2023 H1 NFT Industry Overview
(The views and comments mentioned in this article are the author’s personal opinions and do not constitute any investment advice.)
The NFT bull market’s heyday was short-lived, spanning just a year. Starting in early 2022, we witnessed a substantial drop in NFT trading volume, and during this time, the market echoed with doubts and uncertainties (FUD). But amidst these challenges, what’s in store for the market’s growth? In this article, we’ll give you a quick overview of the current industry landscape (please note that some information hasn’t been updated to the second half of the year).
NFT Market Trading Volume
In March 2022, the NFT market hit its peak, boasting an impressive overall value of $35 billion, as per data from NFTGO. However, what followed was a rapid descent, akin to a sudden storm. Despite the continuous efforts of industry leaders and the emergence of new NFT marketplaces during this period, the market remained lackluster. This downturn led many to ponder whether the NFT market had entered bubble territory.
As 2023 began, the NFT market experienced another significant surge in trading volume, raising hopes of a potential NFT bull market revival. Yet, just as optimism started to spread, it proved short-lived, lasting only for three months. Soon after, it reverted to a chilly trading climate. As of today, the overall market value stands at approximately $4.3 billion.
Additionally, looking at the charts from Holders & Traders, we can observe some clear trends. Over the past year, the number of Traders has seen a sharp decline, decreasing by nearly 40% compared to the same period last year. Conversely, the number of Holders has been steadily increasing, showing a 40% growth compared to the previous year. From these charts, we can draw a few insights:
1. The recent overall cryptocurrency price decline can be attributed to the decrease in traders. Furthermore, the significant drop in blue-chip projects has eroded confidence among many participants, leading to a temporary halt in activity and causing a lack of market liquidity.
2. When observing the market in a cyclical context, it seems to be in a period of calm after the bubble. The key to a turnaround lies in the emergence of positive catalysts such as new concepts, applications, and gameplay, as well as an increase in the price of BTC, which often drives the entire cryptocurrency sector higher.
3. Judging from the signs of an increasing number of Holders, when these positive events occur, it’s probable that trading volume and liquidity will regain an upward trend.
NFT Trading Platform Comparison
Before December 2022, OpenSea dominated the NFT space by a significant margin in terms of trading volume and user numbers. It wasn’t until the launch of the Blur platform that we witnessed explosive growth in trading volume. Blur, functioning both as a direct trading marketplace and an aggregator, quickly gained a substantial market share due to its efficient and user-friendly platform, zero transaction fees, and token airdrops. This played a significant role in driving the surge in trading volume at the beginning of the year.
From January to April 2023, Opensea and Blur were in fierce competition. In response to Blur’s strong presence, Opensea introduced limited-time policies such as fee waivers and customizable royalties. As of today, Blur has maintained its top position in trading volume over the past year. However, Opensea still boasts a larger user base among traders. These two platforms can be considered as the frontrunners in the current NFT market.
NFT Transaction Volumes Across Blockchains
According to CMC’s 2023 NFT market analysis released in May, we have data on NFT transaction volumes for various blockchains in April 2023. Ethereum still dominates NFT transactions, accounting for nearly 75% of the market. The primary reason for this is that most blue-chip projects are currently built on the Ethereum blockchain.
Additionally, due to advantages in transaction fees and efficiency, the Polygon blockchain has adopted an aggressive expansion strategy in the NFT market. It collaborates actively with Web2 companies, major consumer brands, and blockchain gaming companies, making it a competitive player. Ethereum-based blue-chip projects like Pudgy Penguins and Doodles have also announced plans to deploy their projects on the Polygon blockchain.
Initially closely tied to the FTX exchange, Solana faced a setback with the exchange’s closure, leading to a gradual decline in NFT transaction volume.
NFT Blue-Chip Projects
According to data compiled by NFTGO, the top ten NFT projects in terms of market capitalization, often referred to as blue-chip projects, collectively account for approximately 50% of the entire NFT market’s value. Among them, CryptoPunks make up roughly 18%, while Bored Ape Yacht Club (BAYC) constitutes about 9%.
NFT Project Overview: Key Events, Floor Price, Listing Rate, and Number of Holders (as of 2023/09/28)
Crypto Punks
- Floor Price: 45.5 ETH
- Number of Holders: 3,700
- Listing Rate: 10.58%
Crypto Punks, one of the most prestigious projects in the NFT realm, was launched in June 2017 with a total supply of 10,000 units, and notably, they were distributed for free. It is often hailed as the first NFT developed on the Ethereum blockchain. Crypto Punks take the form of pixel art and gained significant attention when #5822 was sold for a whopping 8,000 ETH in February 2022.
In March 2022, Crypto Punks made headlines again when it was acquired by the Yuga Labs team. Yuga Labs expressed their intention to nurture a “community of builders” dedicated to creating derivative works based on Crypto Punks.
Bored Ape Yacht Club (BAYC)
- Floor Price: 24.5 ETH
- Number of Holders: 5,566
- Listing Rate: 4.8%
Bored Ape Yacht Club (BAYC) was publicly launched on April 30, 2021, with a total supply of 10,000 units. It marked the debut project by Yuga Labs. The initial minting price for BAYC NFTs was 0.08 ETH. In April 2022, one of these NFTs, #2087, was sold for 769 ETH.
