What's a derivative?
In this article, I will be using the word "derivative" to describe NFTs that are commissioned in the likeness of another NFT. Derivatives are created by 3rd parties, no connection with the original artist(s).
Derivatives are on the rise because of Bored Ape Yacht Club's inclusion of "Ownership and commercial rights given to the consumer over their NFT". This addition has opened the opportunity for holders of an NFT to create a brand around the base NFT. This means users are free to capitalize on their NFT and create seperate works of arts without fear of the original artist coming to close your project.
Ownership and commercial usage rights is a win-win for the project owner and NFT holders. For owners of the project, you open the possibility for users to create their own derivatives and add value to the original project. For NFT holders, you are now able to create profit opportunities using your NFT.
Example of Derivatives
The base NFT in this case is my BAYC Ape #1248. Below is 3 examples of derivatives of the original NFT in Pixel, Cubist, and Cyber styles. Click on the links of the specific styles if you're interested in getting your own derivative.
Derivatives have the property of being extendable tradable social credibility. This opens up the opportunity to create value "derived" from the base NFT. Of course, this is dependent on multiple factors such as: the project, the holder of the NFT, the properties of the held NFT, style of the derivative, added bonuses from sale, etc.
What can derivatives be used for?
This is an unexplored place and there's much to test to see what sticks. Recently, @punk4156 created a derivative of his own punk with a McDonald themed bandana to comment humorously on the state of the market. This is an example of a derivative that works as a separate piece of art. However, there is no reason @punk4156 couldn't have added utility to his drop. As profile picture NFTs begin to flourish as newcomers look to identify themselves with their favorite community, I forsee more experimentation with derivatives deployment, utility, and value creation.
Are derivatives worth your time?
This opens up the opportunity to create value "derived" from the base NFT.
That is the biggest question in my opinion in regards to whether you should commission derivatives of your own. If you view yourself as someone who's wanting to root yourself into the crypto-verse and wish to create opportunities to allow other people to interact with you and your NFT, then I think derivatives hold a lot of potential for you. If you're in the NFT world mostly for trading aspect, it may be better to continue flipping other projects as you'll most likely feel uncomfortable holding NFTs for long term if you're a flipper.