What Will Happen in the NFT Market in 2023?
The crypto market has experienced a real mess this year. Many disastrous collapses and bankruptcy of many big names in the industry have raised concerns and worries about the future of cryptocurrencies.
Villains in the crypto market now seem to be a trend. Notorious figures like Do Kwon, the founder of Luna, Sam Bankman-Fried (SBF) — FTX, etc. They might worsen the whole market in some ways, especially Sam Bankman-Fried and FTX fallouts took a real shot at the system of trust in cryptocurrencies.
NFTs are the new parts, yet they have enhanced the market and caused many controversies within the community. While the crypto market is chaotic, NFTs cannot get outside the effects. However, there are still many individuals and organizations making attempts to strengthen regulations and rebuild a transparent and trustworthy community for crypto users in general, and NFT investors in particular.
The previous article covered the issues the NFT market has encountered for downfalls and mentioned the prediction of DeFi growth in 2023. This article briefly walks you through some forecasts of NFTs in 2023. Hence, you can better understand practical insights into what we should expect from NFTs in 2023.
Huge ZK Adoption
Privacy has been a concern for crypto users in recent years, hence zero-knowledge (ZK) technology has won the spotlight this year. ZK technology uses a prover, a verifier, and algorithms to verify something with no important information revealed about the proof. ZK application enables many more interactions to take place on-chain in a private way. It will gain popularity next year as ZK proofs are lightweight and ease on-chain interactions to be scalable and efficient.
Succinct Labs, Risczero, and Espresso Systems projects use ZK proofs, VMs, and rollups for verification. ZK technology has particularly beneficial applications to identify as a crypto vertical without revealing sensitive data.
Vitalik Buterin, a co-founder of Ethereum, noted the hugeness of ZK technology in solving the on-chain information problem but its category might not be clear.
ZK technology has done wonderful jobs on bridges, transmitting messages and tokens with guaranteed security and correctness via succinct proofs. TradFi systems have applied ZK technology to credit scores and taxes.
Tokenizing Financial Assets
Real-world assets (RWA) are financial primitives showing a claim on an underlying asset and often generating yield for that asset. The expansion of the category has unlocked huge amounts of liquidity and utility so far, and 2023 can bring more assets shown on-chain in an accessible manner.
Stablecoins are considered the most popular application of an RWA in the market, with the category constituting three of the top seven tokens in terms of capitalization. Circle’s USDC and Maker’s DAI have been top-tier stablecoins and have both seen almost no tumultuous trends throughout the bear market.
On-chain communities have demonstrated demand for RWAs such as MakerDAO invested $500 million worth of DAI into U.S. treasuries and corporate bonds. Goldfinch, a company providing loans collateralized off-chain, has an active loan value of nearly $100 million. Jia allows business owners to take out blockchain-based loans and produces substantial yields for liquidity providers having RWAs and businesses.
Hence, 2023 will witness the growth of tokenizing RWAs, such as flash loans and real estate. Also, a surge of startups concentrated on helping TradFI institutions more in a regulatory-compliant way.
Leveraging Blockchain Data
Rich and open-source data is among the most superior features of the blockchain. As it enables deep analysis of on-chain activity. Effectively and responsibly leveraging this data eases the expansion of blockchain dapps (decentralized apps) and their use cases. Data unveils a huge amount about how blockchain is applied, top trends, user behavior, and the flows of on-chain money, etc.
Nansen, a blockchain analytics platform, keeps on being critical for more insights into on-chain analytics through wallet activity. Companies like NXYZ provide data APIs with no limited rates to tackle blockchain indexing. Definitive emerged in 2022 to boost user acquisition tooling and insights for both on-chain and off-chain activity. Yet, the significant developments in the sector are still not untapped. It will be in 2023.
The Continuous Growth of Developer Tooling Stack
Users always prefer something that brings more benefits but in the most simple process. Thus, developer tooling has a space to grow and innovate for a superior design and features to deploy Web3 projects. The stack can help to process the elimination of many repetitive and tedious parts of the job and motivate engineers to experiment with protocols on-chain. Critical players in the sector are Alchemy and Tenderly.
Regardless of the bear market, Alchemy engineers have conducted experiments with on-chain platforms more than ever. The company’s recent statement is that the number of engineers using its platform soar three times since the start of the year. In Sep 2022, monthly verified smart contracts were up 2.6 times, year over year. Also, 36% of total smart contracts were also deployed and verified in 2022.
As many Web3 developers get involved in the ecosystem, it is essential to provide them with solid tooling as they begin to build. Cross-chain tooling is particularly important, as it supplies composable software easing the launch of projects on multiple chains. By serving as the support for many crypto projects, developer tooling will smoothen the process in 2023 as more crypto use cases increase and a number of engineers look forward to entering the industry.
It is Time for Non-Fungible Tokens to Bloom
Any NFTs and cryptos that provide value to their holders will be able to grow in 2023. In-game NFTs, identity tokens, token-gated communities, software, and events are forecasted to expand in 2023. This year witnessed the beginning of a sector’s development in a technological and creative way. Yet, the space has not reached mainstream adoption. Meanwhile, the digital pure art industry is undoubtedly a massive vertical, with the application of NFTs allowing specific privileges to disrupt many incumbent sectors.
There are some exciting applications and developments of these ideas in recent years. Proof Collective enables its NFT holders to access future Proof drops and Proof community initiatives, like in-person events and a private Discord. Vitalik Buterin, an Ethereum co-founder, also published a formative paper on soulbound tokens holding on-chain identity information to be already adopted. Gaming transactions also soured in 2022, at one point making more than half of all blockchain activity. Moreover, NFTs might step into the context of entertainment for fan engagement.
Traditional companies have explored the application of NFTs at an increasingly rapid pace. Some adoptions are under the spotlight, including Tiffany’s collection of pendants for CryptoPunk holders, Instagram’s incorporation of NFTs into its platform, and Nike’s acquisition of RTFKT, a metaverse fashion company. Moreover, sports players like Cristiano Ronaldo have published NFT collections to engage with his fans and potentially give access to future perks.
Before You Go
2022 has witnessed painful hacks and CeFi crashes as FTX collapses. Yet, there are some brilliant parts that keep the whole market maintained at its best. There are some great forecasts for next year. Doing homework on researching the crypto market is still essential to have valuable insights into the market and the momentum patterns. The conclusion here is that there is still hope in creating a crypto market of financial transparency, dependability, and autonomy.
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