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Last week, the co-founder of a shuttering NFT business told me that running an NFT platform felt like “fighting the market.” It got me thinking about the path forward for NFTs, as the hype around expensive JPEGs has yet to recover from the 2022 market slide.
There is one group of investors that seem to have an inkling about the future of NFTs, however. Drip Labs, the company behind Solana-based creator platform DRiP, announced it raised $8 million in seed funding today. The round was led by NFX and drew participation from Coinbase Ventures and Progression.
DRiP lets art and music creators list and sell their work as well as receive tips from fans in the form of its in-app currency, Droplets. DRiP makes use of Solana’s compressed NFTs (cNFTs), a standard that was initially developed for Instagram during its brief foray into digital collectibles. CNFTs are cheaper to create and store than regular NFTs, and a big part of the DRiP ethos is free or low-cost collectible airdrops from creators to users.
Users can also tip creators with just a few cents-worth of Droplets. These microtransactions are enabled by Solana’s cheap fees and presumably wouldn’t be feasible on pricier traditional payment rails — one of the commonly-cited reasons that Solana rails could make for a better internet experience.
In an email, I asked DRiP CEO and founder Vibhu Norby about this use case for NFTs.
“We were never going to make it with $100,000 ape JPEGs,” Norby wrote, adding that a go-to-market that focuses on low-cost, accessible collectibles is more likely to succeed. The feeling is that DRiP NFTs could sell for tens of thousands of dollars or for a few cents, but only offering the former kneecaps your platform.
Norby said most of DRiP’s revenue comes from a take-rate on Droplet sales, which can be purchased for fiat in the app. DRiP also makes money from sponsored campaigns on behalf of creators and a royalty on collectibles issued on the platform.
In an ideal world, DRiP’s model could separate the helpful traits of NFTs from the unsustainable ones — verifiable ownership, but less wild speculation on highly-priced profile pictures. The Solana platform 3.land is built with a similar ethos, as is Ethereum-native Zora. Base tried something similar with its recently-wrapped Onchain Summer promotion.
Also, DRiP is acquiring users without the promise of a future native token airdrop — a mechanism that has been perhaps the most successful user and deposits magnet this cycle, at least for the short term.
“The history of consumer apps launching tokens has been extremely poor so far,” Norby said. “I’ve seen so many crypto apps drink their own Kool-Aid thinking they found product-market fit when they were under attack by sophisticated sybil farms and arbitrageurs.”
Norby added that DRiP has faced 2.5 million sybil attacks over the past 18 months as it is. “Imagine an app that’s actually promised a token,” he wrote.
With the fresh funding, DRiP plans to bring a mobile app to market. The app will likely begin to launch in October, a spokesperson told me. Opining on what else the future might bring, Norby said he thinks music has the most potential for growth, since musicians are the most “economically challenged creative class” who can also make good use of DRiP’s direct-to-consumer model.
“Check back with me in [three] years to see if I was right,” Norby said.
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