How fashion brands are navigating NFTs and what’s next for the metaverse

For an explanation of key terms in the digital space, look to our explainer at the end of this article.

Case Study: Luxury giants Burberry and Louis Vuitton tackle in-game NFTs 

For the first time ever, Burberry has worked with a game developer to launch its own NFTs. Working with Mythical Games’ Blankos Block Party on a cute shark Blanko that can be purchased, upgraded and sold in-game, the brand moved into the digital space after the success of its own game, B Bounce, launched in 2019. Critically, the Burberry NFT doesn’t run on the energy-intensive Proof of Work crypto model like Ethereum, but rather through a private EOSIO blockchain protocol using a Proof of Authority model that is far less energy-intensive. 

Focused on discovery, these NFTs open up the fashion world to new digital channels and games that are there to tempt a younger consumer. In a press release, Rod Manley, Burberry’s chief marketing officer, noted that, “With this exciting concept, we are able to unlock genuine value for the gaming community by encouraging players to interact with our brand in an environment that celebrates art, design and exploration.” Coming from the official Blankos Twitter account, the Burberry NFT drop sold out faster than any other collaboration done by Blankos that preceded it, including the NFT drop with music artist Deadmau5.

Neda Whitney, svp and head of marketing at Christie’s, said, “NFTs prove that in spaces where digital fashion and skins are already a user behavior, the entrance of fashion brands into the conversation is a natural next step. The ability to allow users to not only buy digital items in the fashion space but to also have unique and, oftentimes, ‘1 of 1’ certificates of ownership adds a level of exclusivity that has always worked well within the fashion culture.” 

Louis Vuitton took a different approach, focusing on developing its continued support of the digital space in a novel way. It is already well-acquainted with the gaming space — it first launched a partnership in 2019 with League of Legends, a multiplayer online game from Riot Games. Nicolas Ghesquière designed a skin for one of the in-game characters, as well as a capsule collection. The brand also created a special case for the in-game trophy, a nod to its origins as a trunk master starting in 1886. 

The brand is continuing the journey through a collection of 30 NFTs that can be collected in its game 200 Anecdotes to celebrate its 200 year anniversary. Tying into the art space, Louis Vuitton has worked with the American digital artist Beeple on 10 of these NFTs. Interestingly, the approach to the NFTs is different from that of Burberry; the items are not sellable or exchangeable, existing only in-game. 

As most fashion brands are placing their NFTs inside closed systems, like with Balenciaga and Fortnite, the idea of having a virtual closet that moves across different gaming platforms and digital worlds is still not as widespread. Platforms like Polygon are looking to change that. Luxury house Dolce & Gabbana has created NFTs on the platform, prioritizing the way that its garments can be transferred across many digital “worlds.” Joseph Pallant, the founder of the Blockchain for Climate Foundation and an NFT expert, said, ​​”There’s going to be a lot of money in the NFT fashion space. Making that a creator-first [concept] and having that blossom into a whole new realm is so much more exciting than getting a Louis Vuitton handbag on some permissioned blockchain that lives within its own walled garden. With items in Polygon, it can live on lots of different metaverses and platforms; you can have it in Decentraland or Cryptovoxels. That interoperability is really important.” 

Case study: Charitable giving through NFTs at Rebecca Minkoff

For other brands like Rebecca Minkoff, NFTs offer a unique way of experimenting with avatars, developing brand engagement with a younger generation and committing to charities close to the brand, like The Female Founder Collective. After her phygital presentation during NYFW, Rebecca Minkoff said, “We have always been at the intersection of fashion and technology. So for us, NFTs were the next logical step in that progression. We wanted to test the idea of not just a 2D image, but also digital merchandise, as people begin to experiment with dressing themselves and their avatars and having more experiences online.” 

Based on the brand’s “I Love New York” collection, the brand worked with digital marketplace The Dematerialised on 400 digital garments that sold out in auction at OpenSea in 10 minutes. “We will definitely be expanding our digital presence in the future. We are planning something even bigger for February,” Minkoff said. Partnering with Yahoo as its Innovation Sponsor, the brand looks to create a metaverse with its garments. 

Speaking about the partnership with Glossy, Joanna Lambert, president and gm of consumer at Yahoo, said, “The opportunity for fashion in the digital world is massive. Immersive formats will reimagine what the fashion industry looks and feels like for the consumer.  We are committed to pushing the boundaries of digital shopability and, through fashion, we were able to explore how AR content strengthens the relationship between designers and their consumers. We look forward to leading creative technology by reimagining the consumer journey and immersing audiences in the things they love, showcasing what is possible as fashion and entertainment evolve. This first of its kind gallery was created to revolutionize the interaction with fashion and art, deepening the connection between the consumer and designer.” 

The appetite for NFTs is only growing, with many companies in the digital space, like Epic Games and The Fabricant, helping brands develop digital garment collections and archives to push them into the metaverse at an accelerated pace. Raffaella Camera, head of brands and advertisers solutions at Epic Games, talked about how the technology the company is working on with Unreal Engine can be used to create vast repositories of 3D assets.

“The idea of 3D experiences, and making them as high fidelity as possible, is to then let brands have a presence virtually wherever they want. It could be on their website or it could be through AR glasses. The end goal would be to try on a specific product and to be able to buy it. So if I think about Ferrari and what we did with them, it was about a variety of different things: We started from the creation of the car with a real engine, down to the stitches in the seats, in perfect in high fidelity, then we used that same asset on the web to let consumers configure the car and make it what they wanted. That’s direct commerce, in that sense. We then also used it to do virtual production for ads, especially during the Covid pandemic. Finally, we also brought it into Fortnite, so that players could drive it and test it virtually that way. So depending on where you are, there is tons of usability for anything that is 3D created.” These widespread applications are part of the reason why brands are getting invested in the digital space. Creating 3D assets doesn’t just mean more realistic imagery for its online space, but it also heralds a commercial opportunity for all of a brand’s goods in the NFT space. 

