FuturePaymentsNon FungibleTokens

Deutsche Bank
Research
Non-Fungible Tokens (NFTs) + Web3 =

The Future of E-commerce?
#PositiveImpact
Marion Laboure, Ph.D - Global Research

Distributed on: 07/09/2022 10:28:06 GMT
marion.laboure@db.com
Galina Pozdnyakova
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September 2022
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Chartbook: Non-Fungible Tokens (NFTs) + Web3 = The Future
of E-commerce?
Today, we are publishing a new Chartbook on Non-Fungible
Tokens (NFTs) + Web3 = The Future of E-Commerce?, recapping
what it is for and its main uses, including the metaverse.
Part 1 – E-commerce: moving to the Web3. The evolution of the

Internet, in conjunction with the pandemic, has propelled the
adoption of e-commerce. Tokenisation can lead to faster
transactions and lower costs.
Part 2 – Tomorrow ecommerce: The rise of NFTs or “the bricks

of Web3”? We look at the evolution of NFTs, the web and NFTs’
ecosystem (including platforms, blockchains and market
structure), while balancing its benefits against major risks.
Part 3 – Specific use case: From marketing to ticketing?

We focus on specific examples of how various corporates are
venturing into NFTs and how these tokens sync with the
metaverse. Then, we outline the broader implications for
corporate strategy and what the main regulatory considerations
are.
…All in an easy-to-read PowerPoint format.
Feel free to email us if you find the presentation useful, or if you

would like to share suggestions for what you would like to see in
the next edition.
Deutsche Bank Research | The Future of Money | September 2022 2

A definition for NFT
‒ Token: a representation of something

‒ A “token of my appreciation….”
‒ Non-fungible: something unique, one of a kind (like a painting…)
‒ Fungible means that each unit is interchangeable (dollars, gold)
‒ NFT is a unique digital identifier that cannot be copied, is not interchangeable and is recorded on a blockchain to certify
authenticity and ownership
‒ NFTs are used to represent various virtual and physical items as unique digital assets.
Number of sales by NFT category

SUPERSET
‒ Arts
‒ Paintings
Games
Collectible
Utility
SUBSET
‒ A digital certificate/ ticket Art
‒ An authenticity, certificate of belonging
to protect intellectual property Metaverse
Source: Deutsche Bank Research, NonFungible.

Around half of citizens have heard about NFTs…
Personally heard of NFTs
No Yes
100%
80%
60%
40%
20%
0%
USA United Kingdom Spain Italy Germany France
Source: Deutsche Bank dbDIG. Note: percentage of respondents answering, “Prior to today, had you personally heard of NFTs (Non-fungible tokens)?”

… and less than a 1/3 have a good or deep understanding of
NFTS
Personally understand NFTs
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
France Germany Italy United Kingdom Spain USA
No understanding of NFTs A minimal or fair understanding of NFTs A deep or good understanding of NFTs
Source: Deutsche Bank dbDIG. Note: percentage of respondents answering “Overall, how well do you personally understand NFTs? 'I have …”

Most don’t really understand with no view…
Agree/ disagree with the following statements: In 5 years, NFTs will ...
100%
80%
60%
40%
20%
0%
USA UK Eurozone* USA UK Eurozone* USA UK Eurozone* USA UK Eurozone* USA UK Eurozone*
Agree Neither agree nor disagree Disagree
Source: Deutsche Bank dbDIG. Note: percentage of respondents answering “Overall, how well do you personally understand NFTs? 'I have …”; * Note: the Eurozone is proxied by
Germany, France, Italy and Spain using weighted average of respective populations.

The top 5 statistics to have in mind
Attention to NFTs skyrocketed among firms

Company Doc Count, "NFT" mentioned
‒ NFT market cap: $2.2bn as of today.
1,600
1,400
‒ NFTs’ all-time sales (> 1mn) have 1,200

exceeded $11bn. 1,000
800
600
‒ Pak’s “The Merge” was sold for
400
$91.8m (December 2, 2021), making it
the most expensive NFT sold to date. 200
0
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22
‒ Millennials are three times as likely as

Gen Zers to buy and sell NFTs. Google trends - interest in Non-fungible token topic (Worldwide)
100
‒ 743 NFT and 526 metaverse

trademark applications were filed in 80
May with USPTO.

60
40
20
0
Jan-21 Mar-21 May-21 Aug-21 Oct-21 Dec-21 Feb-22 May-22 Jul-22
Source: The Law Office of Michael E. Kondoudis, CoinMarketCap, Dexerto, Morning Consult, AlphaSense, Google Trends, Deutsche Bank. Note: as of September 5th 2022.

