It’s 2022, and there are plenty of NFT projects launching every day. But it’s hard to know which ones will remain popular past their drops.
A lot of them launch pictures for proof (PFP) NFTs — think of them as image NFTs — with no utility attached to them. And there’s no clear plan for holders as to what value these might bring them, beyond trading.
It might be easy for project leaders to team up with an artist and drop some NFTs, but they’d need more technical prowess to create their own token and set up a governance mechanism.
That’s where Co:Create comes in. The startup is building a toolkit to make it easy for Web3 developers to build some of these solutions quickly.
At its core, the Co:Create protocol provides easy and programmable templates for four critical components of an NFT project: the NFT minting mechanism, a native utility token and a governance token, a DAO, and a treasury.
Chris Dixon, a general partner at a16z Crypto, equated native tokens of NFT projects with websites in the web2 era last year.
You could think of Co:Create as something akin to what Squarespace is to traditional websites, or what Webflow is to no-code apps — except this takes care of only the backend for an NFT project.
To make this product, Co:Create, and its owner Gesso Labs, has raised $25 million led by a16z Crypto, with other partners in the funding round such as Packy McCormick’s Not Boring Capital, and Amy Wu.
The need for a native token
The Bored Ape Yacht Club (BAYC) is one of the most valuable NFT projects out there. But there are only 10,000 apes, so only a select number of people can be part of that community. To grow its community beyond that, the project’s owner, Yuga Labs, launched a native token named ApeCoin in March.
While Yuga Labs’ millions of dollars in funding enabled it to build its own solutions, Co:Create believes its toolkit can make this possible for anyone.
In a call with TNW, its founder, Tara Fung said native tokens can help a project include more people in the community that might not hold their NFT:
The thought of creating this toolkit was born when we were talking about solutions for a specific NFT project. That presented us with the issues of the community, decentralizing governance, and incentivizing the ecosystem of holders.
There was no mechanism in place to enable that. So that was a starting point, a need for a specific project that provides foundational infrastructure for the brands of the future.
When I asked about the need for a native token, Fung said it solves three problems for a project. First, it helps expands the community by making the cost of admission more accessible. The floor price of an NFT could be too high for someone to buy in, so they can just buy a token at a lower price than that and become a member of the community.
For instance, the floor price for BAYC NFT is 88 ETH ($209,624.89), while one ApeCoin is just $9 at the time of writing. So you can buy some ApeCoins to participate in Yuga Labs projects.
Second, the native token can give holders the power to vote on governance proposals, based on the number of tokens they have in hand. Third, it can be used to incentivize people who might be developing experiences — such as game developers or merchandise makers — centered around the project’s NFTs.
How will this work?
For the initial phase, the startup is working with larger entities and NFT projects that have their own development teams.
Co:Create is building a protocol that will provide them with the backend infrastructure, complete with APIs and SDKs. It’ll also provide smart contracts that allow them to build tools like native tokens.
Over time, the project will make it simpler for developers to read their developer documents and libraries and get started quickly. In the future, it might also bring some front-end elements to support non-technical users.
In terms of execution, a project using a toolkit will need to simply make an instance, which will allow them to mint NFTs with custom rules, such as specifying how royalties will be distributed to artists and holders.
The toolkit will also allow them to launch their own fungible token that could be used to pay out royalties, or make each holder a member of a Decentralized Autonomous Organization (DAO) that can take future governance decisions for the project’s direction.
Projects using this protocol will also get a $CO token based on their NFT trade volume and values. They can use this token to vote on stuff like what features Co:Create should work on next, and what partnerships it should invest in.
Fung said that it aims to be an open-source protocol, so projects can either work with the firm directly or fork its code.
To create value, it plans to put some of the $CO tokens in the open market for trade, so supporters can purchase them and participate in shaping the protocol.
Currently, Fung & Co. are holding talks with many projects to understand their needs: what blockchains they want to have their NFTs on, what kind of governance and voting features they’d want in their DAO, and so on.
Dixon said the protocol will help the project build out some of the most challenging components of an NFT project:
We’re only beginning to appreciate what a motivated and engaged NFT community is capable of. The Co:Create protocol puts creators on the right path to designing and implementing the most challenging components of successful NFT communities.
The company will launch its full site in the summer with developer documents and libraries so programmers can test them out. Later in the fall, the firm intends to launch its first set of NFT partner projects.
The protocol’s initial version will support all Ethereum Virtual Machine (EVM) compatible blockchains such as Polygon, Binance Smart Chain, and Avalanche. But over time, it aims to be chain-agnostic with a goal to accelerate NFT projects with decentralization in mind.
Read more about the startup’s plan in their whitepaper.