The NFT Asset Stack

We're Gonna Need a Bigger Stack

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The Nonfungible Token landscape has evolved from a small ecosystem of collectors and enthusiasts to an emerging multichain ecosystem at the forefront of culture and technology.

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Layer 1: Layer-1s Blockchains

Layer-1s To date, the NFT landscape has been dominated by Ethereum, Flow, and to a lesser extent Wax. It’s likely that many NFT applications will transition from Ethereum mainnet onto Layer-2 solutions or test out other blockchains for specific applications.

Layer 2: Layer-2s & Sidechains

While the smart contract wars have blockchains fighting for DeFi applications, the battlegrounds between the upcoming Layer-2s will be waged for NFT supremacy.

Layer 3: Data Availability & Storage

Blockchain layer-1s are often limited in the amount of on-chain storage capacity. Because not all NFTs – and the images or websites they reference – are stored on the layer-1 or layer-2 level, NFTs require another storage solution. Arweave offers permanent storage for NFTs while Filecion or Sia can also offer cheaper real-time storage.

Finally, individuals can use services like Filebase or Pinata which provide clean interfaces and enterprise desired services like S3 Compatible Object Storage and service-level agreements (SLAs) for companies that want to use IPFS or other storage layers but have formal and legal agreements in place.

Layer 4: Verticals / Applications

While non-fungible tokens(#NFTs) are created and transferred at the Layer-1 or Layer-2 level, the application layer is consumer-facing. Ultimately, platforms will have to rely on unique utility propositions that they can provide to their users.

Layer 5: Secondary Applications

Composability ensures that other developers can build atop existing applications and protocols. Decentraland and other virtual worlds will undoubtedly have various applications within their ecosystems such as the online casino, Decentral Games.

Layer 6: NFT Financialization

One of the largest layers of the NFT stack is the NFT financialization layer which unironically attempts to make non-fungible assets more fungible. Similar to DeFi, NFTs require similar primitives like lending, liquidity, and asset management.

Layer 7: Aggregators

Aggregators can come in various forms. Some protocols aggregate supply while others focus on the demand (consumer) side. Within the NFT sector, there are really only two primary aggregators – OpenSea and Rarible.

Layer 8: Front-ends & Interfaces

There are many companies vying for eyeballs & building the de facto front-end for NFTs. With collectibles and crypto art as the first breakout use case, entrepreneurs have opted to build galleries/ interfaces for collectors to display their NFTs.

Unlike the DeFi ecosystem – which lies at the infra level – NFT assets are highly consumer-facing and attention-grabbing. As DeFi continues to build the financial rails of the future, NFTs will cyclically advance further into the cultural zeitgeist.


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