“
Innovation is in our DNA, we have been pioneers in applying
new technologies within our industry and it cannot be different
with NFTs, which could be the next step in the travel industry.
“
- Bernardo Botella, Air Europa Global Sales Director
1. E-commerce: moving to the

Web 3

E-commerce has jumped by 30% since the Covid-19
pandemic began
Average percentage of spending being done online

45
Pre-Covid 2020 2021 July 2022
40
Average % of spending being done online
35
30
25
20
15
10
0
UK US Spain Germany Italy France
Source: dbDIG Primary Research, Deutsche Bank.

High street retailers are suffering
US retail site activity (monthly average, relative to January 2019)

1.0 2022: the new normal?
Pre-covid peak 2021: major reopenings, some
First vaccines, relaxation of guidelines
some easing of
restrictions
0.5
0.0
-0.5
Widespread Covid
lockdowns, travel
restrictions
-1.0
Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22
Source: dbDIG Primary Research, Deutsche Bank.

Traditional supply chain vs. direct-to-consumer
International revenues (billions)

Top 10 retailers in 02022 20 40 60 80 100 120
1. Walmart Walmart Traditional Supply Chain

2. Amazon.com
Amazon.com
3. Schwarz GroupGroup
Schwarz
4. Aldi Aldi
Manufacturer Wholesaler Distributor Retailer Consumers
5. Costco Costco
6. Ahold Delhaize
Ahold Delhaize VS
7. Carrefour Carrefour Direct-To Consumers
8. IKEA IKEA
9. Seven & I Seven & I
The Home Depot Consumers
10.Home Depot Manufacturer Advertising / Website
0 20 40 60 80 100 120
International company revenues ($ billions)
Source: National Retail Federation, Deutsche Bank. Source: Deutsche Bank research.

Consumers are more tech-savvy and digitalisation is key…
Major trends in the US Major trends in Asia Pacific
New generation Younger generation

As of 2021, 22% of the US population is in the In 2020, Gen Z (born between 1997-2012) made up 25%
millennial age group, while 21% are in the Gen Z of the APAC population, almost the same as Millennials
category. (1980-1996).
Smartphone adoption & social media Smartphone adoption

82% smartphone adoption in 2021 for North America 68% smartphone adoption in 2020 (APAC), forecast to
and expected to grow to 85% by 2025. grow up to 83% by 2025.
As of 2021, around half of US users spent 5 to 6 hours China is heavily investing in R&D, AI, AR, and VR
on their phone each day. On average, Gen Z received
their first smartphone at the age of 12 (vs 17 for 4,085 – number of Tencent’s patent applications in VR
millennials). 95% of US teens have access to a and AR in 2020 and 2021, second behind Samsung’s
smartphone (90% for computer and 80% for a gaming 4,094. Baidu (3rd), SenseTime and Huawei were also
console). Almost 50% say they use the internet “almost among top firms. Tencent is experienced in mega
constantly.” platforms and is one of the largest gaming companies in
the world.
China is also laser focused on AI and in 2017 published
Tech companies entering banking
its own ‘New Generation AI Development Plan’ aiming to
Large tech companies continue to eye entering the become the leading player in the field that could be
payments and lending space. worth $151bn by 2030.
Source: Statista, Insider Intelligence, Grayscale Investments, YPulse, Pew Research Center, Deutsche Bank.

… so corporates are beating the drum about digitalisation…
Nike retail sales by distribution channel – the company has been increasingly moving towards direct-to-consumer
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Wholesale Direct-to-Consumer
Sources: Nike Company Earnings Reports, Deutsche Bank.

Can Blockchain help? What Blockchain tokens are:
Currency Aspect
Cryptocurrencies are fungible stores of
value that can be transferred P2P without a
bank or any other middle man.
Fuel of the Network

A token is need to pay for usage of the network:
Bitcoin (transactions)
Ether (computing power)
Sia (file storage)
Tokens are fuel of the network used to reward
stakeholders for network services and make the
network attack resistant.
Economic Rulesets (Network Economics)

Stakeholders of the network (Miners, devs,
exchanges, token holders, etc.) are incentivised to
contribute to the network by being rewarded with a
stake in the network (the token). The theory: better
individual work -> better the overall performance of
network -> more attention -> price of the token will
rise. This dynamic might also lead to temporary
overvaluation of token price.

Tokenisation of physical and immaterial assets
Data tokenisation can allow data to be shared across both private and public sector organisations without compromising privacy
Sensitive data held by government Enriched individualized insights
— Substance use in families

— Treatment cost and Child welfare agencies Child welfare agencies
effectiveness
— Arrest and parole Corrections department

information Law enforcement
— Geographical crime data Integrated
data set
Non-sensitive publicly available data Enriched aggregated insights
(tokenized)
— Aggregated treatments data
— Aggregated prescription Hospitals Hospitals
data
— Marketing data
— Spending and insurance Third-party data Third-party data
information
Source : Deutsche Bank, based on Deloitte analysis.

