The Ukrainian government has announced plans to issue non-fungible tokens (NFTs) to fund its armed forces as they defend against a Russian invasion which shows no signs of slowing down.
NFTs can be understood as “one-of-a-kind” digital assets that can be traded like any other security or piece of property, but which have no tangible form of their own. Governments, companies, and individuals eager to show their support for Ukraine will now receive a unique, inimitable digital token.
The sale of NFTs represents a much quicker way of receiving funds than traditional fundraising practices, where money will become immediately available for deployment upon the sale of an NFT.
Crypto exchanges are doing all they can to improve the efficiency of digital asset donations to Ukraine, with Uniswap allowing token listed on its site to be exchanged into Ethereum and donated to Ukraine in a single transaction.
Mykhailo Fedorov, Ukraine’s vice-prime minster, announced the move in a tweet on Thursday, signalling that the government had cancelled previous plans to reward cryptocurrency donors with an airdrop, a free digital token routinely used within the crypto community to encourage participation in a project.
This comes after Ukraine’s initial campaign for cryptocurrency donations surpassed £38m, according to blockchain analysis company Elliptic, where Fedorov tweeted crypto wallet addresses that people could make transfers to in bitcoin, Ethereum, solana and polkadot.
It is unclear what these NFTs will consist of or whether they will be transferred for free with each donation or sold in auction, in a bid to raise additional fundraising.
Ukraine will become the first country to issue its own collection of NFTs, highlighting the potential for other countries to follow suit in the future.
One can only hope that crypto donors are doing so on the basis of philanthropy and not as mean to a more speculative end, that is to make a handsome profit on the second-hand sale of a Ukrainian issued NFT and ultimately profit off of war.
It will be interesting to see how Ukraine leverages crypto donations to strengthen its armed forces, combining these funds with the £200m raised through the issuance of war bonds last week.
Whilst the deployment of NFTs by Ukraine highlights the benefits of digital assets as a means of funding, the decentralised nature of crypto markets equally provides a way for Russia to evade the effects of economic sanctions and provide a hidden, more sanction proof route for money transfers needed to finance their relentless invasion.