First Class Research Report: Terraforms by Mathcastles

Project Overview

Terraforms is a series of NFTs created by Mathcastles, released in December 2021, with a total11,104 pieces. The project was developed by two anonymous creators and did not require external financing. The NFT sale in 2022 will receive a total of approximately US$6 million. The current market value of the project is about 20k ETH, and the transaction volume exceeds 30k ETH, ranking 4th among art NFT projects.

The slogan of the project is “The best virtual worlds are imagined, not simulated”。Terraform is essentially a set of data containing color, change, cycle and other information. GIF animations, 3D pictures, etc. can be presented through some visualization tools. Its data is completely stored on the Ethereum blockchain, and players can also create and modify it through smart contracts.

The main advantages of the project are: \
1) The product is strong, using C language to compile ASCII characters to make animated graphics, and the hidden attributes such as Daydream, Pulse, Keystone, etc. are innovative and interesting; \
2) It has a good community atmosphere, and many tools developed by enthusiasts have also increased the playability of Terraforms.

But there are also certain risks: \
1) The audience of artistic NFT is small, and the narrative is relatively simple. It lacks the empowerment of games and the metaverse. If there are no other gameplay and highlights in the future, users may be lost; \
2) In the short term, the NFT market is generally in a state of recovering trading volume but declining prices, which poses greater risks.

Generally speaking, artistry and innovation are the moats for art-type NFTs, and the Terraforms project itself has strong product capabilities and a good community atmosphere. It can be regarded as an art-type NFT with excellent market performance and products.

To sum up, the project deserves attention.

Note: The final assessment of [Follow]/[Not Follow] for the first-class warehouse is the result of a comprehensive analysis of the current fundamentals of the project in accordance with the first-class warehouse project evaluation framework, rather than a prediction of the future price rise or fall of the project token. There are many factors that affect the price of tokens, and project fundamentals are not the only factor. Therefore, just because the research report is judged as [not paying attention], it does not mean that the project price will definitely fall. In addition, the development of blockchain projects is dynamic. If a project judged by us to be “not concerned” undergoes significant positive changes in its fundamentals, we may adjust it to “concerned”. Likewise, if a project judged by us to be “not concerned” If a project that is [Follow] undergoes major malignant changes, we will warn all members and may adjust it to [Not Follow]. \

1.Basic profile

1.1 Project Introduction

Terraforms is a series of NFTs created by Mathcastles, released in December 2021, with a total11,104 pieces. The slogan of the project is “The best virtual worlds are imagined, not simulated”。Terraform is essentially a set of data containing color, change, cycle and other information. GIF animations, 3D pictures, etc. can be presented through some visualization tools. Its data is completely stored on the Ethereum blockchain, and players can also create and modify it through smart contracts.

1.2Basic information

2.Project details

2.1Team

Terraform is developed by the Mathcastles team, which consists of two anonymous developers: xaltgeist and 0x113d. There is less public information about these two developers. The only information currently shows that 0x113d is an artist.

2.2 Funds

Terraforms did not engage in external financing. The team sold 9,800 NFTs at a unit price of 0.16 ETH in December 2021, totaling 1,568 ETH, which was approximately US$6 million converted to U.S. dollars at the then price.

2.3 Products

Terraforms is a collection of NFT works created by the Mathcastles team. All 11,104 Terraforms form a 20-layer fictional structure - “Hypercastle”, as shown in the picture below. Hypercastle is often called “castle” or “mathematical castle” by players. It is a dynamic, changing, three-dimensional three-dimensional structure, and each of its components is called a parcel (each parcel is also a Terraform).

Figure 2-1 Hypercastle

Parcels form Hypercastle like building blocks. The three position features of Terraforms, Level, X and Y, represent the location of this parcel in Hypercastle. Level refers to a certain layer among the 20 layers; 2D plane coordinates in the layer. In addition, Terraforms also has 5 features including Biome, Chrome, and Mode.

