[In-Depth Research Report] Bondly: Running in the storm of NFT

21 min readJul 6, 2021

By Xu Xiaopeng, Mint Ventures

Updated on June 23th, 2021

1. Key points

Although the project has good talents and industrial resources in games and music and it has achieved a lot of business development in recent months, Bondly itself as a trading platform has not shown a solid competitive advantage compared with other competitors in the NFT market.

From the perspective of quantitative valuation, Bondly’s current revenue and profit data have not been disclosed, so it is impossible to compare valuations vertically and horizontally.

2. Basic information

2.1. Business scope

Bondly positions itself as a decentralized P2P digital asset trading platform. Unlike other trading platforms, it focuses on meeting the needs of multi-chain transactions. Therefore, it bets on the Polkadot ecology, hoping to monitor different blockchains of local architectures through the relay chain and bridge of Polkadot to realize convenient multi-chain asset exchange.

In addition, Bondly’s products focus on the OTC transaction mode. Although its ultimate goal is to provide services for rich digital assets classes, the current project mainly focuses on the NFT market, focusing on the tokenize services, NFT transactions and NFT applications.

In the recent AMA with BSC, the project founder stated Bondly as: “Bondly is the next-generation collection infrastructure and fans interaction method. Our Web3 platform enables creators to use localized digital assets to interact directly with fans with a new experience.”

2.2. History and development

The Bondly project was founded in November 2020, and published its white paper in December. The team provides specific tasks and millstones on the Roadmap. At present, the overall performance is okay, and most of its Q2 work plan has been completed.

In the next two quarters, Bondly will mainly focus on the expansion of NFT in sports and games, as well as the launch of BProtect in NFT trading market, parallel chain auction of Polkadot and the launch of some key NFT functions. For at least a year, Bondly will continue to focus on NFT as the breakthrough point of its asset trading business. Therefore, the overall popularity and progress of the NFT market will directly determine the development of Bondly business.

2.3. Existing main products and business conditions

As a digital asset trading platform, Bondly connects buyers and sellers of assets. It needs to provide API and other services to third-party cooperation platforms to ensure that its services can be connected to a wider platform.

According to the planning of core team, there are three core products to be launched: BONDSWAP, BONDDEX and BONDProtect. BondSwap. We focus on the analysis of BondSwap, which has been launched.

BondSwap can be understood as a blockchain-based OTC market, in which users can initiate transaction pending orders and wait for trading with users with matching needs. Now the assets supporting transactions include NFT and cryptocurrency. BondSawp currently supports access to Ethereum, BSC and HECO, and will also support Polygon in the future.

At present, Bondswap has very small trading volume and small pending orders volume for both cryptocurrency and NFT. On the one hand, due to the short launch time of the project and the limited traffic of the platform, users are more willing to place orders on Opensea and other popular NFT platforms. On the other hand, the transaction mode of P2P will make it difficult to match the demands of buyers and sellers.

a.NFT Launchpad

NFT Launchpad is a strong feature of Bondly now, which can be understood as IDO with NFT mechanism.

After subscribing by encrypted assets on Bondly, users no longer directly obtain the token of IDO project, instead gain the exclusive NFT of the project. After that, the project party will conduct multiple airdrops to NFT to distribute project tokens to subscribers. Compared with traditional IDO, the advantages of this solution include:

After successful subscription, users can resell the NFT, i.e., reselling the allocation rights of subsequent project tokens. This will increase the liquidity for the subscription rights and may also help the project party to gain more attention from players in the NFT circle.
Since the IDO process has been changed from one allocation to multiple allocations, this mechanism extends the stickiness of the project to subscribed users, allowing users to maintain their attention to the IDO project for a longer period of time.
The NFT can be used as an important prop or voucher in the follow-up operation activities or product functions of IDO projects, transforming investors into long-term product users.

In addition, after completing the preliminary approval of the NFT Launchpad application project, Bondly will also help the partner project with the design for NFT features, art, story line, subsequent NFT release and promotion as well as the final after-sales support.

