwap's platform is already live, and was met with a positive reception when it launched with the Fancy Bears metaverse collection. The organisation is now in the process of onboarding over 30 collections including Bored Ape Yacht Club and Azuki.

Only a few weeks removed from the announcement, much is uncertain about what this platform and economy will look like. It remains to be seen whether trait economies will receive attention from the dominant NFT marketplaces and whether Psychedelics Anonymous can bring existing blue-chip creations onboard to accelerate their roadmap. 

Time will tell, but one thing is certain: the emphasis on digital identities is here to stay, and innovation will come.

Perhaps the most promising angle is the ability to onboard web2 brands to web3 through licensing and partnership deals.
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Randy Ginsburg
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Randy is the founder of Digital Fashion Daily and Third Wall Creative, a web3 marketing agency. Straddling the worlds of retail and emerging technology, Randy has worked with many companies including nft now, Shopify, and Touchcast to create compelling and educational web3 content. Previously, Randy worked at Bombas, developing the most comfortable socks in the history of feet.