Table 2-1 Characteristics of Terraforms

Each Terraform is essentially a set of data that contains every feature of Terraform. On the most common web pages or secondary markets, Terraform is usually displayed in the form of a flat GIF image, as shown in the figure below (the lower left corner is the current Terraform floor plan). In addition to positional features, several other features of Terraform determine the images it displays. All Terraforms are images composed of some ASCII characters. The Zone and Biome characteristics determine the color and character group used by this Terraform respectively, as shown in the red box in the figure below (characters and colors are displayed at the same time); and Chroma and? ? ? The characteristics determine the speed of the color change and the cycle speed of the characters when Terraform is used as an animation.

Among these features, some features have a certain degree of scarcity due to their small number. But in addition to quantity, Level also indicates the height of the Terraform. The official setting is that the highest 3 floors and the lowest 3 floors are relatively scarce, and the highest 3 floors are better than the lowest 3 floors.

Figure 2-2 Terraforms visual information

Another important feature for Terraforms is Mode. There are 5 modes in total:Terrain, Daydream, Terraform, Origin Daydream and Origin Terraform. Terrain is shown on the left in the figure below. From the plan view, it is some random terrain maps, which is also the initial state of Terraform. Daydream, on the other hand, clears these terrains and turns them into the same symbol, as shown in the middle picture below. At this time, players can freely edit and draw on the picture. Terraform (referring to Mode) is an NFT that is fixed after Daydream (and can be changed back to Daydream at any time), as shown on the right side of the figure below. Origin Daydream is a Terraform (referring to NFT) that is originally in Daydream mode. Its Mode after editing and saving will become Origin Terraform.

Figure 2-3 The Mode on the left is Terrain, the middle is Daydream, and the right is Terraform (referring to Terraform Mode)

In its initial state, when Terraforms was first released, there were only two Terraforms: Terrain and Origin Daydream. The conversion relationship between these Modes is shown in the figure below. Terrain can be converted to Daydream, but this conversion is one-way, that is, Daydream cannot be converted back to Terrain; Daydream and Terraform can be converted to each other. The conversion relationship between Origin Daydream and Origin Terraform can be converted into each other just like Daydream and Terraform; the difference is that the Mode of Origin Daydream exists from the beginning, rather than being changed by Terraform. It can be understood asA rare feature of Terraforms that sets them apart,The Mode converted by Origin Daydream is called Origin Terraform.

Figure 2-4 Mode conversion relationship

After converting Terrain to Daydream, Terraform will become a unified character (Daydream is usually described as blank in the project). At this time, players can create with characters in the Biome character group of the Terraform, and it will also change Metadata of Terraform; if the Terraform (referring to the NFT) is locked at this time, the data will be saved on the chain, and the Mode of the NFT will be changed from Daydream to Terraform (referring to one of the Modes). Players can also not save or change Daydream, and the Mode of the NFT will always be expressed as Daydream and displayed in the form of blank (same character).

Origin Daydream and Daydream are not much different in appearance. Origin Daydream is mainly due to its original scarcity. In theory, only Origin Daydream is considered a rare NFT of Terraform, with only 165.

In addition, due to different visualization effects, Terraform also has some hidden attributes, as shown in the following table:

Table 2-2 Hidden attributes

There is a SEED parameter in the source code of Terraform. When Origin’s SEED>9000 or non-Origin’s SEED>9970, a special pulse effect can be produced. These SEEDs are called X SEED. There are 14 Origin Terraform and 34 Terrain with X SEED, and these NFTs can most clearly see the pulse effect. But are there any other SEEDs that match certain requirements? ? ? Features will also produce some pulse effects. The community calls this type of SEED X SEED II. There are about 5,000 of these NFTs.

The hidden attribute of Elevation is not visually obvious. Instead, you need to enter the Token ID into the tokenSupplementalData function of Etherscan to return an elevation value. The community regards this value ranging from -4 to +4 as another value besides Level. A location feature. If a Terraform has an elevation value of +4 at Level 20, then this Terraform can be considered the NFT with the highest “absolute value” in Hypercastle.

