Redeemable NFT – The solution to bridge the gap between real and digital assets

The utility of NFTs is slowly expanding beyond the digital world. With Redeemable NFT, virtual assets are now not only encapsulated on the computer screen but will be applied, connected to real life through physical products or great reality experiences.

What are Redeemable NFTs?

Redeemable NFTs are alternative NFTs that show ownership of an item or service. NFT buyers can redeem their tokens for other assets, including real-world items or additional digital assets.

Redeemable NFTs were first introduced through the EIP-5560 NFT improvement proposal (on August 30, 2022) by Olivier Fernandez, Frédéric Le Coidic, and Julien Béranger. By adding extensions to smart contracts, developers will be able to validate the usability of Redeemable NFTs. If the NFT is in an exchangeable condition, the function will read “true”, if it is “false”, the NFT is no longer usable.

The purpose of Redeemable NFTs is to redefine the true value of NFTs while bridging the gap between the physical and digital worlds.

Through the use of smart contracts, users can use their NFTs to buy or exchange for physical goods such as clothing, collectibles, and event tickets. Even these tokens can be used to redeem exclusive rewards, services, and offers.

Pros and cons of Redeemable NFTs


  1. Physical assets

Redeemable NFTs expand the limits of digital assets, instead of 2D photos, NFTs can now exchange physical items and real services. This aspect makes them more attractive to investors looking for the potential to get real returns on their investment.


RTFKT X Nike Air Force 1 Genesis is a great example of a Redeemable NFTs collection. It includes 1776 pairs of sneakers, and users can only get a physical product when redeeming their respective NFTs. After a user exchanges an NFT for an object, the NFT will be burned or removed from circulation.

  1. Increase brand value

By creating a digital asset in exchange for a physical good or service, businesses can enhance the value of their products. These NFTs will create scarcity for the items sold, while giving customers the opportunity to own something of value.


Adidas has partnered with Bored Ape Yacht Club (BAYC), Pixel Vault (founder of PUNKS Comic NFT) and ‘gmoney’ (NFT collector) for the first release of 30,000 Redeemable NFTs on the Metaverse and collected $ 23 million in both selling products and earning large profits from royalties.

The use of Redeemable NFTs allows Adidas to promote itself on the Metaverse, while also surprising their customers, excited about a one-of-a-kind launch exclusively for NFT holders.

  1. Increase brand loyalty

Redeemable NFTs offer unique and non-replicable experiences and rewards. This enhances the importance of the product to customers, fosters a deep connection, and increases brand loyalty.


Soapy Joe’s, a San Diego car wash company, has been using Redeemable NFTs to increase demand for the service. It allows customers to collect NFTs from each of its stores after they wash their cars there and redeem them for rewards like keychains, theme park tickets, and free annual garage memberships.

During the two-month campaign, more than 10K Redeemable NFTs were sent to customers while increasing store sales by 3x.

  1. Create a new revenue stream

Redeemable NFTs provide the foundation for entirely new business models and revenue streams. Companies can self-issue Redeemable NFTs and use them to distribute rewards to their customers or even employees. This encourages increased interaction with the company’s products or services.


Nike took advantage of this benefit and successfully monetized secondary sales from the CryptoKicks collection by charging a 5-10% royalty fee. As a result, they generated $92 million in revenue without adding any infrastructure.

  1. Authenticity and provenance

By using blockchain to track the ownership and movement of Redeemable NFTs, developers can establish clear and verifiable records of the authenticity and provenance of NFTs. This will bring more transparency as Redeemable NFT accompanying exchange products move from one owner to another.

  1. Digital collectibles

Similar to other NFTs, Redeemable NFTs will be used to create digital collectibles, such as rare artwork or limited-edition game items. This allows users to own unique digital assets that drive market demand for these items.


  1. Restrictions apply

Redeemable NFTs are still in the infancy stages of adoption. Therefore, there are always inherent risks when using them because they have not yet undergone extensive testing and validation in the real world.

  1. User reach

NFTs are technology-based so it will be difficult to navigate and reach the masses because they require a certain level of technical understanding. This means that not everyone is comfortable with this technology, which limits the accessibility of Redeemable NFTs to a specific user base.


Wine company Vinsent faced these issues when it launched its first NFT issuance. While the campaign was successful, only 15% (private rounds) and 30% (public rounds) of NFT holders decided to exchange their digital assets for physical services — > this modest number makes the preservation of wine bottles a serious issue.

  1. Fraud risk

Because the concept of Redeemable NFT is still quite new, leading to the risk of fraudulent activities taking advantage of vulnerabilities from user knowledge. So you must be very cautious and take the necessary precautions when investing in NFTs to minimize risks as much as possible.

  1. Information leakage

Another concern brands face with Redeemable NFTs is ‘doxing’. This term refers to tying real-life identities to online identities and makes customers hesitant to redeem NFTs because it involves the disclosure of personal information.


Redeemable NFT offers many opportunities for businesses in many different industries such as fashion or events. Although still in the early stages of adoption, the benefits clearly make them a potentially advanced technology to explore. Like any emerging technology, it is essential to be aware of the risks involved. However, with continued growth and widespread adoption, Redeemable NFTs will undoubtedly reshape the way we conduct business and interact with physical and digital assets.