Up to now, there are 9 projects that have reached NFT Launchpad cooperation with Bondly, of which Bridge Mutal has the highest return on investment, reaching 1038%. The overall yield rate of purchasing new Bondly partner projects is not too high in the DEX’s IDO boom. However, for Bondly, a brand-new player who has only been on the stage for one or two months at that time, it has to be attributed to the novel mechanism of purchasing new NFTs that it can attract so many cooperation projects.

b. BONDProtect and BONDDEX (not launched)

BONDProtect is a trading market and e-commerce solution based on the BondSwap protocol. It will also add a guarantee design to make the transaction process more secure. The feature was originally scheduled to be launched in April this year, but it is still in preparation. According to the team’s plan, the solution will also help other e-commerce platforms to more easily connect to Bondly’s NFT market, allowing traditional Internet users to try to purchase NFT assets at a lower threshold. Creators can also easily produce NFTs on BONDProtect.

BondDex is a multi-chain DEX, which needs to wait for the completion of Polkadot’s parallel chain. The team also stated that it will attend Polkadot’s bid in the second half of the year.

Overall, Bondly’s current product is not complete enough.

BondSwap that has been launched can be regarded as a MVP (Minimum Viable Product) since the fit between the product and user needs has not yet been verified. NFT launchpad has won the favor of many partners with the upsurge of NFT since the beginning of this year and the novel form of token sale. However, it remains to be seen whether this model can continue as the popularity of NFT decreases gradually.

Whether Bondly can succeed in the future will depend on the situation of two core products, BONDProtect and BONDDEX.

c.NFT release and sales

Before the business volume of trading platforms has risen, Bondly’s main revenue comes from its fast-growing NFT issuance business. The NFTs issued by Bondly can be divided into two categories: 1. Bondly’s NFT products originally created based on its own IP; 2. Other NFT products jointly released by Bondly and other external IPs, such as the well-known game company Atari and singer Lewis Capaldi.

Among them, the NTF products originally created by the team are currently mainly the BCCG card game series and Pokapets with the theme of Polkadot ecology (similar to Polkadot’s Pokemon). In addition to its own collection and display value, BCCG also plays the role of project token in the Bondly ecosystem, accepting multi-dimensional empowerment (see the “Token Model Analysis” section for details).

The NFT released by the team in cooperation with external IPs includes collaborations with singers Lewis Capaldi and Morgan Heritage. In addition to acting as a carrier of digital music albums, NFT also contains a richer exploration of rights than traditional digital albums.

Take the Gold Legacy NFT package based on the new album “Legacy” released in May by Morgan Heritage and Bondly as an example. Its rights include:

1. The Legacy digital album will be available for priority download on the day before the album is released

2. To get a Bondly Finance Gold NFT

3. To automatically qualify to be one of the 15 lucky winners and participate in rewards of more than US$10,000, including a US$100 Amazon gift card, Vizio 50 TV, PS5 and MacBook Pro 13

4. To get a free VIP channel automatically to participate in the Legacy Live Stream virtual concert

5. For MH concerts anywhere in the world (excluding the festival of our next tour), each NFT holder can get 2 VIP tickets and VIP Experience including a few minutes to meet and support the band.

6. MH x Bondly gift, including an autographed poster of Legacy album.

Cooperation with well-known external IPs can not only share the sales revenue, but also bring users outside the circle to Bondly and the crypto world more importantly.

For celebrities, this kind cooperation can interact with fans directly through NFT without any intermediate in the traditional entertainment industry. This may have a profound impact on fans and the form of community economy, allowing creators to share a greater proportion of the industry value.

For fans, their consumption is realized through the intermediary of NFT, and consumer goods become collectible and transferable. This can realize the disguised capitalization and improve the consumption rights as fans.

We can see on Open that the original and cooperative NFTs issued by Bondly have begun to circulate heavily in secondary markets, with relatively rich collectors and transaction volumes.

2.4. Team

Bondly’s achievements in introducing the NFT partner program are impressive, including working with Atari to develop Metaverse products and with Lewis Capaldi who is the winner of two Brit Awards to release the digital album of “Big Fat Sexy NFT”. This mainly contributes to the team’s rich resources from the culture entertainment industries.