Verification of document authenticity can be done using
blockchain and this eliminates the need for centralised authority
UK UK UK
Proof in a service: Proof on demand: Proof in Consensus:
– Marriage register – Proof of assets – Proof of Work (PoW)
– Land Registry – Proof of identity – Proof of Possession (PoS)
– Supply chains – Proof of authenticity – Evidence of authority
– Asset registration – Evidence of individuality – Proof of existence
– Transactions between – Proof of ownership

counterparties – Proof of physical address
– Accounting audits – Proof of provenance
– Voting operations – Proof of receipt
– Transfer of documents

New technologies will be disruptive
In a few years
Web 3 and the metaverse: use of

tokenisation
These days…
Emerging digital currencies as

alternative payments
In the last few years….
Digital currencies are also driving
the trend of a cashless society,
$ particularly for making online
payments and purchases
Digital &
Rise of e-commerce
contactless payments
Online payments and Shift to new online

contactless payments business model (i.e.,
methods in-store are direct-to-consumer and
gaining more popularity marketplace)

History of Digital & Mobile Payments
1855 1876 1998 2004 2007 2007
2014 2013 2012 2011 2010 2009
2015 2015 2015 2015 2015 2016 2017

2. Tomorrow’s e-commerce: the rise of
NFTs or “the bricks of Web3”?
“
We forget, in our generation, that things don’t have to be physical… They can
be digital, and they have meaning to people. And as long as that meaning can
“
be essentially substantiated in a blockchain, I think you’re going to see an
explosion of things being created, traded, collected in NFTs.
- Bob Iger
- Former Disney CEO

How to buy NFTs
‒ Select a crypto wallet 30-day MA of daily unique buyers and sellers of NFTs, thousands
70
Unique buyers
‒ Choose a crypto exchange and get an 60
account. Purchase Ether and transfer it to the 50

Unique sellers
wallet.
40
30
‒ Choose an NFT platform and connect the 20
wallet to it. Some platforms accept fiat.
10
0
‒ Once connected, select NFTs to purchase Sep-20 Mar-21 Sep-21 Mar-22 Sep-22
from platform’s offering. Many are akin to the Average prices have declined from their peaks. The number of active
usual online shopping experience. Some wallets has also shrunk.
NFTs can be purchased right away while 100 3,000
others require an auction process. Active market wallets (thousand, lhs)
Average price in USD (rhs) 2,500
80
2,000
‒ NFT transactions require variable gas* fees. 60
Buyer’s wallet should have enough balance to 1,500
cover for both the price and the gas fee. 40
1,000
20
500
‒ Once bought, the NFT can be accessed using
the crypto wallet. 0 0
Sep-20 Mar-21 Sep-21 Mar-22 Sep-22
Source: NonFungible, Money.com, Coinbase, Deutsche Bank. Note: Gas fees are payments made by users to compensate for the computing energy required to process and validate
transactions on the Ethereum blockchain.

Overview of the Non-Fungible Token (NFTs) ecosystem
Gaming Studio
Marketplaces
VR
DeFi NFT
Domains
DAO
Infrastructure
Collectibles
Games
Source: Adaptation from The Block, Deutsche Bank.

Copyright issues and proliferation of digital art throughout
history fueled enthusiasm about NFTs
Democratising (digital) assets and protecting creators’ rights
Early days of NFTs:

2012-2013: Colored coins
The first Copyright Act ‘14: “Quantum” - probably the first NFT
(1709) was followed by
Early pressers in China ‘15: Etheria – probably the first NFT game
the Engravers' Copyright
(11th century), followed
Act (1735) amid the Expansion:
by metal movable types
proliferation of etching ’17-’21: Cryptopunks, CryptoKitties, the
– mass copying
that made it easy to copy metaverse (Decentraland, AxieInfinity),
becomes easier
artwork crypto bull run
2 4 6
1 3 5
15th century:
Computer art techniques Nowadays: going mainstream?
The Gutenberg press proliferate in mid 20th century
– better literacy but no ‒ Nike x RTFKT sneakers
Digital art emerges later in the
copyright ‒ NFL NFTs
century
‒ Budweiser NFTs
Andy Warhol presents Pop Art
‒ Vault Art Space by Gucci
and SuperRare
‒ Art sales - Beeple
Source: History.com, the UK Copyright Service, Britannica, Victoria and Albert Museum, The Art Newspaper, nftexplained.info, Deutsche Bank Research

Evolution of the web will shake up industries and products
The evolution of the web
Web 1.0 Web 2.0 Web 3.0

Green shoots of All-driven
Social networks
services
E-commerce ‘Mobile-first
Decentralised
Desktop browser always on
data architecture
Access Dedicated Cloud-driven
Edge computing
Infrastructure computing
infrastructure
?
Value Created
$5.9 trillion
$1.1 trillion
1990 2025
Source: https://www.eenewseurope.com/en/preparing-for-the-metaverse-a-guide-for-cios/, Deutsche Bank.

