A trend among companies building products with NFTs is that they start off by taking custody of the NFTs for users.
When NFTs are in the custody of users themselves, they truly own the asset, which means they can do with it whatever they want such as placing it for sale on other marketplaces or using it in other games and experiences. Assuming custody means taking control.
Yet for users to custody their NFTs, they need to hold them in their crypto wallets and manage their private keys, which introduces more complexity.
To make it easier for users, companies custody the NFTs themselves by controlling the private keys of the wallets the NFTs sit in.
On Sorare, for example, the NFTs users hold are by default in the custody of Sorare. A user can access their NFTs by logging into their Sorare account with a username and password, which is a more familiar experience than accessing a crypto wallet with a private key.
At this point, because Sorare controls the private keys, users don’t truly own their NFTs, which means that Sorare can set the rules on what can or cannot be done with them.
Now let’s assume that a user wants to take an NFT and place it for sale on another platform like Opensea. To do so, the user needs to assume full custody of the asset, which he can do by pressing “mint and withdraw to Ethereum.”
Once the user has done so, the NFT is transferred to a specified wallet he owns the private keys to and he can go ahead and place it for sale on Opensea. If the user wants to take the card back to Sorare and use it in the weekly competitions, he can hit “deposit cards.”
By initially taking custody of NFTs, companies like Sorare can address a mainstream audience from the onset, while allowing a subset of users to take custody themselves. This comes with more complexity, but also more utility as a result of NFTs’ native interoperability.
Today though, we're not yet at a point where the value derived from interoperability is higher than the additional cost of having to learn and deal with self-custody of an NFT for the majority of users. For example the main thing that can be done with a Sorare card outside the platform, is to list it on Opensea. What would make it more interesting is if the same NFTs could be used in far more games and experiences.
As an example, one can imagine the creation of an experience between Sorare and the football clubs it has licenses from. I’m an Arsenal fan and collect a lot of Arsenal cards. Each time I buy the NFT of an Arsenal player on the Sorare primary market, Arsenal receives a percentage of the fee. It would be neat if my purchasing history would be reflected in the experience I get when I log onto the Arsenal website with a crypto wallet. The website would be able to tell through the NFT holdings in my wallet which of their players’ NFTs I own, clearly see how much I have spent on the NFTs, calculate how much has ended up in their pocket, and as a result give me a personalised experience (i.e. access to gated parts of the website, discounts to tickets / jerseys, other fan experiences).
In order for more people to take control of their NFTs and experience the uniqueness of true ownership, the interoperability of NFTs needs to be leveraged to a greater degree. We already have the technology, now we need the experiences.