Founder & CEO: Brandon Smith

Brandon Smith has been responsible for strategic analysis and consulting in large companies such as PricewaterhouseCoopers and GE, mainly serving financial and technology companies. He also served as Vice President of Shieldpay, working with e-commerce platforms and banks. Brandon claims to be a connoisseur of geek culture, with a large collection of animations, comics, novels, games and cards. In addition, since 2018 he has established Shuttle Capital with Harry Liu, another founder of the project, for investment and consulting in the blockchain field.

Founder & CIO: Harry Liu

Continuous entrepreneur with the main direction of marketing consulting, partner of Shuttle Capital.

Summary: the two founders have a well-established track record, but their career experience doesn’t seem to have much in common with blockchain and big entertainment unit. Due to the obvious To B nature of their work, they should have accumulated rich enterprise resources. This may be the reason why they can find good business department heads.

Behind the NFT track that Bondly focuses on is the big entertainment industry, which has high requirements for business cooperation and expansion capabilities in vertical industries. Bondly has good talents in this aspect.

Game CEO of Bondly: Doug Ferguson

Doug Ferguson is a game industry veteran with more than 20 years of experience in the game field. He served as the senior vice president of product development at The Pokémon Company International (Pokemon, where he worked for 16 years.

Music CEO of Bondly: Liam Boyd

Liam Boyd is an expert in the music industry. He worked for many years in Bandsintown (a company that provides services for streaming media, concerts, and music festivals). He not only helped improve the concert experience for millions of fans around the world, but also built a better connection between thousands of artists of all sizes and styles and core audiences.

Conclusion:

Different from the two founders, Bondly’s directors of several culture and entertainment sectors are all senior industry professionals and they should have a deep resource accumulation in their respective fields. This should also be an important reason for Bondly’s rapid development of KOL and enterprise partners in the field of game and music.

Other team members

According to LinkedIn, Bondly currently has 28 employees, which is not a small number among blockchain startups. At the same time, Bondly has more than 10 open positions for recruitment, including data engineering, developers, business development and marketing, etc. The company should be in the stage of aggressive expansion.

2.5. Partners and investors

In addition to product development, Bondly’s main task at present is to continuously introduce influential IPs of entertainment, importing materials and users for its NFT ecosystem and activating bilateral markets for transactions. At the same time, it must also actively cooperate with NFT platforms with capabilities and users to expand its influence in the NFT field. The influential partners that Bondly has announced are as follows:

It is impressive to achieve the above business achievements since Bondly project has been established for a short time. In particular, Bondly said more partner star IPs will be released on Binance NFT, which was launched on June 24. In addition to partners in the culture and entertainment industry, Bondly has reached a payment cooperation with Plasm in the crypto field. It has also reached a cooperation with ChainLink in oracle.

In terms of financing, Bondly has received investment from two major exchanges. First, it received investment from the Binance NFT Accelerator Fund in April this year. Second, it announced in May that it had received investment from OKEx Blockdream Ventures. However, the specific amount and cost of finances has not been disclosed.

3. Business analysis

3.1. Industry prospect and potential

In a recent interview, CEO Brandon Smith defined Bondly as: “Bondly is the next generation of collectibles infrastructure and fan engagement, we are the Web3 platform to enable creators to have brand new experiences directly with fans using natively digital asset interaction.” In short, in his view, Bondly provides services around NFTs, including issuance, trading, and other services that may link NFT creators and users.

However, “NFT is not track of the application layer, but a component of protocol layer… a protocol layer or middleware between the application layer and the blockchain infrastructure layer. Projects issuing NFTs should pay more attention to the carrier itself, that is, what problems are solved in what scenarios. NFT is just a technical means instead of an end, otherwise it will put the cart before the horse. NFT is meaningless for the sake of NFT.” Original founder of Dappreview Niu Fengxuan said.

From this point of view, the bottom layer of Bondly’s business model is still swap, based on its own resource advantages on the industrial end. The team is more actively involved in the upstream of the NFT trading market — IP introduction and issuance.

So, how big is the entire NFT trading and issuance market?