Each iteration of the web has profound implications for how
users interact, organise and control the environment
Key features
Web 1.0 Web 2.0 Web. 3

(1996 – 2004) (2004 – 2016) (2016+)
Interact Read Read-Write Read-Write-Own
Medium Static Text Interactive Content Virtual Economies
Technologies HTML/ FTP Flash, Java, XML RDF, RDFS, OWL
Organization Companies Platforms Networks
Infrastructure Personal Computers Cloud & Mobile Blockchain Cloud
Control Decentralised Centralised Decentralised
Examples MySpace, LiveJournal
Source: Grayscale Metaverse Report –Nov 2021, Deutsche Bank.

NFTs have versatile use cases but risks are important
NFTs have seen spectacular growth but this field is still nascent, resulting in both opportunities and risks
NFTs so far:
‒ Main use cases of NFTs include art, gaming and collectibles
‒ Collectibles with highest all-time sales volumes include:
‒ Bored Ape Yacht Club
‒ CryptoPunks
‒ Azuki
‒ Games like Axie Infinity are built around NFTs. These tokens are useful in the metaverse.
‒ In art, NFTs are used to prove ownership and receive compensation.
‒ Corporates use NFTs to increase brand loyalty.
Participating in NFTs:
‒ Need cryptos (e.g., Ethereum) and a wallet (e.g., MetaMask) to transact
‒ OpenSea is one of the most popular marketplaces
‒ Early adopters and influencers are the key active participants
‒ Forums and communication channels exist for NFT enthusiasts
Risks:
‒ NFTs lack regulatory oversight and often do not have the status of securities, limiting oversight and consumer protection.
‒ Money laundering, tax issues, manipulations and insider trading are key issues. IP and copyright are important.
‒ Cybersecurity.
Sources: FT, CoinGecko, and Deutsche Bank calculations.

Asset tokenisation can increase efficiency and unlock value
The evolution of the web
‒ Tokenisation aims to convert an asset

into a digital token and can be applied
to both physical and intangible assets
‒ Advantages: liquidity, fractionalisation,
personalisation, automation via smart
contracts, faster settlement times and
better transparency
‒ Some forms of tokenisation can
reduce costs (via elimination of
intermediaries) and democratise
access (e.g., fractionalization).
‒ But tokenisation requires robust
technical infrastructure and regulatory
frameworks due to fragmentation,
operational, data leakage risks, etc.
‒ Cyber security (potentially detrimental
consequences of data leakage) and
scalability (potentially high fixed costs
of setting up the infrastructure) are
important considerations
Source: MAS, Ledger Insights, CityWire, PR Newswire, Euromoney, Deutsche Bank

Tokens from top NFTs collections can fetch millions of dollars
CryptoPunks and BAYC are among the most popular NFT collections by a significant margin.
Many collections, however, have traded 1000s worth of ETH.
Crypto Collectible Rankings by all-time volume

Product Volume ($bn) Market cap ($bn) Sales Traders Avg price ($) Floor price ($)
1 Axie Infinity (game) 4.25 0.002 18m 2m 178.41 0.96
2 CryptoPunks (collectible) 2.93 1.05 22k 7k 130.84k 105.31k

Bored Ape Yacht Club
3 2.16 1.24 28k 14k 77.73k 124.36k
(collectible)
Mutant Ape Yacht Club
4 1.50 0.42 36k 27k 41.73k 21.84k
(collectible)
5 Art Blocks (art) 1.29 0.08 195k 48k 6.66k 7.86k
All-time volume in $bn, top 10 collections

5
0
Axie Infinity CryptoPunks BAYC Mutant AYC Art Blocks NBA Top Shot Otherdeed Azuki Mobox Clone X
Source: DappRadar, Deutsche Bank. Note: as of September 5th, 2022.