Will the sustainability issue with NFTs be solved?

The drive for NFTs, while great in reducing the physical impact that clothing production and waste have on the planet, is also contributing to climate change. Cryptocurrency mining to enact “proof of work” — the main source of energy consumption and carbon impact — has a detrimental impact on the planet and takes up valuable resources. These are already in short supply because of supply chain issues around the globe. 

However, more and more cryptocurrencies don’t operate on the PoW model, choosing to be more sustainable in the blockchain system by going with PoA (proof of authority) or PoS (proof of stake) system instead. Many fashion brands are prioritizing this when it comes to choosing partners to work on their digital collections and NFTs. 

The Fabricant, the original NFT creators behind the Iridescence dress that sold for $9500 in 2019, placed its creations on the Flow system created by Dapper Labs that uses the Proof of Stake model. Michaela Larosse, head of creative strategy and communications at The Fabricant said, “It was a very difficult decision to begin to iterate as NFTs. But because it’s the future of what we do, and it’s very important for creators, regardless of whether they are fashion creators or artists, we felt it was the right decision. It allows the creators to enter this space, giving people complete agency over their creations, allowing them to monetize their work and operate at a global scale without middlemen. Equally, it’s a very difficult decision to make right now, because of this extraordinary energy wastefulness that’s going on. So Ethereum 2.0 is a big step forward. I believe the reduction in energy when Ethereum flips to the proof of stake mechanism is a completely different way of validating.” According to the Digiconomist and the Ethereum creators themselves, the merge to the PoS will use at least 99.95% less energy than the current model, making minting fashion NFTs with the cryptocurrency a real step toward a sustainable digital fashion future. 

What’s next for brands launching into the metaverse?

The notion of access to the digital space is still difficult for those with traditional fashion backgrounds, making growth and innovation in the space slower than the demand of the industry. For many, the shift to technology takes years to master. After observing the space, The Fabricant are launching a new platform called The Fabricant Studio, where users without 3D technology knowledge can create digital items and mint their own NFTs. Michaela Larosse said, “To create digital fashion, you have to be quite tech-savvy, understand programs like Clo3D and be able to iterate in them. That’s a very long timeline to learn that kind of thing. We’ve tried to come up with a mechanism that allows people to customize and interact with digital garments that have already been created as templates and essentially create their own NFTs.” This shift to bring more people into the digital space is a way of breaking down the silos that typically exist in other craft professions, especially in fashion. 

In the same way, Epic Games, the founders of Unreal Engine — the system behind Balenciaga’s previous game and latest collaboration — have committed $100 million dollars to help creators and game developers in the 3D space. The Fabricant was a recipient of one of these mega grants for a fashion show featuring its designs. Another was Delz Erinle, founder and lead game designer for the Astra Game from Thrill Digital that combines a virtual world where players compete in-game to win real-life luxury fashion prizes. In the demo, a simply-clad heroine walks into a store where she cycles through a variety of looks that she can buy after competing in combat sequences with other players outside the “store.” Talking with the founder, he describes it as the first iteration, hoping to become a full metaverse with growing support. “We’re attracting an intersection of people we call ‘fashion gamers.’ These are people between the ages of 18 or a bit younger to 35, who are interested in fashion and also like to play games. It is a broad community, everyone from millennials and Gen Z to Gen alpha.” 

These metaverses — huge online worlds with their own currencies, communities and economies — are already starting to come into fruition. Star Atlas, an intergalactic planetary exploration game, already shows the possibility of an alternate gaming universe, where cryptocurrency economies are as real as those created in the real world. Better still, brands like The Fabricant are already getting involved, selling its NFTs before the game is launched this autumn. Cathy Hackl is an industry expert on the metaverse and has been a pioneer in developing and researching the space in her role as chief metaverse officer and CEO of the Futures Intelligence Group. “We’ll see an evolution of volumetric video and NFTs that will not only unlock unique access and experiences, but also take ownership of digital assets to new levels. We’re just scratching the surface of what NFTs will be able to unlock for fashion.”

The vocabulary of the future: 

NFT: A non-fungible token, or a unit of unique data stored on the blockchain system that can be traded and sold. Most digital files can become NFTs, but in the fashion industry, NFTs have mostly been through imagery. 

Crypto-currency: Different currencies that are used to trade digital items. The most popular are defined by three verification systems: proof of work like Ethereum, which has come under fire for using large amounts of energy through the mega computers needed to solve mathematical problems; proof of stake, where the person with a corresponding number of network coins verifies blocks; and proof of authority, where the users have to make themselves known to the network. The most popular cryptocurrency is Ethereum, although others also exist that are tailored to specific value environments. 

Blockchain: The system that allows NFTs to be verified through a record of transactions across several linked computers. What makes the blockchain unique is that records cannot be altered, making it a perfect system for traceability and transparency. 

Skins: Digital garments that exist in-game. Unlike NFTs, skins are rarely transferable through metaverses, but encompass anything that the avatar (online persona) is wearing. 

Metaverse: The future of the internet and a shared 3D virtual universe that users can exist in perpetually. The next generation of this online reality will be across many metaverses that all have different characteristics and communities.