#252: Renting Out NFTs with Liquid Delegate

⚙️ Why asset utilization matters and become a form of user acquisition

A Web3 with TPan piece at this hour?!

Today’s a quickie since I gotta head over to the airport in a couple hours and I still haven’t packed yet…Is it me or do you procrastinate packing for trips the older you get?

Delegate.xyz launches Liquid Delegate

Yesterday foobar announced the launch of Liquid Delegate, a marketplace for tokenizing and trading asset utility.

First of all…

What is Delegate.xyz?

Delegate is a tool that allows you to link wallets together and ‘delegate’ token access from different wallets to a single wallet. This allows you to take actions from a hot (active) wallet on behalf of other wallets.

This is helpful for security purposes. I wouldn’t want my cold wallet, which may store valuable tokens or assets, running around the internet and web3 conducting transactions on the off-chance I go to a nefarious website. Unfortunately, scams are still commonplace and getting smarter, and I’ve been victim before.

Where might this be applied? If I wanted to claim a free ApeFest ticket which would require a Bored Ape, I could use my hot wallet which has delegation rights from my cold wallet (holding the Bored Ape) to claim the ticket. Easy peasy security squeezy.

This sounds annoying and confusing, but this concept already exists in other settings. On my Apple Wallet, I’ve ‘delegated’ some of my credit cards and my public transportation card to my iPhone:

You can delegate a lot more than that to your Apple Wallet such as driver’s licenses, state IDs, and employee badges. There is similar functionality with Google and Samsung wallets.

Why is Liquid Delegate interesting?

As some NFTs and tokens evolve beyond being just collectibles, utility and access to that utility shifts into focus.

I’ll admit, when I first saw foobar’s announcement, I glossed over it. However, yesterday evening, Crier’s emphasis on the implications of Liquid Delegate made me do a double take and think a little deeper about what this enables and why it’s notable.

• If you can't go to a token-gated IRL event, you could sell the rights for the token to someone who wants to go to the event

• If you don't want to play a game but have a token that provides a boost to game stats or access to special items, you could sell the rights to the token to another player for a specific amount of time

• If you don't want to purchase a limited edition item that a token you own grants access to, you can sell the rights to the token to another fan for the duration of the sale

All of this can happen with the actual owner still owning the actual asset itself.

Source

Again, sounds straightforward and confusing at the same time. What are some established examples of the Liquidate Delegate concept in our everyday world?

• Season ticket holders for sports can sell access to individual games on ticketing platforms. They’re delegating access to a specific home game.

• Homeowners can rent out their property on Airbnb. They’re delegating access to their property for a specified amount of time.

• There is a market of people selling reservations at popular restaurants. I’m not sure if restaurants care, but I guess it’s better to have tables filled than empty!

Source

Why would creators and projects want this?

The natural reaction (at least mine) is what about existing monetization models? Particularly this one:

One thing foobar and the Delegate team are doing is incentivizing builders and creators by providing a share of trading fees:

Additionally, in situations that incorporate scarcity or limited capacity, you don’t want to sell more. Instead, you might want to have a higher utilization rate.

If a project holds a physical event in New York City and certain holders can’t attend, holders can create a Delegate Token representing access to the event.

Projects can identify these tokens as an additional parameter for CRM purposes and identify them as future community members. After the event, they can be invited to learn more about the community, or be onboarded in different ways in the future.

This isn’t just a prospective community member. This is a prospective community member who has had a real taste of what it means to be a part of that community, supercharging the concept of a ‘+1’.

Another hypothetical example of this could be projects using their treasury holdings as a unique way to conduct giveaways. Interested parties could bid or enter a raffle (this feature doesn’t exist yet, but I imagine it will in the future) on a Delegate token, and if they win, they get access to the token and the corresponding event for that period of time.

This concept is even clearer in gaming if a player wants to rent a powerful item to complete a quest. Renting the item could be an indicator that the player would eventually want to purchase that item or a similar one at a later point.

With gaming specifically, we’re already seeing vertical-specific rental marketplaces similar to Liquid Delegate pop up like LootRush.

This space is still early, but we’re starting to see what the concept of renting looks like in web3, and how it can be an opportunity to create productive assets and serve as a high-signal channel for user acquisition.

Off to my flight, see you next week!