NFTs have primary and secondary markets and can be
transferred
Primary vs. Secondary sale & Transfer
‒ Primary sale: NFT minter sells to new owner Monthly sales of NFTs in $bn
(whitelisting).
January: elevated
‒ Whitelisting is key for primary sales. 5.0 secondary and primary
Primary sales markets trading Other side, of the
‒ The return distribution for sold NFTs can be Bored Ape Yacht
4.5 Secondary sales Club fame, sold
vastly different. The Merge, the
virtual land for
most expensive
NFT ever sold hundreds of
4.0
($92m) million dollars
‒ Secondary sale: an already minted and sold NFT is CryptoPunks
sold again to a new owner. 3.5 fuel trading
‒ There is evidence that completed secondary

3.0 Sliding
sale are profitable far more often than
markets cool
primary sales.
2.5 sentiment
2.0 Beeple’s “The First

‒ Transfer: owner A send to B 5000 Days” is sold
($69m), 2nd most
1.5 expensive NFT to date
1.0
0.5
0.0
Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22
Source: NonFungible, Chainalysis, sensoriumxr.com, Cryptoslam.io, Deutsche Bank.

NFT marketplaces are highly concentrated and lack regulatory
oversight
Exchanges and blockchains for NFTs are highly concentrated
All-time volume in $bn by platform

‒ OpenSea is the largest platform for NFT trading by $ 35
volume 30
25
‒ All-time volume exceeds $32bn and the number of 20
traders is around 2mn for the same period 15
10
5
‒ Many of corporates that issue NFTs have them 0
trading on OpenSea
‒ But lack of regulations and concerns over insider

trading and money laundering raise questions about
the marketplaces
NFT holders by number of
NFT sales by blockchain
‒ Ethereum is the dominant blockchain used for NFTs, tokens held
so gas fees are an important consideration. Gas fees 30 1.8
are paid to offset transaction costs on the Ethereum 1 25 1.5

14%
blockchain and are denominated in Ether 2-4 20
Sales ($bn, lhs)
1.2
Buyers (mn, rhs)
7%
43% 5-10 15 0.9
‒ Cybersecurity is key, both when it comes to wallets 10%
and other parts of the ecosystem 10-20 10 0.6
More 5 0.3
‒ For instance, the Ronin sidechain, used by Axie 27%
0 0.0
Infinity, suffered a hack that resulted in $650 m
losses
Source: DappRadar, Dune, CryptoSlam.io, Deutsche Bank. Note: as of September 5th 2022.

Gas fees: The invisible cost of NFT minting
NFT minting process
‒ (i) Discord: project owners created a Discord server for Ethereum average gas price in Gwei
the NFT project 800
‒ (ii) Early Bird: early members of Discord server are
granted access to mint a number of NFTs before the
700
general public
‒ (iii) Public at a certain point in time, NFT minting is
600
opened up to the general public
‒ How minting happens?
500
‒ NFT minting refers to the process when a NFT is
created and transformed to its initial owner
400
‒ Requires sending a transaction to the NFT projects
smart contract to call the mint function
300
‒ The miners decide the order of the transactions
‒ Prioritised base on what the owner of the 200
transaction is willing to pay
‒ Gas price, measures in gwei (1 billionth of an 100
ETH)
‒ What you are willing to pay per execution step 0
2017 2018 2019 2020 2021 2022
‒ Each transaction has a cap on max total spend
Source: Etherscan.io, Deutsche Bank. Note: * Gas fees are payments made by users to compensate for the computing energy required to process and validate transactions on the
Ethereum blockchain.

NFT marketplaces see strong global representation, with
emphasis on Asia and North America
Number of NFT users in selected countries, 2021 in m NFT: interest over time (Sep'17 - Sep’22, Google Trends)
Thailand China
Brazil Hong Kong
US Singapore
China Nigeria
Vietnam Philippines
India Taiwan
Canada Cyprus
Indonesia South Korea
South Africa UAE
Germany Georgia
0 1 2 3 4 5 6 0 20 40 60 80 100
Source: Statista, Google Trends, Deutsche Bank.

Robust intellectual property (IP) rights are key for NFT
adoption
Growing number of high-value transactions requires greater sophistication and protection of IP
– IP rights are important, given prices of some NFTs and information Collectibles are the key driver of volumes
Share of NFT $ sales by type, monthly
they represent.
100%
– Many participants confuse the rights they acquire when
buying NFTs. Often, it is metadata that is being purchased, 80%
not the artwork itself.
60% Art
– Many forms of embedded contracts exist (e.g., an NFT may be Collectibles
sold without a copyright assignment). 40% Game
Utility
– For brands, it is vital to extend their trademarks to NFTs, as Nike did
Metaverse
in 2021. As NFT adoption grows, more cases will likely be brought up 20%
regarding copyright infringement involving NFTs.
0%
– Similar to Hermes, it has filed a lawsuit against a company Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22
who used images of its products in NFTs.
Art, collectibles and the metaverse are the priciest categories
Relative average $ NFT prices by type, monthly
100%
– NFTs, owing to their non-fungibility and use of blockchain, may be
important to authenticate brand’s products and avoid counterfeiting. 80% Art
Collectibles
– Nike’s use of “Cryptokicks” “twins” to authenticate the Game
physical pair of shoes is an example. 60%
Utility
Metaverse
40%
– As blockchain technology gets adopted by an increasing number of 20%

businesses and if NFTs become more common as perks for
customers, the issues with IP will become even more relevant. 0%
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22
Source: NonFungible, Deutsche Bank calculations.

