Boson Protocol revealed at NFT.London that it has updated its NFT platform, enabling users to trade actual goods in the form of nonfungible tokens that could be burnt and exchanged for the goods themselves within a certain time frame.
The concept is that customers may trade, give, and transfer these NFTs without ever holding the physical object, akin to a smart contract-programmed forward contract for a physical good. “Rather than tokenizing physical assets themselves, redeemable NFTs tokenize the right to receive a physical asset within a given time period,” Boson Protocol explained on its website.
The platform’s focus will be on premium products.
“We’ve got a number of projects where they’re tokenizing luxury wine and luxury whiskey,” explained co-founder Justin Banon. “Someone will get a redeemable NFT that they can hold or trade for five or 10 years while the whiskey matures,” he continued, adding that “those sort of items would create a commodities market for luxury whiskey.”
Banon also views NFTs as a method to package together various things, such as digital twins — tangible objects that have a metaverse counterpart, such as a t-shirt that is also a metaverse wearable. “You could go to a football game and have the ticket, a redeemable shirt and a token that enables you to access a digital download of the game,” he provided as an example. “It’s a kind of solution for creating bundles of digital, physical and experiential things,” he added.
Promoters of redeemable non-cash tokens say that these instruments have the potential to offer consumers greater power. For instance, if your one-year gym membership was an NFT and you decided you no longer wanted to use it, you could sell it to someone who could utilise the remaining time, as opposed to being bound by a contract.
The disadvantage is that this might result in price hikes. August saw the release of 333 NFTs redeemable for a limited edition 16-pack of Solana-themed beer. It was shortly depleted. The original NFTs were sold for $1.35 SOL (then $45) apiece, however those advertised on Magic Eden had a minimum price of $2.49 SOL (then $79.61).
This poses a problem for e-commerce when merchants fail to actually deliver a thing. “Let’s say someone tokenizes a $1,000 pair of sneakers and then they go out and sell that token on an NFT website for $5,000,” Banon noted, explaining that “there’s a challenge here — if the seller doesn’t deliver, the second buyer has paid $5,000 for something, and there’s only $1,000 in the protocol that they will get back in the case of the thing not being delivered.”
Boson Protocol refers to its answer for this problem as “sequential commit”; rather than the trade of redeemable NFTs occurring outside the system, following purchasers will actually pay their money into the protocol. “The protocol will custody that money and, therefore, protect subsequent buyers from this kind of partial rug pool,” said Banon.
