The deal toy has gone digital. To commemorate the May 5 signing of Galaxy Digital Holdings Ltd.’s $1.2 billion agreement to buy BitGo Inc., Galaxy counsel Davis Polk & Wardwell LLP issued what it calls the first-ever nonfungible token, or NFT, deal toy.
“Davis Polk surprised us with the world’s first NFT deal toy, and the team at Galaxy Digital couldn’t be more excited,” said Christopher Ferraro, the company’s co-president and chief investment officer. “In our eyes, the custom NFT deal toy is indicative that crypto as a sector and asset class has arrived.”
Jai Massari, a partner in Davis Polk’s Washington office who provided cryptocurrency regulatory advice on the deal, also created an NFT deal toy, a six-second clip in which a standard-looking deal toy blasts off. “People love deal toys. They are a credential for an important project,” she said. “Given the transaction and given the times, I thought that an old-fashioned, in-real-life credential — a lucite block that sits in your office — seemed out of step. And NFTs provide the perfect way to create a verifiable credential that shows you worked on something exciting.”
An NFT deal toy is particularly appropriate for the Galaxy Digital deal, the first of more than $1 billion in the emerging crypto sector. Galaxy is a financial services firm focused on crypto, while BitGo is a crypto custodian — think Bank of New York Mellon Corp. (BK) or State Street Corp. (STT) but for cryptocurrency instead of securities. Both bitcoin and NFTs are based on blockchain technology. But while cryptocurrency is totally fungible, an attribute that allows it to function as money, a central aspect of NFTs is their lack of fungibility. That has made NFTs a subject of great interest in the art world, since they are a way to create a property interest in digital images.
Massari worked with the firm’s business development department and graphic designers to create the deal toy. They minted their NFT as a smart contract based on the blockchain underlying Ethereum, the second-largest cryptocurrency after Bitcoin. Recipients of the deal toy sent Davis Polk their public blockchain key, and the firm sent them the NFT back. “I wanted the NFT to look like a traditional deal toy, but to be a bit silly too,” Massari said. “It was a very fun project.”