“
The novelty of art is only the starting value of what an NFT
can be. To unlock their full potential, brands are going to have
to start creating utility via the token.
- Mathew Sweezey
“
- Director, Market Strategy, Salesforce
3. Specific use case:

From marketing to ticketing?

A growing number of brands are filing NFT-related trademarks
‒ Trademarking NFT implies that brand’s name/logo cannot be used in NFTs by anyone other than the brand itself; NFT-
connected services can be trademarked as well. It is important to keep brand’s NFTs valuable and trustworthy.
‒ The sheer number of companies that have applied for NFT trademarks creates a “gravity pull” for their uses – keeping the
trademark requires using it in commercial applications.
‒ While the current crypto rout has dented the hype around various blockchain technologies, Web3, blockchain and some version
of the metaverse are likely to continue developing, adding option value to early-movers brands in the NFT space.
NFT trademarks applications Metaverse trademarks applications

1200 800
700
1000
600
800 500
600 400
300
400
200
200 100
0
0
Feb-22
Feb-21
Apr-21
Apr-22
Oct-21
Mar-21
Mar-22
May-21
Jun-21
Sep-21
Jan-21
Jan-22
Jul-21
Aug-21
May-22
Dec-21
Nov-21
Oct-21
Feb-22
Feb-21
Apr-21
Apr-22
Mar-21
Mar-22
Jun-21
Sep-21
Jan-21
May-21
Jan-22
Jul-21
Aug-21
May-22
Nov-21
Dec-21
Source: The Law Office of Michael E. Kondoudis, The Fashion Law, Deutsche Bank Research.

NFTs use cases by corporates are diverse but focused on marketing…
Will ticketing be the next big thing?
Marketing:
‒ McLaren – entered the metaverse with its MSO LAB and launched
NFTs to enhance community and experience benefits.
‒ Gucci has launched Vault in partnership with SuperRare. The company

now has presence in Roblox and the Sandbox and auctions off NFTs.
‒ Coca Cola ventured in the metaverse & NFTs in July 2021 by auctioning
off collectibles for charitable causes for $575k.
‒ Tiffany & Co launched NFTiffs – 250 exclusive, real-life pendants (and

their NFT versions) designed after specific CryptoPunks and available
for purchase only by their owners.
‒ NFTs can now be posted on both Facebook and Instagram.
Ticketing (early stage):

‒ Ticketmaster announced it will mint some tickets as NFTs, which will
mainly serve as collectibles and “proof of attendance”.
‒ NFL has given out more than 500K NFTs related to tickets since Nov.
2021 launch. The league is now selling video NFTs with moments from
the games. In May, the NFL announced a 2023 release of NFL Rivals –
an NFT-based play-to-own video game. Earlier that month, a similar
initiative was announced by MLB.
‒ Air Europa - pioneering blockchain-based airplane tickets – NFTickets -

developed with TravelX.
Source: CoinDesk, NFT Evening, Ledger Insights, Air Europa, McLaren, Gucci, Coca Cola, CNN, Deutsche Bank Research.

NFTs can be a revenue stream but we are in the early days
Revenues can come from royalties as well Secondary markets show popularity and liquidity
Brand revenues from NFTs ($mn) Secondary transactions

80 Secondary transactions (thousands, lhs) 1,400
Nike Secondary volume ($m, rhs)
70
Dolce & Gabbana 1,200
Tiffany 60
1,000
Gucci
50
Adidas 800
40
Time Magazine
600
Budweiser 30
Primary sales Total royalties
400
Bud Light
20
AO
200
10
Lacoste
0 0
Nickolodeon
McLaren
0 50 100 150 200
Source: Dune Analytics, Deutsche Bank Research.

Budweiser has a diversified portfolio of NFT applications
‒ “Long-term” NFT strategy and partnered with Gary Vaynerchuk.
‒ Earlier NFT successes with Stella Artois (NFTs for a digital horse racing
platform ZED).
‒ In June, launched 2,500 Budweiser Pass NFTs for ZED RUN x

Budweiser racing challenge.
‒ Bought “beer.eth” domain (potentially for around $100k) and NFT “fan
art”.
‒ Anheuser-Busch filed metaverse-focused trademark applications with

USPTO in April.
‒ NFT collections include:
‒ Budweiser Cans – Heritage Edition: 1,936 (after the firm’s first

can in 1936) digital cans that can be access tokens to the
Budverse.
‒ Budweiser Royalty – supports 22 emerging artists, with 500

NFTs issued per each.
‒ Budverse Legends: Dwyane Wade x Budweiser Zero Edition –

supports businesses with minority owners in underserved
American communities.
‒ In March, held NFT Beerfest in St Louis for holders of Budweiser

Royalty, Budweiser Heritage Can, and Bud Light NFTs (a brewery tour,
music and free beer included).
Source: Budweiser, St. Louis Post-Dispatch, CoinDesk, ZED, U.Today, OpenSea, Ledger Insights, Deutsche Bank Research.

