Nonfungible tokens (NFTs) have rapidly become the new hot topic in the cryptocurrency sector, as evidenced by Litecoin (LTC) creator Charlie Lee comparing the current spike in NFT interest to the ICO mania of 2017.
The recent pullback in the cryptocurrency market hit decentralized finance tokens (DeFi) pretty hard, but as Bitcoin's (BTC) price recovered the $50,000, DeFi and NFT tokens bounced back rapidly.
One project that has successfully capitalized on the DeFi and NFT boom is Aavegotchi. The project benefits from its association with Aave, while also focusing on the creation of value-infused NFTs that are limited in minting.
Data from Cointelegraph Markets and TradingView shows that the price of GHST, Aavegotchi's governance token, rose 35% from $1.36 on March 1 to a new all-time high of $1.86 on March 2 as the community conducted its first NFT sale.
Three reasons for the GHST breakout to a new all-time high include its recent migration to the Polygon network, the successful completion of its first NFT sale and excitement about the upcoming mainnet launch.
Users bridge to Polygon for lower fees
Transaction fees on the Ethereum network have been increasing since the beginning of 2021, and they show no signs of decreasing anytime soon.
In response to this, the team at Aavegotchi announced on Jan. 26 that the project would bridge to the Polygon network, an Ethereum layer-two solution Following the migration, users are able to conduct transactions, buy items in the store and stake their GHST tokens for the cost of .0001 MATIC, a significant price reduction from the current costs of transacting on Ethereum.
GHST price rose from $0.61 on Jan. 27, when the Polygon bridge was first released, to $1.25 on Feb. 14 as users began to be more active in the community due to lower transaction costs.
Optimism grows as the mainnet launch approaches
One of the biggest drivers of GHST was its official mainnet launch on March 2.
While most NFT projects are content to utilize Web 2.0 servers or the InterPlanetary File System, Aavegotchi has taken its project to the next level by creating its own blockchain. Doing this enables each GHST token to have its unique personality traits, staked cryptocurrencies and visual elements stored permanently on the blockchain, which may help to strengthen their collectability and long-term value.
This also creates the unique opportunity where DeFi can be combined with NFTs by locking one of Aave’s wide selection of interest-generating tokens directly into a particular Aavegotchi, making each one a rare, unique form of a digital piggy bank.
NFTs sell out in under a minute
As Aavegotchi launched its mainnet, the project also conducted its first “portal drop,” which allowed tokenholders to buy a portal that is capable of summoning a yield-bearing Aavegotchi NFT.
Each portal was on sale for 100 GHST, and the demand was so high that the 10,000 portals sold out in less than a minute.
Through an integration with Aave and its aTokens, NFTs on the Aavegotchi platform create unique interest-bearing representations of funds supplied to the Aave protocol, a first for the NFT space.
Aavegotchis are designed to combine elements of gaming and collecting in an effort to tie digital collectibles to real value. This adds a new level of functionality to NFTs and is likely to help each Aavegotchi increase in value over time. In order to extract the value of aTokens locked within an NFT, the Aavegotchi must be destroyed in the process.
Future portal drops, low transaction fees and an expanding NFT store demonstrate that there is a healthy demand for GHST, and this is bound to grow as the platform expands to offer new layers of gamification.