Keystones are the most interesting hidden attribute of Terraform. The NFT with this hidden attribute looks like a mini map of the level where Terraform is located. The project team said there are 50 to 100 such NFTs, and 68 have been discovered so far. Basically, each Level has 2 to 4. The Modes of these Terraforms are basically Terrain, with only two Daydreams, one Origin Daydream and one Terraform (referring to Mode).

In addition to the NFT itself, Mathcastles and the community also provide some Terraforms-related tools, such as visual rendering tools, tools to help users draw in Daydream, tools to interpret on-chain data, and nearly 10 other tools. Such tools have increased the playability of Terraforms to a certain extent, but Terraforms has not developed a larger ecosystem like other NFT projects, but only improved its work itself.

Figure 2-5 Some tools provided by the community

Summary: Terraforms are data stored on the Ethereum chain, including data with characters, colors, changes and other attributes. They are displayed as flat images, which are dynamic images composed of ASCII characters. The project has interesting settings such as Daydream, X SEED, Keystone, etc., and has strong product strength and innovation. The project team has only two anonymous creators and will receive approximately US$6 million from the sale of the NFT in 2022. Otherwise, there is no external financing.

3.develop

3.1 History

Table 3-1 Terraform major events

Terraforms is an artistic NFT. Its works basically do not require maintenance after release, and the team has no idea of ​​developing an ecology. Therefore, the subsequent team and community just launched some tools to increase the playability of Terraforms.

3.2 Current situation

Currently (March 27, 2023), Terraforms’ total trading volume exceeds 30k ETH, with a floor price of 1.8 ETH. Nansen’s market value estimate for the project is 17.7k ETH, and NFT GO’s market value estimate for the project is 21.2k ETH. In terms of market value, Terraforms ranks around 50th among all NFT projects and 4th among art NFT projects.

Figure 3-1 Trading volume and price data, source: Nansen

Judging from the transaction volume data, in addition to the high transaction popularity when the project was first released, the transaction volume will be low for most of 2022. By October 2022, Terraforms’ trading volume had increased, but only for a while. Later, from December 2022 to January this year, Terraforms had a larger increase. The entire NFT market began to rise in mid-February 2023 and declined slightly in March. The trading volume of Terraforms was similar. Overall, the market is hotter this year than in the second half of last year.

As you can see from the chart above, the transaction volume from the end of last year to January this year was similar to the transaction volume in February this year, but the average price in February dropped significantly. As can be seen from the figure below, the number of transactions in January was much lower than that in February, but the transaction volume was similar between the two, so there was a big difference in the average price.

Figure 3-2 Transaction number data, source: Nansen

Judging from the floor price and average price, Terraforms has basically experienced a substantial price increase since October last year, from about 0.5 ETH to 1.8 ETH. Later, in mid-December, both volume and price experienced a large increase, with the highest floor The price is 4.5 ETH. However, from mid-to-late February to now, prices have dropped somewhat, but overall they are still higher than last year.

Figure 3-3 Transaction price and floor price data, source: NFT GO

Judging from the transaction information of Giant Whale (the green circle in the picture below is the purchase of Giant Whale, and the orange circle is the sale of Giant Whale), when the project was released, Giant Whale bought more and sold less. Later, in February 2022, Giant Whale bought more and sold less. Whales sold at prices higher than the floor price and average price, and then from May to June, giant whales bought at prices close to the floor price and average price. At the same time, in June, giant whales sold at prices significantly higher than the floor price and average price. Sell ​​at a lot of average price and floor price. Then in October 2022, the project market became more popular, the buying and selling volume of giant whales increased, and at the same time, the buying and selling prices increased to a certain extent. But in November, as prices fell back, whales sold more and did not buy. In December, Terraforms’ trading popularity increased again, whales also appeared in transactions at this time, and the price also rose accordingly. But in March this year, as the price dropped and the market became less popular, some giant whales began to buy.