NFTs are the building blocks of the Metaverse economy
‒ The term Metaverse was first coined by science-fiction Number of corporate documents mentioning "metaverse"
author Neal Stephenson in his 1992 novel Snow
Crash. 1400 Company Doc Count
‒ To be considered a metaverse, the experience must 1200
Transcript Doc Count
combine “the three P’s:” (i) User presence is 1000
represented; (ii) The world is persistent; (iii) The data 800
is portable. 600
‒ Metaverse users need NFTs to prove their ownership 400

and authenticity of digital goods and services (e.g. 200
concert tickets, land) - NFTs are the medium of 0
ownership evidence in the metaverse. Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22
‒ Therefore, NFTs are key for the metaverse because

Performance of public metaverse-related stocks
they are able to attest digital ownership, thus enabling
various transactions in virtual worlds. Metaverse ETF
1.8
Roblox
‒ Corporates can benefit from development of the Microsoft
1.4 Meta
metaverse by finding new revenue streams,
revolutionising production and improving the Nvidia
1.0
workplace.
‒ Yet, bottlenecks such as hardware and software 0.6

remain on the path to a fully immersive metaverse.
0.2
Jul-21 Sep-21 Nov-21 Jan-22 Mar-22 May-22 Jul-22 Sep-22
Source: AlphaSense, Bloomberg Finance LP, Deutsche Bank. Note: as of September 5th 2022

Nike is spearheading adoption of the metaverse by corporates
The company views the metaverse as a part of its digital

transformation and a potential revenue stream.
‒ 7 million people visited Nikeland on Roblox. LeBron

James was among them during the NBA All-Star
Week.
‒ The company has filed patents for virtual goods and

services. It acquired RTFKT in December 2021 to
enter NFTs.
‒ Nike’s ongoing lawsuit against StockX demonstrates

that IP in the virtual economy is an uncharted
territory.
‒ In April 2022, RTFKT x Nike Dunk Genesis

CryptoKicks, Nike’s NFT wearable shoes, were
released. One of the pairs was selling for $130k.
‒ Recent project, “Space Drip”, involved matching

NFTs with real-life Air Force 1 sneakers
Source: Nike, Deutsche Bank Research.

NFTs are useful for marketing & communication, customer
engagement & brand loyalty
‒ NFTs most apparent applications are in collectibles and art. This makes
them useful tools for customer engagement and brand loyalty.
‒ Multiple brands use NFTs to create a sense of exclusivity and community.

Thus, the value is largely emotional and tied to scarcity.
‒ Examples of forays into NFTs are often accompanied by venturing into the
metaverse as well. Gamification is important for engagement.
‒ Aside from experiences and extra services, companies like Nike use NFTs
for verification purposes of their physical goods. Such applications bring
real life value for industries where fakes are common, such as luxury goods.
‒ Using NFTs for new revenue streams can be most promising in digital
asset-focussed industries such as music, art, but also where ticketing is
key.
‒ IP issues are emerging, making NFT trademarks especially important.

Some high profile cases are still ongoing and will be important for setting
precedent.
‒ Cybersecurity risks, concerns over copyright infringement and relative

novelty of the field are denting NFTs’ use cases for now. Few are using
them as substitutes for usual electronic tickets or property rights for high-
value assets. Environmental footprint of NFT minting should be accounted
for as well.
Source: Deutsche Bank Research.

