Nike just spent ~$100 million to purchase an NFT creative studio… and Adidas may have done something wrong.

Web 3.0 is Heating Up:

It’s shocking to see just how quickly companies we know and love are moving into “Web 3.0” – with the largest development of the last few weeks being Nike’s (NKE) ~$100M acquisition of a leading metaverse fashion and collectibles brand that’s effectively merging culture and gaming.

According to Nike’s press release announcing the acquisition..

“This acquisition is another step that accelerates Nike’s digital transformation and allows us to serve athletes and creators at the intersection of sport, creativity, gaming and culture.

We’re acquiring a very talented team of creators with an authentic and connected brand. Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike’s digital footprint and capabilities.” 

And to be quite honest, despite crypto / NFT investors being very “anti big corporation” in some ways, this acquisition was very well-received by the broader crypto community.

In my experience, crypto / NFT investors — if that’s even a proper title for them — care most about decentralization, ownership, and building community. By the way, Nike specifically introduced this acquisition as “value-adding” …

“Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community…”

instead of some sort of cash grab (like Adidas — we’ll talk about that here in a second), they’ve been given the thumbs up from Web 3.0 participants.

But is it a Cash Grab?

Alright, so companies are doing metaverse stuff — we get that. I’d personally argue Nike fits right in to this evolving Web 3.0 landscape as more people begin to care about their appearances in the digital world vs. in real life.

But what about all of the other companies and brands that are converging with the metaverse and Web 3 in a more.. “irresponsible” manner?

Let’s start by talking about what’s been deemed ‘cool and fine’ by the Web 3.0 community at large.

Your favorite Saturday hangout, Applebees, is launching a campaign called Metaverse Monday – allowing anyone the opportunity to purchase an NFT based on their iconic menu items.

The first buyer of the NFT will also receive instructions on how to redeem their NFT for “meals for a year,” which their website claims is worth about $1,300 in free Applebee’s meals.

I think this is cool! I mean, people out there are certainly into Web 3 — especially the metaverse — and Applebee’s is catering new products toward them. They’re selling these NFTs for $25 / each, which is a huge discount to their intrinsic value of $1,300 in free meals so everyone wins.

Applebee’s will get some buzz online, and someone will have free meals for an entire year — a win / win situation.

White Castle, credited for creating the world’s first fast-food hamburger chain (1921), recently took to Twitter to announce a slight name change on their account.

This “.eth” at the end of their name is pretty much them saying “We’re claiming a wallet address on the Ethereum blockchain as ours.” What they’ll do with this Ethereum wallet address – no one knows, but it’s certainly interesting.

Let’s now talk about what Adidas did this week – collaborating with a few notable NFT projects, including Bored Ape Yacht Club, to launch their own NFT collection Into the Metaverse.

According to a press release by the company..

“We’ve embarked on the new age of originality, we said from the very beginning that if we’re going to be the brand that’s going to stand for, represent and help push the values of this new generation into the world, then we must move at the speed of culture. This goes back to the principles of Adidas, where we embrace the edge, open the door for the new and act with rebellious optimism.

The opportunity with the Metaverse is it creates infinite possibilities for us to connect, create and belong.

This has been a massive learning journey for us at adidas, working with the communities that surround G Money, Pixel Vault and the Bored Ape Yacht Club. These communities aren’t collecting hyped up tokens, they have a stake in the future of that community, and I think we can learn something about that. When we think about the role that we can play as a brand to be that trusted friend of our members looking to join this space. In essence, how can we help our current members, get educated, informed and show them the way?”

Below is the NFT Adidas is selling to their community — a spin on the esteemed Bored Ape Yacht Club — for 0.2 ETH each, or about $800.

Adidas spent 46 ETH, or about ~$185,000, on OpenSea to purchase this NFT. The company did this to build rapport within the Bored Ape Yacht Club community — an NFT community a lot of people look up to.

I’d imagine Adidas was thinking.. “If we can get the ‘best’ community to like us, maybe all of the others will follow suit?”

Well, considering Adidas spent $185 thousand to “win over the approval of Web 3.0 community members,” and made $23 million from the launch.

Because of this “quick” 125X return on their investment (Bored Ape) — some people are beginning to think it was all a corporate cash grab.