Figure 3-4 Whale transactions, source: NFT GO

Judging from the data of Top Sales (the NFT with the highest transaction price in history), the transaction prices of the top ten Terraforms span a wide range, with prices ranging from 18 ETH to 319 ETH. However, the Terraform transaction of 319 ETH was in January 2022. That is, when the project was first released, the market valuation at that time may not be rational. If you exclude this Terraform, you can find that only one other Terraform was traded during that period, and the transaction price was 53 ETH. In addition, the rest of Terraforms were traded between the end of 2022 and the beginning of 2023, with the transaction price ranging from 18 ETH to 135 ETH.

Figure 3-5 Top Sales, source: NFT GO

In terms of holders, according to NFT GO data, there are 1,917 holders in total, includingThe proportion of Unique Holders is lower - only 19%. Among them, there are 29 giant whales, accounting for 1.51%, holding 12.29% of NFTs (1,218 pieces), and 571 blue chip holders (Blue Chip Holders), accounting for 29.79%, holding 38.18% of NFTs (3,784 pieces).Whale and blue chip holders collectively hold more than 50% of NFTs. Judging from the changes, the number of holders of Terraforms is constantly decreasing, with a decrease of nearly 20% compared to the highest number of holders. Judging from the situation of whales and blue chip holders, the data is missing in some time periods, but overall, blue chip holders are relatively stable, while whales decreased in November last year.

Figure 3-6 Holder data, source: NFT GO

Judging from the holding time data, Terraforms holders basically hold it for a long time, and there are fewer new players entering. Only a small number of new players entered at the end of last year. In February this year, the number of players who have held it for 3 months to 1 year has decreased, while the number of players who have held it for 1 month to 3 months and more than 1 year has increased.

Figure 3-7 Holding time data, source: NFT GO

Judging from the number of holdings, most Terraforms players still hold a small number of NFTs, but the total number of Terraforms holders is less than 2,000, so these players with a small number of holdings also hold a smaller proportion of NFTs. . Looking at the situation of giant whales and blue chip holders, a small number of Terraforms users hold the majority of NFTs, and the proportion of Unique Holders is lower.

Figure 3-8 Holding quantity data, source: NFT GO

The picture below shows the positions of large investors. Overall, the positions of several large investors are constantly increasing. Their holdings increased significantly in August last year, October and January this year. The top five large investors hold about 1,200 Terraforms in total, accounting for about 10%.

Figure 3-9 Positions of large investors, source: Nansen

However, the positions of Smart Money are opposite to those of large investors. Overall, the positions of Smart Money have decreased. Some Smart Money positions increased to a certain extent at the end of last year and the beginning of this year. However, by February this year, most of the Smart Money positions were gone. reducing their holdings.

Figure 3-10 Smart Money positions, source: Nansen

3.3 The future

The Mathcastles team does not have a clear roadmap or plan, and may continue to launch some related tools for GIF images and 3D visual rendering in the future. In addition, the project has also cooperated with projects such as ZIELCHAIN ​​and FINILIAR, and there may be profit opportunities such as airdrops and whitelists in the future.

Inspired by Terraforms, the community has also developed many new ways to play code art, such as Little Block Machines and Terraflows. A community with a good atmosphere has formed around Mathcastles, and the team and community may launch new code art works in the future.

Figure 3-11 Terraflows legend

Summary: Terraforms is an art NFT in terms of product positioning. The focus of the project is on the product, which is basically a one-time delivery. Therefore, the team has not expanded its IP and ecology. After the project went online, the community had a good atmosphere, and some enthusiasts also spontaneously developed related tools. It is worth noting that in terms of holders, Giant Whale and Smart Money have more NFTs in Terraforms, while Unique Holders have a lower proportion. Although the current market popularity has declined, the current floor price of Terraforms is still more than ten times higher than the original launch price.

4.economic model

Neither Terraforms nor its development team Mathcastles have tokens and currently have no plans to issue tokens.