Regulation: There are no NFT-specific laws in major countries but
whether they’re considered a security is key
While there are no NFT-specific laws in the major economies globally due to the market’s infancy, if a token is deemed a financial
security, local financial regulations will likely apply. Nevertheless, this is likely not the case for corporate use cases of NFTs where the
tokens serve as a branding tool. Income (capital gains) tax likely applies to creators (investors) in some countries. This likely means
corporate taxes for firms selling NFTs as originators. Yet, there are various complications and uncertainties, such as the physical
location of the seller and whether digital assets are covered by existing tax laws.
EUROPE:
‒ NFTs are likely to be treated as services for tax purposes. Although VAT is likely applicable, there is no clear VAT guidance for
NFTs in most countries. Spain’s tax authority was the first to address NFT sales in the bloc.
‒ So far, NFTs are out of MiCAR’s scope unless they fall into categories covered by the MiCAR, such as “security tokens”. But
new regimes can be created if the authorities see sufficient risks stemming from these new assets. No NFT-specific laws exist in
countries like Germany, France and Italy.
US:
‒ No specific regulatory body oversees NFTs. Whether an NFT can be classified as a security matters but no clear pattern so far.
Most corporate use cases by corporates use NFTs as customer loyalty tools, which may limit application of financial regulations.
‒ Washington is the first US state to publish sales tax guidance for NFTs.
‒ When an NFT is sold by an artist, income tax is likely applicable. For investors, capital gains taxes are likely applicable.
ASIA:
‒ China, Singapore, Japan: no specific NFT regulation unless tokens satisfy local definitions of financial securities.
Source: The National Law Review, European Council, Tokentax.co, Bloomberg Tax, The Art Newspaper, Forbes, Deutsche Bank Research.

https://research.db.com/Research https://research.db.com/Researc
https://research.db.com/Research/TinyUrl/BYMXV
/TinyUrl/NWQ4G h/TinyUrl/KYNTV
Latest
research
https://research.db.com/Research/TinyUrl/BYMXV https://research.db.com/Research/TinyUrl/PXJ8T

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Attribution
I wish to acknowledge the contributions made by Anthony Chaimowitz of dbDIG Primary Research for his invaluable contributions to this report.
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Non-Fungible Tokens (NFTs) + Web3 =

Marion Laboure, Ph.D - Global Research

Part 1 – E-commerce: moving to the Web3. The evolution of the

Part 2 – Tomorrow ecommerce: The rise of NFTs or “the bricks

Part 3 – Specific use case: From marketing to ticketing?

…All in an easy-to-read PowerPoint format.

Feel free to email us if you find the presentation useful, or if you

Deutsche Bank Research | The Future of Money | September 2022 2

‒ Token: a representation of something

Number of sales by NFT category

Source: Deutsche Bank Research, NonFungible.

Deutsche Bank Research | The Future of Money | September 2022 3

Personally heard of NFTs

Deutsche Bank Research | The Future of Money | September 2022 4

Deutsche Bank Research | The Future of Money | September 2022 5

Agree Neither agree nor disagree Disagree

Deutsche Bank Research | The Future of Money | September 2022 6

Attention to NFTs skyrocketed among firms

‒ NFTs’ all-time sales (> 1mn) have 1,200

‒ Millennials are three times as likely as

‒ 743 NFT and 526 metaverse

May with USPTO.

Deutsche Bank Research | The Future of Money | September 2022 7

1. E-commerce: moving to the

Deutsche Bank Research | The Future of Money | September 2022 8

Average percentage of spending being done online

Source: dbDIG Primary Research, Deutsche Bank.

Deutsche Bank Research | The Future of Money | September 2022 9

US retail site activity (monthly average, relative to January 2019)

Source: dbDIG Primary Research, Deutsche Bank.

Deutsche Bank Research | The Future of Money | September 2022 10

International revenues (billions)

1. Walmart Walmart Traditional Supply Chain

Deutsche Bank Research | The Future of Money | September 2022 11

Major trends in the US Major trends in Asia Pacific

New generation Younger generation

Smartphone adoption & social media Smartphone adoption

Deutsche Bank Research | The Future of Money | September 2022 12

Sources: Nike Company Earnings Reports, Deutsche Bank.

Deutsche Bank Research | The Future of Money | September 2022 13

Fuel of the Network

Economic Rulesets (Network Economics)

Deutsche Bank Research | The Future of Money | September 2022 14

Sensitive data held by government Enriched individualized insights

— Substance use in families

— Arrest and parole Corrections department

Source : Deutsche Bank, based on Deloitte analysis.

Deutsche Bank Research | The Future of Money | September 2022 15

Proof in a service: Proof on demand: Proof in Consensus:

– Marriage register – Proof of assets – Proof of Work (PoW)

– Land Registry – Proof of identity – Proof of Possession (PoS)

– Supply chains – Proof of authenticity – Evidence of authority

– Asset registration – Evidence of individuality – Proof of existence

– Transactions between – Proof of ownership

Deutsche Bank Research | The Future of Money | September 2022 16

Web 3 and the metaverse: use of

Emerging digital currencies as

Online payments and Shift to new online

Deutsche Bank Research | The Future of Money | September 2022 17

1855 1876 1998 2004 2007 2007

2014 2013 2012 2011 2010 2009

2015 2015 2015 2015 2015 2016 2017

Technologies HTML/ FTP Flash, Java, XML RDF, RDFS, OWL