Are NFTs experiencing a slow death, and if so, would anybody mourn them? Not everyone is a fan of non-fungible tokens, and the mere mention of the subject can elicit a dismissive or even hostile reaction online.
However, in the anonymous, social media arena, it’s difficult to judge whether diatribes are actually representative of the majority opinion, as people who are undecided or disinterested tend not to engage.
Volumes Down but Markets Are Functioning
Sales volumes are more easily quantified than opinions, and in that case, there can be no doubt that NFT trading activity is down heavily from the peaks reached in 2021 and the first half of 2022.
That said, one needs to be careful when assessing this data. Look at trade in USD terms, and reports have indicated a 99% drop from the peaks.
However, the USD value of ETH is highly volatile, and peak figures at the market top were a combination of prices rising in ETH at the same time as ETH hit all-time highs in USD. In ETH terms, sales volumes are comparable to just before the summer of 2021’s biggest surge in activity.
What’s more, NFTs are down from their highs, but they are still greatly advanced from where they were prior to 2021. Before last year’s bull run, NFTs were niche to the point of being unknown outside crypto circles, largely ignored even within crypto circles, and lacking the increasingly complex platforms and architecture that now support the NFT ecosystem.
Taking the view that committed NFT market participants operate in ETH, and that the value of ETH is likely to rise again in the future, then the current ecosystem looks relatively quiet, but functional and developing.
Furthermore, it makes little sense to single out NFTs for special criticism, when entire markets, both crypto-oriented and traditional, are operating precariously in a gloomy macro environment.
Early Brands and Key Collections
During the last NFT bull run (which was also the first real NFT bull run), a significant amount of crypto capital found its way into the NFT space, proto-brands were sketched out, and crossovers with art, gaming and finance were established.
Bored Ape Yacht Club, created by Yuga Labs, is now the most prominent NFT brand, and might plausibly become the first giant of web3. Also of unique significance is CryptoPunks, which is a landmark collection not only in crypto and NFTs, but in art history, too, with items picking up bids in the millions of dollars at auction houses Christie’s and Sotheby’s.
Bored Ape Yacht Club, bulked up with cultural clout and significant resources, is now building a metaverse and gaming platform, and it’s not the only high-potential new brand angling for a shot at defining the future online landscape.
Investment Is Being Secured
Collections that are highly valued within the NFT space, but still less well known more widely, have been securing funding to further develop their projects.
Chief among them are Azuki, Doodles and Moonbirds. Chiru Labs, the creator of the Azuki collection, is reported to be in the process of closing a $30 million funding round , and, as a result, saw the value of its NFTs jump on secondary markets.
Doodles, another big name collection, secured $54 million of funding in September, while Proof Collective, the web3 organization behind the Moonbirds collection and co-founded by Kevin Rose, raised $50 million in a funding round in August.
It remains to be seen exactly what kinds of platforms and products these brands will construct, but the ongoing experiment is presenting a novel business model. Essentially, projects have utilized leftfield art and design, coupled with what amounts to blockchain -based membership tokens, to drive interest in ventures that are yet to be clearly defined.
It’s an approach that could sound risky and insubstantial, and yet even now, in the depths of a severe bear market, funds are being raised and development continues.
Renewed Purpose after a Haphazard Summer
Mid-2022 was a period of uncertainty for NFTs. As crypto crashed and unwound and wider markets clouded over, NFT prices dropped sharply. As a result, NFT creators reacted by stripping down new projects.
Incoming collections were launched for free, without Discord channels (usually the chosen medium within which to build communities and distribute information), with no IP rights attached or roadmaps laid out and with tongue-in-cheek but forcefully dark artistic themes.
It was a nihilistic switch, at times creating the appearance of a directionless creative space. However, there are recent hints at a more positive atmosphere, in part due to some high-quality new projects selling out well-executed collections.
A notable launch has been Renga, a meticulously detailed art and narrative project by artist Daniel Isles. Renga is connected to web3 platform Wenew, which was co-founded by prolific digital artist Beeple (real name Mike Winkelmann), whose NFT artwork Everydays: The First 5000 Days sold for $69.3 million last year, helping to kickstart the first explosion of interest in NFTs.
Then there is home computing titan Atari, which celebrated its 50th anniversary with a sold-out collection of 2600 retro-styled NFTs, that will function as ecosystem access passes, and come designed for utility.
Doing consistent trade throughout market ups and downs, there is Ethereum Name Service (ENS), which sells web3 domain names as NFTs. Sought-after names are valued highly, and ENS reported at the beginning of September that August had been its third highest month in ETH revenue, indicating a belief in crypto and NFTs among forward-thinking buyers.
Looking back from the end of Q3, the NFT space as a whole has experienced a subdued, haphazard summer, but corrections were inevitable after the roller-coaster highs of the year prior. However, there is a sense of purpose now as the summer haze lifts, and it is evident that many investors, artists and developers remain fully committed to NFTs and web3.