In terms of transaction volume, the total annual transaction volume of NFT has risen nearly threefold from US$62.86 million to US$250 million from 2019 to 2020. In 2021, the volume of NFT market transactions in the first quarter alone has exceeded 8 times that of the full year of 2020, approximately US$2 billion (excluding NBA Top Shots, Nifty Gateway and other project data). From the perspective of user size, the number of NFT active wallets in the first quarter of 2021 reached more than 140,000, with more than 70,000 active addresses of buyers and more than 33,000 active address of sellers.

From the perspective of NFT trading categories, the transaction volume of collectibles and artworks accounted for more than 90% in the popular “NFT Trading Spring” of in the first quarter of 2021, while that of virtual worlds and games was only about 5%. In addition, the utility category NFT had a negligible percentage of total NFT transactions.

From this point of view, it is understandable that Bondly currently focuses on music and games (most of them are game-themed collection NFTs) in the development of NFT upstream distribution market.

However, the author agrees with Niu Fengxuan’s analysis on the value of NFT in “NFT and Metaverse I Understand”, namely:

NFT value = Intrinsic Value + Utility Value + Premium

Regarding the definitions of the above three values, Niu Fengxuan’s specific expression is:

“Intrinsic value refers to the various costs of creating the NFT asset, including time cost/transaction cost/casting cost, etc. Use value means that NFT asset can be used to bring value to the owner under specific scenarios. For example, a ticket can be used to participate in an event, or a game item can be used in the game. The premium includes many elements, such as the premium brought by IP, the premium brought by hype and low liquidity, etc., which is difficult to be valuated and evaluated accurately.”

I suggest to the formula can be simplified as: NFT value = Utility Value + Premium

Because according to the laws of the real world, the final price of a commodity is determined by its use value (or its subjective utility to the buyer) rather than its production cost. Otherwise, when we produce a commodity, as long as we increase its production cost indefinitely, its price should also rise indefinitely. This is obviously absurd, because the cost of a commodity cannot determine its price, and the price of a commodity in turn determines the production cost.

Then, let’s take a simplified “NFT value = use value + premium” perspective to examine the hot NFT trading market in the first quarter. With the NFT transaction volume of US $2 billion, how much of them are paid for the “use value” (aesthetic utility of collectibles)? How much is paid for the “premium”?

As the price of the current NFT trading market has decreased significantly, the answer has surfaced: most of current NFTs have insufficient use value, and the “NFT Spring” of 2021 is actually a “bubble summer” for speculators.

Therefore, only when NFT assets are separated from the simple role of trading and presentation carrier with more and more use value in more scenarios and products, we can see the real panorama of NFT market and then the business spring of Bondly may really come.

3.2. Token model analysis

a. Core project token: Bondly

The total supply of Bondly is 1 billion. Now the total circulation is 191,961,902, with a circulation rate of 19.20%. The peak period of vesting the locked Bondly should be at the end of the year according to official data.

The first edition of Bondly’s white paper did not systematically state the application scenarios and value capture logic of the project token Bondly. However, based on the observation of the product and activity mechanism of the project side, the uses of Bondly token can be summarized as:

1. Project governance: voting evidence of proposals to realize the governance of project.

2. Transaction medium: NFT transactions on Bondswap market, limited number of cards issued by the project party and other commodities, which support using Bondly to purchase.

3. Participation credential for important events: For example, a certain amount of Bondly is a necessary condition for participating events including the NFT launchpad.

4. Repurchase and burn: the project announced that it began to repurchase Bondly using the project’s business profits in May this year. However, the repurchased Bondly are not necessarily burned after being deposited in the Bondly Vault, which needs to be voted by the community.

5. Bondprotect collateral: The Bondprotect platform that will be launched later will add a guarantee function. Guarantors need to use Bondly as the collateral to obtain guarantee rewards.

6. Mining: now Bondly’s official website has launched some staking mining mechanisms, by which users can earn system rewards by using Bondly as collateral.

