Quick Take on Hybrid NFT

In the latest SHDL Quick Take on Hybrid NFT it was no surprise to learn that Joe has had a long history with Non-Fungible Tokens (NFTs). In what seems like a recent phenomenon, NFTs are taking the world by storm. Joe and the team discussed using NFTs for tagging and transferring physical and virtual assets with unique serial numbers while at Disney years ago.

Joe and the team were so early in the life of NFTs that there were no standards at that time. How times have changed as seemingly every industry from publishing to sports to entertainment has everyone jumping into NFTs.

Today we look at how Dragonchain takes a unique approach to tackle scalability so that NFT adoption won't break the bank for creators and holders.

Non-Fungible Tokens: The Basics

NFTs are digital assets backed by blockchain. Each NFT is unique and can't be duplicated. Multiple blockchains have joined the NFT revolution, but Ethereum currently holds the most value when measured by actual trading. NFTs can represent digital files and physical items. Businesses can use them for loyalty rewards or access to events or merchandise. NFTs can replace a physical title or deed to a house. They really can represent anything you want them to represent. Presently most of the use cases center on collectibles or trading on speculation, but we can also use NFTs for access and gating as seen in Den.


In Den, the Lair Ownership Token (LOT) is an NFT that represents ownership in a Lair. LOT is used for access and for certain features within a Lair.

For example, if you have ownership in a Lair, you can freely edit as many times as you want. There also will be LOT based governance in every Lair. If someone wants to change some aspect to the Lair, holding LOT will allow them to take part in determining the outcome.

NFT based LOT is decentralized and transferable as most NFTs are. But the interesting and uniqueness of LOT is that it produces passive income. Holders of LOT are motivated to grow the Lair. It's counterintuitive to how we have all been conditioned to hold the NFT as a speculative investment and selling it down the road for a higher price. Of course, you could do that if you wanted. But the goal as a LOT holder is to help create an active Lair. Owners will naturally produce more content, gather more content, and actively work to bring new community members into the Lair and by extension to Den, all the while getting paid for that activity.

Learn more about Lair ownership here.

Exponential Growth

NFTs are growing at a rapid rate. Art NFTs have been the number one avenue for NFT growth, with music and sports quickly getting into the action. Gaming and entertainment such as movies and television are also taking a look at NFTs. NFTs are great for ticketing as well. Ticketing NFTs can become collectibles, come with rights to purchase merchandise, albums, or give something special to patrons of a live show.

Growing Pains

There are some problems with NFTs in their current iteration. They are expensive to mint and if they don't sell then the creator is out a significant amount of money.

Because of the activity of the Ethereum network and its current fees, the upfront costs associated with creating NFTs can be very high. Once created, selling the NFTs is met with even more Ethereum fees. These exorbitant fees may be absorbed with large high-end NFTs such as the recent Beeple piece sold at Christie's but it's a huge barrier to really getting a lot of adoption and capitalizing on the true benefits from NFTs.

As it stands now, licenses are not typically included. NFTs are the perfect vessel for licensing parameters. NFT creators on the whole are neglecting to include digital rights to the NFT holder. These rights do not need to relinquish the artist's rights but instead, provide a balance of use between all parties involved.

Another issue is most NFTs don't contain the actual files. Also, the metadata can be edited on some systems even after the sale, which is potentially a big problem. There have been a few instances where artwork was pulled because wherever it was hosted dropped the rights. This is where Dragonchain comes in.

Hybrid NFTs with Dragonchain

Costs associated with NFTs can quickly add up and become a barrier to mass adoption. Minting on a large scale for say a record label where millions need to be created is going to be costly. With Dragonchain you can affordably mint NFTs at scale. This includes all the files, metadata, and any other parameters the creator wants the NFT to contain, such as the licensing rights. Everything is on-chain and proven all the way to Bitcoin and Ethereum.

Dragonchain advocates including provenance in NFT creation. As an example, a painter could show every step of the creation process. A sensor that would show a time-lapse of the creation of that piece could automatically capture each layer.

With provenance on-chain, the entire history would be known and could not be manipulated. The historical data can include ownership, everywhere the piece has been displayed, and anything that happened around the piece like theft. Years from now the history of the art piece will remain and is proven to Bitcoin and Ethereum with massive amounts of security behind it. This adds authenticity to the art piece and possibly factors into its overall value.

There may be times when the creator doesn't want or need to push the NFT to the Ethereum (or some other) network. Perhaps they want to wait and see if the NFTs gain any interest. By using Dragonchain for scale creators can let the market decide which NFTs to send onto Ethereum. If the creator ends up selling the NFT, all the files will remain on Dragonchain and the proof is decentralized to Bitcoin and Ethereum.

NFTs with Dragonchain offer more utility and functionality, opening up the technology to mass production and adoption. Build on Dragonchain for scale, provenance, proof, and then harness Ethereum when needed. The Dragonchain advantage is really the best of both worlds.

Watch the full Quick Take on Hybrid NFTs. Contact us today to discuss how we can help you scale your unique NFT implementation.