NFTs…? Solana?

You might be thinking this is somewhat of a pivot from recent pieces on Maker and Compound and you’d be right. This report looks at Mad Lads, an NFT project on Solana.

We have been thinking deeply as of late about infrastructure, long term value accrual and future usage across the Crypto complex. As the long tail of alt L1s have failed to reach sufficient organic demand (fees) to outpace high annual rates of supply inflation, the economics generally favour pivoting to becoming an L2 whereby they achieve a significantly reduced “cost” (via supply inflation) of validation for equal or even superior security. This is particularly true for L1s with no real specialisation at the application layer (read: almost all alt L1s). The infrastructure is consolidating around Ethereum as we see the L2 ecosystem blossom and projects like EigenLayer emerging, both leveraging ETH’s economic security in distinct ways.

The modular thesis is compelling from a conceptual perspective but we are yet to see it in action and there are few viable ways to position in secondary markets (for now). We see Solana and the Solana Virtual Machine as the only alt L1/VM to have achieved sufficient differentiation and therefore true sticking power alongside Ethereum and the EVM. The Solana roadmap allows developers to think less about infrastructure and more about product and UX while enjoying extremely high throughput. This has and will likely to continue to attract a different developer audience including many web2 and tradfi developers, reflected by the increasingly high quality applications which continue to be rolled out. We recommend this report for a short ecosystem overview.

Additionally, we can view last year as a cleansing year for Solana. What was previously an extremely centralised ecosystem (looking at you FTX, Alameda and parasitic VCs) has been washed out during an impressive show of resilience as SOL tokens and validators have been redistributed.

As for NFTs, we remain of the view that one must be extremely picky but that there are pockets of value. In this case we view a bet on Mad Lads as a bet on an impressive founder within the Solana ecosystem with potential airdrops as the kicker.

Mad Lads

Mad Lads founder Armani Ferrante and his team were the developers behind Anchor, Solana’s most popular smart contract development framework and Backpack (a wallet for executable NFTs or xNFTs). The Backpack vision is to focus on distribution with mobile being a large part of the roadmap, they seek to bring more users into Crypto through a superior wallet UX. Having interacted with Backpack, I can attest to the enjoyable UX and super clean interface. They launched Mad Lads earlier this year as the first xNFT collection for Backpack - but unlike every other 10,000 PFP collection there are some interesting twists.

xNFTs are NFTs embedded with executable programming scripts which allow them perform tasks; they are like individual applications which can run code inside of them. Essentially, the NFTs themselves are applications which live inside the wallet. Given the novelty of xNFTs their surface of use cases is scarcely explored but given they have executable code within them they could be used to directly access/use a DeFi protocol, play a game or access token-gated content without having to connect one’s wallet to a 3rd party application. You can see the existing app library here:

Backpack and by extension xNFT is an operating system with a set of developer frameworks and APIs associated with it allowing anyone to build their own xNFT apps in a permissionless fashion. We could see xNFTs becoming a platform for airdrops/incentives as new projects seek to interact with a set of xNFT holders to evoke usage of their applications, like Mad Lads.

There have already been movements by existing projects like Zeta Markets to incentivise Mad Lads to engage and interact with their protocol, we think this trend can continue as Mad Lads gain attention and notoriety.

In the Backpack UI one can stake Mad Lads to accrue gold/silver/bronze depending on how long you stake (a loyalty counter which is accumulating). There is also an airdrop button greyed out in the staking page. . .

Mad Lads is a bet on Armani as a founder, Backpack adoption, xNFT innovation and ultimately a bet on Solana while simultaneously offering exposure to potential airdrops/incentives. Let us know what you think in our open-to-all Telegram channel we opened recently.

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Additional Resources

Interview w/ Founder: Validated | From Anchor to Mad Lads and Beyond with Armani Ferrante

Interview w/ Founder: What Crypto Wallets Get Wrong | Armani Ferrante

An overview of xNFTs

xNFT App Library

Armani Ferrante Thread on xNFT Soul Abstraction

HFA Research Newsletter

Mad Lads - exploring opportunities on Solana