5.compete

5.1 Industry Overview

Nearly 10 projects at the head of the NFT track and several other NFT-related research reports in the current first-class warehouse of the track analysis have been basically covered, and the fundamentals of most projects have not changed, so this article will be more biased towards the current situation for analysis. If necessary, you can refer to the research reports on other NFT projects in First Class Warehouse.

Figure 4-1 NFT market data, source: NFT GO

The NFT market and the entire cryptocurrency field have been relatively sluggish since May last year. Their trends are basically the same. However, the encryption market has rebounded in January this year in terms of transaction volume and market size, while the NFT market is still relatively cold and has not matched the trend. The market is in sync. The trading volume of the NFT market increased significantly in mid-February this year, but the prices of most NFTs did not rise, especially the blue-chip index fell instead.

Figure 4-2 Blue chip index, source: NFT GO

As you can see more intuitively from the figure below, Blur has contributed a lot of market transaction volume since the end of last year, and its transaction volume has further increased this year. Overall, the NFT market trading volume in recent months has largely come from Blur.

Figure 4-3 NFT market transaction volume data, source: Nansen

As you can see from the chart below, Smart Money operations have become more frequent since mid-February, with larger buying and selling volume, but there are no obvious signs of changes in net funds.

Figure 4-4 Smart Money operation, source: Nansen

Further segmenting the NFT market, we can find that PFP is still the mainstream of the market, and the market value and transaction volume of other collections, games, and art are not high. At present, art NFT accounts for about 9% of the market value, and the transaction volume in the past month accounts for about 7%. Compared with PFP, there is still a big gap.

The picture below shows the situation of several Nansen NFT indexes (the value data of buying the index fund for US$1,000 on January 1, 2022). It can be seen that the overall market was relatively sluggish during this period. As of today (March 27, 2023) day) all index returns were negative. From the end of last year to the first quarter of this year, the income of the art NFT index was higher than that of other indexes. However, the market fell again after March. Currently, the game index has the largest loss, and the other indexes have relatively similar losses.

Figure 4-6 NFT index, source: Nansen

Judging from the recent situation, the emergence of Blur has brought some market heat to the NFT market, but the increase in transaction volume has also been accompanied by a decrease in the price data of most projects. If market enthusiasm decreases in the future, how to maintain prices will be a problem. Overall, the current NFT market opportunities and risks coexist.

5.2 Comparison of competing products

Terraforms are code-visualized works of art, and both OpenSea and NFT GO classify them as artistic NFTs. When OpenSea classifies art NFTs, some art NFT platforms (Art Blocks, etc.), PFP-derived NFTs, and social NFTs are also classified into the art category, which is not accurate. NFT GO excludes NFTs such as music and photography when classifying art NFTs, and basically narrows the scope to flat images, but it also includes some art NFT platforms.

Figure 4-7 Top ten art NFT projects, source: NFT GO

Judging from market data, the overall market size of art NFT is not large, much lower than the market size of PFP. As you can see from the picture above, one Art Blocks project has a market value of 300k ETH, accounting for 37% of the entire art market value. But in fact, Art Blocks is not an art NFT project, but an art NFT platform, ranking among the top Foudation, SuperRare, BEEPLE and MakersPlace among the top ten are actually art NFT platforms.

If several art platforms are excluded, according to NFT GO data, Terraforms, CyberBrokers, Deafbeef, Friendship Bracelets by Alexis André and Karafuru remain among the top 10 art projects by market value.

Table 4-1 Comparison of competing products

The distinction between art NFT and PFP is relatively blurry. CyberBrokers and Karafuru are actually PFP projects. Their products and development routes are very similar to PFP projects such as BAYC. Friendship Bracelets by Alexis André is not actually an art NFT, but a membership NFT. If these projects are excluded, Deafbeef is the only project with a higher market value for art NFTs.

5.3 Competitive analysis

5.3.1Art vs PFP

There are currently many classifications of NFT, but in fact the differences between NFT categories, especially PFP and art categories, are not obvious. Judging from the several PFP projects at the head, they all have more or less blessings from some artists, and their products are also related to artistic works. For example, CloneX has the support of artists such as Takashi Murakami and Jeff Staples; the founder of Doodles is himself a well-known illustrator.