Holding BAYC NFTs has its perks. Owners were able to convert them into Mutant Ape Yacht Club (MAYC) through a free airdrop, which at one point had a floor price reaching as high as 40 ETH. Additionally, BAYC holders received Ape Coin Airdrops as an incentive for contributing to the decentralized community.
The BAYC community is known for its strong loyalty, and the project’s team has continued to operate actively even during bear markets, frequently releasing updates. In late June, they launched the “HV-MTL Forge’’ game, resulting in a series of NFT transactions totaling nearly 40,000 ETH. Recently, it was announced that BAYC would collaborate with the fashion brand A Bathing Ape (commonly known as Bape). They will jointly introduce a groundbreaking “irreverent series” at the Apefest event in Hong Kong in November, marking a significant and exciting news.
Pudgy Penguins
- Floor Price: 4.72 ETH
- Number of Holders:4,535
- Listing Rate: 4.73%
Pudgy Penguins made its debut in June 2021 with a total supply of 8,888 NFTs, initially priced at 0.03 ETH each. During the bullish market phase and boosted by strong community engagement and celebrity endorsements, their cute and unique appearance created quite a buzz. At its peak, the floor price exceeded 7 ETH, with one NFT (#6873) selling for as high as 400 ETH.
However, during the subsequent bear market, the Pudgy Penguins project faced controversies. Rumors circulated about unpaid team salaries and even plans to sell the team, causing many holders to lose confidence. Simultaneously, the hatchlings from the airdrop were perceived as rudimentary, leading to doubts about the team’s commitment. Consequently, many holders sold their NFTs, causing the floor price to plummet to 0.5 ETH at one point.
In April 2022, Luca Netz, the founder of Netz Capital, acquired Pudgy Penguins and began rebuilding the project’s IP. This involved establishing an official media presence, Instagram community, and even releasing physical toys on Amazon in June, where 20,000 units were sold within 48 hours. In September, Pudgy Penguins made a significant move by being listed in 2,000 Walmart stores across the United States, greatly increasing its exposure and recognition. Currently, Pudgy Penguins’ floor price hovers around 5 ETH, making it one of the few projects that managed to defy the bear market trend and achieve upward momentum.
Azuki
- Floor Price: 4.12 ETH
- Number of Holders: 4,272
- Listing Rate: 3.83%
Azuki made its public debut on January 12, 2022. Excluding 1,300 whitelisted items, the remaining 8,700 were distributed through a Dutch auction, all minted within just four minutes at a price of 1 ETH each. Azuki actively collaborated with Web2 companies and established a DAO, swiftly capturing the attention of many. At its peak, the floor price surged to 30 ETH, with one NFT (#9605) selling for a staggering 421 ETH.
However, with the arrival of the bear market and the founder’s rug pull controversy, the floor price plummeted by nearly 67%. Azuki persevered in its operations, conducting airdrops, releasing physical apparel, and even creating the Azuki World metaverse. In June, Azuki introduced a new series of NFTs called Azuki Elementals. The official allocation provided Azuki and Beanz holders with ten minutes of priority minting time each, leaving many others disappointed. This series closely resembled the original PFP, leading to backlash.
To appease the community, the official team publicly acknowledged their mistakes and offered various incentives during meetings. They hinted at producing a series of animations, forthcoming project-related tokens, and establishing a loyalty points system, among other things.
Blue-Chip NFT Cross-Holding Rate
According to a report from NFTGo in April of this year, 11 blue-chip projects were compiled by @anymose96, and their cross-holding rates among all holders were compared. The Yuga Labs family of projects dominated the top three positions. MAYC had the highest cross-holding rate at 20.26%, followed by BAYC at 14.38%, and BAKC at 13.38%. On the other hand, Pudgy Penguins, Crypto Punks, and Moonbirds were at the bottom three. This indicates that each project operates independently with its own unique style.
It’s not surprising that BAYC and BAKC had a combined holding rate of nearly 50% since BAYC owners had priority minting rights for BAKC dogs. The cross-holding rate between Crypto Punks and Meebits reached 27.93% because both projects were sold to Yuga Labs. In August of last year, Yuga Labs announced that holders of these two projects would have the right to use Yuga Labs’ IP.
The above data suggests that, excluding projects operated or acquired by Yuga Labs, the cross-holding rates among various projects are not exceptionally high. This reflects a certain level of loyalty among the respective communities. Despite the current bear market conditions, there is anticipation for future project operations and new gameplay. Many are waiting for the next bull market to reignite excitement in these projects.
Key Takeaways
The recent NFT market remains in a bearish phase, with data from various platforms and markets indicating a gradual decrease in trading volumes across different blockchains. However, despite this trend, the number of NFT holders continues to grow. Blue-chip projects have been actively operating during this period, creating additional value for their holders. Furthermore, the competition among different blockchains is intensifying, with many eagerly partnering with large Web2 companies to position themselves for the future market.
We believe that the market is poised for a new phase of development and applications. This, coupled with improvements in the overall economic market and general liquidity, is expected to drive an upturn in NFT trading volumes, breaking free from the current bearish trend. While the core concept of NFTs based on Web3 derivatives remains unchanged, the development and diversification of application types will take time to unfold.
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