To be honest with you, I don’t have a dog in this fight. The only NFT I own is the Poolsuite NFT I shared with you all here. Happily using its ownership to jam out to my favorite tunes on their exclusive website. It’ll be interesting to see how greedy (or not) corporations might become as Web 3.0 evolves.

It sort of reminds me of influencers receiving millions of dollars worth of a cryptocurrency in exchange for pumping it to their audiences — knowing damn well they’re going to sell and “rug pull” everyone without consequences.

I’m not saying Adidas has done or will do that — don’t be mistaken. I’m just keeping an eye on how specific companies are entering this incredibly lucrative space.

This company, through some strategic marketing, made $23 million in less than a day — compare that now to the $538 million in profits the company generated worldwide during the entire last quarter. That’s a potential 4% pad to their bottom line with very little cost. If corporations, like Adidas, are able to reap these lucrative NFT rewards at scale… we may end up seeing a very different Web 3.0 landscape in 2022.

An Interesting Observation:

Something that non-crypto folk have trouble understanding are “gas fees.”

These fees are associated with moving an asset from one wallet to another.

Just like I pay my bank $15 to wire money from my business account to an employee’s account for payroll, those of us transferring assets from one wallet to another pay money.

This cost is titled as a “gas fee,” kind of like how we pay to put gas in our car to transport us from one location to another — we pay for “gas” to transport assets on the blockchain too.

An interesting observation from the Adidas NFT campaign is the fact the company conducted it using EIP-1155 — and according to the smart contract..

“This standard can be used to represent multiple token types for an entire domain. Both fungible and non-fungible tokens can be stored in the same smart-contract. This reduces gas costs when more than one token type is included in a batch transfer, as compared to single transfers with multiple transactions.”

Long story short, Adidas used this smart contract built on top of the Ethereum network to save their NFT purchasers as much money as possible on gas fees. I think this is going to be something we begin to see a lot of other corporations do — as paying for gas fees isn’t something normal folk might understand just yet.

A company who is really moving against the tide here as it relates to NFT gas fees is none other than FTX.

You know, the cryptocurrency exchange valued at $25 billion that has signed sponsorship deals with Tom Brady & Steph Curry, bought the naming rights to the Miami Heat arena, partnered with Major League Baseball (umpires wear their logo on their uniforms), and signed an exclusive deal to host the Golden State Warriors’ NFTs on their platform.

They’ve introduced the world’s first gas-fee free NFT exchange.

Unlink OpenSea and other smart-contract-based NFT platforms, auction and trading actions on FTX NFTs do not require gas fees, which is something you’d have to pay in order to bid, buy, sell, list, and even adjust your offers on OpenSea.

OpenSea also charges a 2.5% marketplace fee on every transaction – FTX NFTs is only charging 2%.

Their exchange supports both Ethereum and Solana-based collections, including CryptoPunks, Bored Ape Yacht Clue, and Solana Monkey Business — don’t ask me why NFT artists like primates so much.

To put this in perspective, imagine every time you went to buy a stock on your online brokerage of choice you had to pay $75 minimum fee — even if the total value of the stock you were purchasing was less than that $75 fee itself.

Then you tack on a 2.5% transaction fee on top of that and you’re really feeling the pain.

They allow anyone to buy, sell, list, and bid on their favorite NFTs from a mobile app — with no gas fees.

Personally, Blockfolio was an app I used for about 3 years to track the performance of my cryptocurrency portfolio — then FTX came in and acquired the company. They then built their exchange on top of its portfolio tracking capabilities.

It was kind of funny to see the app name change from “Blockfolio” to “FTX” on my phone. I’ll be keeping an eye on the developments of FTX, and specifically with their activity in the NFT space. Whether you think the space is silly, sketchy, or somewhere in between – I guarantee that it’s not going away. I’ll post more updates regarding what the company is doing over the coming months.

Here’s a link to check out FTX if you’re interested.

What to Watch Out For:

Companies moving into Web 3.0 in a meaningful way — and by meaningful, I don’t mean offering JPEG images of your iconic menu items to NFT collectors.

I mean companies who are doubling down on enhancing the consumer digital experience as outlined in the Tweet thread below:

Feel free to let me know how you feel about this type of content and the Web3 / NFT / metaverse space in general. We’re all learning together here!

Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.