Nestled between the iconic Roosevelt Hotel and the Hollywood Walk of Fame, there’s a buzzy new spot in Los Angeles that prides itself on exclusivity. Like other trendy social clubs, The Dancing Seahorse Club offers members-only benefits such as intimate concert experiences and exclusive access to its event space, which opened earlier this month. But instead of building its business on annual membership fees, the music-focused startup is offering life-long perks to holders of its non-fungible tokens (NFT).
“There's just hundreds of benefits of on-chain solutions that we feel bring this business into the world of Web3,” said Alex Nahai, CEO of Dancing Seahorse, who has worked across the music and entertainment spaces for several years before embracing blockchain technology. “Through our contacts and through what we're willing to invest into creating the best fan experience possible, we’re able to provide that.”
The brand offers two membership tiers in the form of profile picture (PFP) collections featuring its namesake seahorse logo – 444 “legendary” NFTs that have a floor price of 88 ETH (about $111,860) on OpenSea as of the time of publishing and 8,888 “premium” NFTs that are being offered up at 3 ETH (about $3,810) each. So far, holders have been able to access a live performance from rapper Polo G at its nightclub and VIP gatherings at global shows featuring artists including Bad Bunny, Jack Harlow and Post Malone.
What are utility NFTs?
Although some people think of NFTs as either static JPEG images or pricy fine art collectibles, many NFT creators have started offering IRL perks for collectors who hold their NFTs. This method of incentivizing long-term ownership has helped stave off some of the uncertainty brought about by a frosty crypto winter and a sharp decline in NFT trading.
NFTs that offer real-world perks and experiences are called utility NFTs. While many are linked to colorful artwork or have collectible qualities that make them attractive to flip-happy investors, much of their value comes from a variety of practical applications. For example, some NFTs are being used in place of event tickets to reduce instances of fraud or price gauging, while other NFTs provide holders with 1:1 digital and physical goods.
To enforce token gating at events, users are often asked to connect their crypto wallets to verify ownership of a specific NFT and claim an invitation. The event tickets can then be airdropped into a holder’s wallet, which was the approach serial entrepreneur Gary Vaynerchuck took for his inaugural VeeCon conference earlier this year. To enter the conference, attendees needed to hold a VeeFriends NFT in their wallet and show an airdropped VeeCon NFT ticket at the door.
No third parties, less ticketing fraud
For Dancing Seahorse and other music-focused Web3 startups, utility NFTs can replace the need for physical tickets to get into events. Putting tickets on the blockchain lessens the dependence on third-party ticketing platforms that often charge additional fees, and can help customers dodge ticketing scams that continue to litter the music space.
Arthur Sampaio, co-founder of Groovoo, told CoinDesk that blockchain technology offers built-in solutions to issues like ticketing fraud and theft.
“We're focusing on how we can store tickets in a very secure way that cannot be tampered with,” he said. “More specifically, what kind of information can we store on the blockchain so that other institutions can trust us?”
“It's a very intrinsic characteristic of the blockchain,” he added.
Restaurant reservations and foodie fanfare
Utility NFTs are also helping to solve issues in the hospitality industry that can be frustrating for communities of self-proclaimed "foodies."
While getting a reservation at some of the most popular restaurants in New York City has become a nearly impossible task over the years, one company is using NFTs to sell preferential booking options to NFT holders, along with other exclusive experiences.
Front of House, an NFT events company that caters its menu of offerings to foodies, sells digital collectibles that offer bookings 24 hours in advance to exclusive restaurants that would otherwise require months-long wait time. Additional perks include members-only social events, menu preview tasting sessions and merchandise, among other things.
Phil Toronto, co-founder of Front of House, told CoinDesk that utilizing NFTs to offer reservations at exclusive restaurants can help broaden mainstream access to foodie culture and help curate communities of food lovers with shared interests.
“We're doing our best to sort of liven up the term ‘utility,’” Toronto said. “We're taking an active role in demonstrating what could be possible in the physical world and bridging that with the digital token world.”
On the Front of House site, users can buy NFTs that offer privileged access to upscale New York restaurants such as Dame, Emmett’s on Grove and Hanoi House. Other collectibles include Polygon-based Wildair’s Donut Club, which comes with special merch offerings as well as collectible images by food photographer Evan Sung.
Token-gated experiences to bolster community
NFT projects that offer utility are often successful at building tight-knit communities. This shared sense of affiliation and belonging among holders creates new opportunities for connection and encourages collaboration.
For Dancing Seahorse, hosting token-gated experiences gives music fans an opportunity to connect with each other and access exclusive performances by their favorite artists.
“With Web3, people are finding that the experiences we provide also give people an opportunity to network,” said Nahai.
And while owning a sought-after NFT might interest some short-term investors, Front of House believes that creating unique, shared experiences is the real selling point for many holders of utility NFTs.
“At the end of the day, this isn't about making money. It's about having an asset that provides you with something you can actually do,” said Toronto.
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