What can you build with NFTs (feat. the founders of Underdog) - Solfate Podcast #28

The Evolution of NFTs on Solana

The world of Non-Fungible Tokens (NFTs) is rapidly evolving, and Solana is at the forefront of this transformation. In a recent episode of the Solfate Podcast, the founders of Underdog, Kevin and Tony, shed light on how they're pushing the boundaries of what's possible with NFTs on the Solana blockchain. Their vision extends far beyond the typical profile picture (PFP) use cases that have dominated the NFT space, focusing instead on creating powerful infrastructures and data-rich experiences.

Underdog's journey began with a focus on social tokens and NFTs for credentialing. However, they quickly realized that the real potential lay in creating APIs and infrastructures that would allow developers and businesses to seamlessly integrate NFTs into their products and services. This shift in focus has positioned Underdog as a key player in the Solana ecosystem, providing tools that are revolutionizing how we think about and use NFTs.

Compressed NFTs: A Game-Changer for Data on Solana

One of the most exciting developments discussed in the podcast is the potential of compressed NFTs. As Kevin explains, "Compression offers a thousand times decrease in cost, but it's a thousand times increase in the ability to capture data on-chain." This dramatic reduction in cost opens up a world of possibilities for capturing and utilizing data on the Solana blockchain.

Compressed NFTs allow for the creation of "markers" or "stamps" for user activities across the ecosystem. This capability enables better targeting and personalization of user experiences, potentially revolutionizing how businesses interact with their customers in the web3 space. The ability to drop a compressed NFT for every on-chain action a user takes creates a rich, queryable dataset that can be leveraged for a variety of purposes.

Beyond PFPs: Innovative Use Cases for NFTs

While profile pictures have been the dominant use case for NFTs, Underdog is exploring and enabling a wide range of innovative applications. Some of the exciting use cases discussed in the podcast include:

1. Membership and credentialing systems
2. Loyalty and rewards programs
3. On-chain analytics and user activity tracking
4. Digital provenance for art and collectibles
5. Web3 cookies and personalized experiences

These use cases demonstrate the versatility of NFTs when combined with Underdog's infrastructure. For instance, the SuperTeam XP NFTs showcase how NFTs can be used to create dynamic, updatable membership systems that capture user contributions and engagement within a community.

The Power of Public Data on Blockchain

One of the key advantages of blockchain technology is the public nature of its data. While this might raise privacy concerns for some, the podcast guests argue that the benefits often outweigh the drawbacks. As Tony points out, "55% of users will share their personal data for a better experience."

The public nature of blockchain data enables interoperability and composability between different projects and applications. This can lead to more personalized and valuable experiences for users. For example, loyalty programs from different businesses could potentially recognize and reward customers based on their activity across multiple platforms, all powered by on-chain data stored in NFTs.

Underdog's API: Simplifying NFT Integration

At the core of Underdog's offering is their API, which simplifies the process of minting, indexing, and updating NFTs on Solana. This API is designed to be easily integrated into existing workflows, with custom integrations for popular tools like Telegram, Discord, and Airtable.

The API's versatility is demonstrated by its adoption by projects like SuperTeam and Solana Mobile. As Kevin notes, "To build what you guys had built, it would have taken us three months, three engineers to set up the infrastructure for the Genesis token. With Underdog, it took us a week, less than a week, and a single engineer."

NFTs as a Business Funnel

One of the most intriguing concepts discussed in the podcast is the idea of using NFTs throughout the business funnel. Tony breaks this down into three key areas:

1. Acquisition: Using tools like Duster, a compressed NFT tool, to airdrop NFTs to potential customers.
2. Engagement: Creating quests and rewards using dynamic NFTs to keep users involved.
3. Retention: Developing strategies to maintain user interest and participation over time.

This approach reimagines NFTs not just as digital assets, but as powerful tools for customer relationship management and engagement in the web3 space.

The Future of Web3 Experiences

Looking to the future, the Underdog founders envision a world where the rich data captured by NFTs enables highly personalized and dynamic user experiences. They see potential for "generative A/B testing" for apps and products, where user interactions and preferences captured in NFTs could inform real-time adjustments to user interfaces and experiences.

The concept of "on-chain cookies" or "on-chain stamps" is particularly exciting. Unlike traditional web cookies, which are often viewed negatively due to privacy concerns, on-chain stamps could provide similar functionality for personalization while giving users more control and transparency over their data.

Solana's Advantage in the NFT Space

Throughout the discussion, it becomes clear that Solana has a significant advantage in the NFT space, particularly when it comes to non-PFP use cases. The blockchain's high speed and low transaction costs make it ideal for the types of data-rich, high-frequency interactions that Underdog's vision requires.

The podcast highlights how projects on Solana, such as Drip and the upcoming Backpack mobile app, are pushing the boundaries of what's possible with NFTs. These projects are creating new paradigms for social interaction, content distribution, and user engagement in the web3 space.

Challenges and Considerations

While the potential of NFTs for data capture and user experience enhancement is exciting, the podcast also touches on some of the challenges and considerations. Privacy concerns are addressed, with the guests acknowledging that there needs to be a balance between data collection and user control.

The technical challenges of managing large amounts of on-chain data are also discussed. For instance, the limitations of concurrent writes to merkle trees when dealing with large numbers of compressed NFTs are mentioned as potential hurdles that need to be overcome.

The Road Ahead for Underdog and NFTs on Solana

As the podcast wraps up, the Underdog founders share their vision for the immediate future and the longer-term potential of their technology. In the short term, they're excited about the potential for a "Mailchimp for Web3," enabling creators to connect directly with their audience through NFT-powered campaigns.