But in general, the current token model design of Bondly token and Bondly’s capture of platform value are not clear enough. For example, in the repurchase and burn mechanism updated in May, it did not specify the specific ratio of business profit used for repurchase, nor how to calculate and validate business profit.

b.Project NFT: BCCG

It is worth mentioning that, in addition to Bondly tokens, the NFT game cards (BCCG) that are sold and issued by the project party also have certain value capture capabilities as a project with NFT as its business focus. It plays a lot of roles in many aspects of the project.

BCCG is the abbreviation of “Bondly Collectible Card Game”, which can be understood as a combination of various series of NFT cards issued by Bondly. It is like the “Water Margin” series of cards and star card series we collected when we were young.

But Bondly has added a lot of empowerments to these cards, including:

1. Earlier card purchasers can receive multiple airdrops of Bondly tokens, i.e., they subscribe tokens while purchasing the cards;

2. BCCG holders do not need to pay handling fees for transactions on Bondswap;

3. Holding BCCG is one of the hard conditions to participate in the NFT launchpad;

4. Card holders can directly stake BCCG to participate in the card mining activities designed by the project party;

5. Card holders can participate in special activities of Bondly project, such as joining core groups, or contributing your own works to become the image of a core role, etc.;

6. Cards are a necessary pass and props to participate in the subsequent card competition game.

As an NFT economic steamroller, Bondly itself is also trying to improve the use value of NFT. However, as most of the functions of the project have not yet been launched, the role that cards can play is still limited. As an NFT, the advantages of BCCG over a fungible token mechanism remain to be seen.

3.3. Competition landscape

a. Basic market structure

Bondly can be classified as an NFT trading platform product. This track is the one with the most players and the most intense competition in the NFT industry.

The comprehensive head NFT trading platforms include:

Opensea: it is the largest NFT trading platform at present, accepting almost all types of NFT transactions. There are more than 16 million NFTs on display and more than 200,000 users. It supports minting NFT without gas fee.

Rarible: it is a comprehensive NFT trading platform. It has designed a mining mechanism of NFT trading, distributing RARI tokens to NFT traders every week.

Mintable: it is a trading platform that can purchase, sell, and mint NFT without gas fee (there is no fee to create NFT, and there will be a handling fee to launch on the chain eventually). At the same time, after the completion of the transaction buyers and sellers will get NFT of voting rights, and users can use the NFT to participate in community governance. But the unreasonable part is that voting rights for Mintable can be purchased directly with ETH. At present, Mintable announced that it received an investment from NBA Dallas Mavericks owner and billionaire Mark Cuban.

NFT art platforms include:

SuperRare: it is currently the strongest crypto art platform. Artists need to go through strict screening to enter SuperRare. Moreover, due to the early birth of the platform, almost all of the popular crypto artists have settled in SuperRare.

Nifty Gateway: Co-founded by twin brothers DuncanCock Foster and Griffin Cock Foster. Its crypto art trading platform was acquired by Gemini, the digital currency trading platform of the Winklevoss brothers in November 2019. With the cooperation with famous crypto artists such as Beeple, FEWOCiOUS, Mad Dog Jones, etc., its popularity and sales instantly climbed to the forefront of crypto art platforms.

MEME: it is one of the most representative projects to regain a new life through transformation. MEME started as a spoof project, and gradually completed the transformation from an “air project” to an art platform by cooperating with various artists,

MakersPlace: it is an old crypto art platform that supports new artists on the platform while focusing on the introduction of external IPs. Jose Delbo, the author of DC comics “Wonder Woman”, once published NFT crypto artworks on this platform. In addition, MakersPlace also introduced social attributes.

Async Art: it focuses on the programmability of artworks. Artworks on this platform is not a simple image, instead composition of several changeable layers. The Async Art platform allows users to purchase masters mask and layers, which are respectively tokenized on Ethereum. Buying layers gives you the opportunity to influence your favorite artist’s works. When you change something on a layer, the master mask regardless of its owners will change because the layer is changed.

Collectibles platforms include:

NBA Top Shot: it is a collectible NFT game launched by Dapper Labs and is officially authorized by NBA. It is the hottest NFT project now, where players can collect the highlights of NBA stars and trade in the secondary market.