At the same time, it is precisely because of the blessing of these well-known artists that many projects will have higher valuations and premiums in the market. The market value of the leading BAYC and CryptoPunks is around 800k ETH; while the market value of blue-chip NFT has declined at this stage, but it is still around 100k ETH. Compared with these projects, Terraforms has a large gap in terms of transaction volume and market value, which is basically the same as the market value of the NFT projects derived from these projects. However, there are also some projects that rely entirely on celebrities to “bring goods”, such as Jaylen Bear. Such products are not strong and prefer to be hyped, and their market performance in the later period is also poor.

5.3.2Operating model

The biggest difference between PFP and art-type NFT is its development route or operating model. PFP is more commercial and usually has a sustained profit model. This makes PFP projects more ambitious in terms of narrative. Most of them are involved in the metaverse, games and other fields, and they all have a rich series of derivative NFTs. The reason why the leading NFT projects have achieved good market performance is largely due to the operational capabilities of the project parties.

For many Web3.0 users, the cryptopunk spirit is one aspect, and the investment attributes are also more important. Headline projects such as BAYC have strong value-added capabilities in the early stages, and they continue to release derivative series of NFTs and provide other potential benefits to users. Artistic NFTs such as Terraforms are more like a one-time deal, with less room for profit for users (although early users can also make good profits). There are basically no other derivative NFTs, and the team rarely updates them. project. This development model is more suitable for projects with strong product capabilities, where players pay for consumption rather than entirely for investment.

5.3.3Artistry and innovation

In terms of creative techniques or expressions, PFP projects usually use random combination to generate a large number of graffiti or cartoon-style avatars. This method allows the project to maintain the same style and facilitate mass production. PFP with bright colors and simple patterns is also easier for most people to accept. However, this method also makes the threshold for project creation low and stimulates market competition. Therefore, it is necessary to start from the aspects of artists, operating models, etc.

Compared with PFP, art projects pay more attention to their artistry and innovation. Terraforms and Deafbeef are obviously better in innovation. One of them uses ASCII characters to draw, the other uses C language to write audio and video, and the product content is more interesting. Projects such as Terraforms and Deafbeef are more recognizable and unique, making this type of work difficult to imitate. This makes their works smaller in audience, but more attractive to target users.

The difference is that if the total amount of NFT is taken into account, the total amount of Deafbeef and Elemental by Fang Lijun is not large. The current total amount of Deafbeef is less than 200 pieces, and the total amount of Elemental by Fang Lijun is 2022 pieces. Deafbeef’s market performance is particularly outstanding. Its total supply is only 164, but it has created a market value of 16k ETH and a trading volume of nearly 6k ETH. There are only 100 holders, and the Unique Holder ratio is 44%. Deafbeef maintains a high price due to insufficient supply (the current floor price of Deafbeef is about 70 ETH), but this also makes the entry threshold for users higher.

Figure 4-8 Deafbeef official website

However, compared to other art-type NFTs and even PFP-type NFTs, the biggest product difference of Terraforms is its Daydream mode, which gives players space to create freely. Before Terraforms, no NFT had similar functions. Players could only passively accept the cultural symbols and spiritual connotations of NFT, but Daydream provides a new way to play.

Summary: The current NFT market trading volume has picked up, but prices continue to fall, and opportunities and risks coexist. PFP is still the mainstream of the NFT market, and its market value and trading volume are much higher than other types of NFT. Terraforms’ market data ranks 4th among art NFT projects, but excluding NFT platform projects, its market value ranking should be 1st among art NFT projects. Compared with PFP projects, art projects such as Terraforms pay more attention to artistry and innovation, which is also their moat. Projects are basically delivered in one go, and projects with strong product capabilities also have good market performance. Among art projects, Deafbeef, which has strong product capabilities and a small total volume, also has good market performance.

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