Looking further ahead, they see the potential for a rich metadata layer built on NFTs, enabling unprecedented levels of personalization and interoperability in web3 applications. This vision positions Solana as a leader in the next generation of blockchain experiences, moving beyond simple ownership records to create a data-rich ecosystem that can power the next wave of web3 innovation.

Conclusion: A New Paradigm for NFTs and Blockchain Data

The conversation with Underdog's founders reveals a future for NFTs that goes far beyond digital art and collectibles. By leveraging the unique properties of blockchain technology and the efficiency of the Solana network, Underdog is paving the way for a new paradigm in how we think about and use on-chain data.

From enhancing community engagement to powering personalized user experiences, the potential applications of this technology are vast. As the web3 space continues to evolve, tools and infrastructures like those provided by Underdog will be crucial in realizing the full potential of blockchain technology.

The future of NFTs on Solana looks bright, with innovative projects like Underdog leading the charge towards more useful, data-rich, and engaging blockchain experiences. As this technology continues to develop and mature, we can expect to see increasingly sophisticated and valuable applications of NFTs across a wide range of industries and use cases.

Facts + Figures

• Underdog provides an API for managing NFTs on Solana, including non-transferable, transferable, and compressed NFTs.
• Compressed NFTs offer a 1000x decrease in cost and a 1000x increase in the ability to capture data on-chain.
• SuperTeam is using Underdog's API for their SuperTeam XP NFTs, creating a membership and reputation system.
• The Solana Mobile Genesis token implementation using Underdog took less than a week with a single engineer, compared to an estimated three months with three engineers without it.
• 55% of users are willing to share their personal data for a better experience, according to statistics mentioned in the podcast.
• Underdog's Duster tool allows for airdropping compressed NFTs to up to 10,000 users at once.
• The podcast mentions that Solana is doing a better job than other blockchains in utilizing NFTs for non-PFP use cases.
• Underdog is working on a solution involving PDAs (Program Derived Addresses) to solve issues with compressed NFTs showing up in wallets and transferability.
• The concept of "on-chain stamps" or "on-chain cookies" is proposed as a way to create more personalized web3 experiences.
• Backpack is releasing a mobile app that will experiment with on-chain cookie concepts for some XNFTs.
• Underdog is exploring the idea of a "Mailchimp for Web3" to enable creators to connect directly with their audience through NFT-powered campaigns.
• The podcast suggests that the next bull run in crypto could be driven by moving beyond the PFP meta and finding more utilitarian use cases for NFTs.

Questions Answered

What is Underdog and what do they offer?

Underdog is a company that provides an API for managing NFTs on the Solana blockchain. Their API allows developers and businesses to easily mint, index, and update various types of NFTs, including non-transferable, transferable, and compressed NFTs. Underdog's tools simplify the process of integrating NFTs into products and services, enabling faster development and more innovative use cases beyond traditional profile pictures.

How do compressed NFTs differ from regular NFTs?

Compressed NFTs offer a significant reduction in cost compared to regular NFTs, while dramatically increasing the ability to capture data on-chain. According to the podcast, compressed NFTs provide a 1000x decrease in cost and a 1000x increase in data capture capabilities. This makes them ideal for use cases that require frequent, low-cost interactions or the storage of large amounts of data on the blockchain.

What are some innovative use cases for NFTs beyond profile pictures?

The podcast discusses several innovative use cases for NFTs beyond profile pictures. These include membership and credentialing systems, loyalty and rewards programs, on-chain analytics and user activity tracking, digital provenance for art and collectibles, and "web3 cookies" for personalized experiences. For example, SuperTeam is using Underdog's API to create XP NFTs that track member contributions and engagement within their community.

How does Underdog's API simplify NFT integration for businesses?

Underdog's API simplifies NFT integration by providing a streamlined way to mint, index, and update NFTs on Solana. It includes custom integrations with popular tools like Telegram, Discord, and Airtable, making it easy to incorporate into existing workflows. The API significantly reduces development time and complexity, as evidenced by the Solana Mobile Genesis token implementation, which took less than a week with Underdog compared to an estimated three months without it.

What is the concept of "on-chain stamps" or "on-chain cookies"?

"On-chain stamps" or "on-chain cookies" are proposed concepts for using NFTs to create more personalized web3 experiences. Similar to traditional web cookies, these on-chain versions would track user activities and preferences, but with the added benefits of blockchain technology such as user control and transparency. This data could be used to tailor experiences across different applications and platforms in the web3 ecosystem.

How does Underdog envision the future of NFTs and blockchain data?

Underdog envisions a future where NFTs and blockchain data enable highly personalized and dynamic user experiences. They foresee the potential for "generative A/B testing" in apps and products, where user interactions captured in NFTs inform real-time adjustments to interfaces and experiences. They also anticipate the development of a rich metadata layer built on NFTs, facilitating unprecedented levels of personalization and interoperability in web3 applications.

What advantages does Solana have in the NFT space?

According to the podcast, Solana has significant advantages in the NFT space, particularly for non-PFP use cases. Solana's high speed and low transaction costs make it ideal for data-rich, high-frequency interactions. This enables more innovative and utilitarian applications of NFTs, such as the real-time tracking and updating of user data, which might be cost-prohibitive on other blockchains.

What is the "Mailchimp for Web3" concept mentioned in the podcast?

The "Mailchimp for Web3" concept, mentioned by Underdog's founders, refers to a tool that would enable creators to connect directly with their audience through NFT-powered campaigns. This would allow for more engaging and interactive content distribution in the web3 space, potentially revolutionizing how creators and businesses communicate with their communities in a decentralized environment.