CryptoPunks: it is the first NFT project, produced by Larva Labs, with a total of only 10,000. All of them were airdropped to community users at the beginning of its birth in 2017.

CryptoKitties: it is also produced by Dapper Lab. It even paralyzed the Ethereum when it was just launched. Players can purchase virtual pet cats and let them breed offsprings. The attributes of each cat are determined by genetics.

Hashmasks: it is a phenomenal NFT application born in early 2021. It combines various mechanisms such as joint curves, blind boxes, rare attributes, and domain names into a new way to play, which has triggered a boom in the market.

In summary, the above trading platforms have their own advantages. Although the NFT market is still at a very early stage, the competition and innovation competition in the trading track are already in full swing.

b. Project moat and source of competitive advantage

At present, the competitive advantage of Bondly which is betting on NFT track is still weak. Its advantage mainly comes from the team members’ continuous introduction of some out-of-circle IP through industry resources, gaining user and industry exposure by increasing the issuance of high-quality NFT assets. However, if Bondly wants to win the fierce competition of NFT trading platforms, it must have its own trump card, which is still difficult to see.

3.4. Risk

a. Internal risk

Bondly’s product and business development progress has subsequently slowed down. If there is a lack of differentiated competitive means to quickly expand the market, it will lead to the gradual loss of users and partners.

b. External risk

If there is no clear application scenario in the NFT market in the short term, simple transaction and display demands cannot support the previous market enthusiasm. Therefore, there is a risk of rapid market cooling-off, which will suppress the development direction of Bondly’s existing business.

If the cryptocurrency market enters a bear market cycle, the asset price of the whole market will fall into a depression, which will also reduce the activity level of the NFT market and put tremendous pressure on Bondly’s business expansion and currency price.

4. Preliminary valuation

4.1. Five core questions

What business cycle is the project in? Maturity stage or the early and middle stage of development?

The core products of the project have not yet been launched and it is in the test period of the business. From the view of the minimum viable products released, it has not reached the PMF (Product market fit) stage. The overall project is in the early stage of the business cycle.

Does the project have a solid competitive advantage? Where does it come from?

Although the project has been expanding rapidly in business partners, it has not yet shown a clear competitive advantage.

Is the medium and long-term investment logic of the project clear? Is it in line with the industry trend?

The underlying business model of the project is based on Polkadot’s multi-chain transactions, currently focusing on NFT business. There are great uncertainties in both directions. The former depends on the actual operation of Polkadot, while the latter needs the further completion of NFT infrastructure and application scenarios before it can usher in larger business opportunities. Therefore, the overall investment logic of the project is fuzzy.

What are the main variables in the operation of the project? Are these variables easy to quantify and measure?

The first variable mainly concerned is the introduction of some NFT partners, and whether there is continuous cooperation with important culture and entertainment partners. The second is to check whether the transaction data and user activity of the project products have increased significantly with the increase of partners and the launch of core products.

What is the management and governance of the project? What is the level of DAO?

At present, the project has released a preliminary idea about DAO, but it has not been implemented yet.

4.2. Valuation assessment

As a trading platform project, the main valuation assessment indicator for Bondly should be the ratio of its market capitalization to business revenue or business profit.

The current transaction volume of Bondly’s trading platform is very low, which contributes little to the overall revenue of the project. More business income may come from the early sales of BCCG cards, the income sharing of NFT sales with business partners, and the cooperation income brought by NFT Lanuchpad. However, the settlement of the above income is mostly done off-chain, without observable data. The project party has not disclosed its revenue for the time being, so it is difficult to evaluate the valuation of Bondly vertically or horizontally.

4.3. Value evaluation summary

Bondly is in the cross-track of multi-chain trading + NFT qualitatively. However, Bondly business faces a high degree of uncertainty due to the limitations of Polkadot’s development and the current low maturity of the NFT market. As a trading platform, Bondly has not shown a solid competitive advantage compared with other competitors in the NFT market.

From the perspective of quantitative valuation, Bondly’s current revenue and profit data have not been disclosed, so it is impossible to compare its valuations vertically and horizontally.