N.Fungible: The start to the fashion community’s approach to sustainability & entering the metaverse
From design to marketplace management, N.Fungible ensures sustainability by simplifying the metaverse onboarding process through community participation
Today, after months of work behind the scenes, we launched N.Fungible, a launchpad, and marketplace for fashion brands in the metaverse. We conceptualized the idea in the first quarter of 2021 during a discussion with Carlo Rino on sustainability and the metaverse.
The most wasteful industry in the world
Since the beginning of the fashion industry, trial and error have been the primary mode of operation for product development. While brands try to curate their product assortment around consumer demand and market trends, the fashion climate, interests, and attention span of the consumers are constantly evolving. So despite the resources invested into a collection, there is no guarantee how much profit will come of it. We conceptualize a design, request samples, modify the design, launch it in stores, and hope it succeeds. When we analyze the performance of our products, we discover that 30% of our products are best sellers, 40% are average performers, and the remaining 30% are poor performers, which end up being discarded.
Looking at the bigger picture, the negative impact of the fashion industry on our planet is undeniable. Data from the Environmental Protection Agency reveals that 17 million tons of textile waste ended up in landfills in 2018, and 208,000,000 pounds of waste were generated by single-use outfits in 2019. According to a 2021 report from the World Economic Forum, the fashion industry is the planet’s third-largest polluter after food and construction. The number of garments produced annually has doubled since 2000 and exceeded 100 billion for the first time in 2014. Products that are unsold are either sent to jobbers, parallel importers or are burned to protect brand image. With the ever-increasing demand for trendy fashion each season, the need to develop a more sustainable system within the fashion industry is more pressing than ever.
The goal behind N.Fungible
Our goal was to develop a system that would reduce the number of discarded garments by only producing what the market actually wants and virtually removing the testing phase in between. When we started to uncover how we used to build communities around brands, we discovered that only the top 20% of our communities participated in community events hosted by the brands, while the remaining 80% were idle due to a lack of incentivization in long-term participation.
With this, we ventured to NFTs. What if we could just create the base designs and attributes, randomize them to create multiple versions of one product, and then let our community decide which one we should end up producing? This would promote sustainability as it would help to reduce the amount of waste produced by the fashion industry.
But in order for this work, we need to ensure that the community actively participates in order to guide the production of in-demand products. We can achieve this by rewarding our community and incentivizing long-term participation. To do this, we decided to pay our community the same royalties we would pay to partnerships with Warner Brothers or any similar partner for every bag sold.
The building blocks of N.Fungible
This is how the concept behind N.Fungible was developed. We will partner with brands, and before physically producing any of their new collections, we will create the base designs and traits, randomize them to generate 10,000 designs, and let our community decide which designs we should physically produce based on consumer demand by community voting and tradability of the designs.
For the brand’s community, there are two opportunities for profit. They can be owners of any bag within the NFT collection and specific NFT bags, which they hope will ultimately be produced in the real world. For every bag sold in the real world, our brand partners will pay 50% of the royalties to the community of all NFT bag owners and another 50% to the owners of the chosen NFT bag that is produced.
As an example, here’s how this works using Carlo Rino, contemporary leather goods and footwear brand that sells over 300,000 bags from its collection every year:
- 10,000 bags are randomly generated from base traits.
- Person A buys 1 NFT, which is produced physically due to getting the highest votes from the community.
- Carlo Rino sells 10,000 of these bags at US$250 per bag while paying a 7% royalty* to those who own the respective NFT bag design.
- From the US$2,500,000 in sales, US$175,000 will be paid in royalty.
- Of the total royalties, 50% (US$87,500) is paid to the entire community of NFT collection owners and the remaining 50% (US$87,500) is paid to Person A who buys the NFT bags that are chosen for production.
A system where everyone wins
With this ecosystem, both brands and consumers benefit from the growth. The brand knows what in-demand products to produce before they physically produce them. They can build an existing audience of customers ahead of a launch. They can also simultaneously reduce wastage and give back to the community through royalties, encouraging and ensuring their long-term participation. As for the community, they get the opportunity to have a say in the growth of their favorite brand and are rewarded for their continuous participation.
First step to sustainability
While NFTs do use some energy during their generation, this is far less than what is needed for the physical production of thousands of unsold items and then having to dispose of unwanted products. This is a step in the right direction for sustainability within our industry and the utilization of NFTs.
We help brands launch physical products into the crypto metaverse sustainably, handling everything from designing and launching to selling and managing in marketplaces. Going even further, we oversee the production to ensure our NFT holders, and brand partners are able to manufacture and sell the products physically through our relationships with key manufacturers and distribution partners. With the help of our experienced team, we ensure Digital Authentication of the collections as we enter the metaverse, exclusive to NFTs launched by N.Fungible. For more information, please visit nfungible.xyz.
*Note: We expect royalties to fluctuate between 7% and 10% per collection partner.