NFTs Blast Past $55B
Plus: Optimistic layer 2 adoption
Based on IntoTheBlock’s weekly newsletter. If you enjoy it, and would like to receive it every Friday make sure to sign up here!
Weekly Fees — Sum of total fees spent to use a particular blockchain in a week. This tracks the willingness to spend and demand to use Bitcoin or Ether.
- Fees accrued by the largest blockchains continue to fall, with both Bitcoin and Ethereum recording double digit decreases this week
Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges over the past seven days. Crypto going into exchanges may signal selling pressure, while withdrawals potentially point to accumulation.
- $200M Bitcoin was deposited into exchanges, with relatively low total deposits and withdrawals
- Nearly $800M worth of Ether left exchanges, representing moderately high outflows
NFTs Blast Past $55B
While NFTs surpassed anyone’s expectations in 2021, they have continued to grow throughout 2022. At the beginning of 2022 there were $17B in cumulative trading volume in NFTs and it has quickly expanded past $50 billion just four months later.
$10B/Month — On-chain volume for NFTs on Ethereum have averaged 11 figures per month throughout the year
- Growth spiked particularly in January, processing as much volume in a month ($17B) as the total historical volume up to that point
- Volumes stalled throughout March but have began to pick back up, driven by a few new collections
- Ethereum still makes up over 90% of NFT volume despite growing ecosystems on other blockchains
When it comes to the new collections reigniting interest NFTs, Moonbirds stands out as one of the largest likely in the history of the space.
100k ETH in first week — Within less than 7 days the collection surpassed $300M in trading volume
- With a minting price of 2.5 ETH and current floor price of approximately 40 ETH at the time of writing, representing a 16x return
- The high price for the collection has led to Moonbirds being a top 5 collection (measured as average price times supply)
Behind Moonbirds is the PROOF Collective founded by entrepreneur Kevin Rose, who previously built internet startup Digg and currently leads True Ventures. PROOF had previously issued 1,000 NFTs for 1 ETH as a membership providing access to future activities of the collective, including the ability to claim 2 Moonbirds for free.
Not just another PFP — The Moonbirds collection is the latest looking to add utility to its NFTs in novel ways
- The collection introduces “nesting” which provides the equivalent to staking rewards, growing the longer the NFT is held
- Moonbirds will also serve as free tickets to PROOF Collective’s future conference
- Physical and digital airdrops — in a Bankless interview Kevin Rose teased rewards ranging from hoodies to art blocks pieces to holders
$500k JPEGs — rare versions of Moonbirds have been selling for over half a million
- Moonbirds surpassed Bored Apes over the past 24 hours, being the only other collection making up the 10 largest sales
- Moonbird #3730 became the largest sale for 240 ETH, seemingly accidentally, only to sell for 44 ETH seconds later
While the speculation with Moonbirds seems to be getting overheated, it does highlight that NFT interest remains strong, particularly for collections expanding their utility.
Optimistic Layer 2 Adoption
Given the high demand to use Ethereum, users have long awaited for layer 2 scalability solutions that provide lower fees. Many layer 2s such as Arbitrum and Optimism launched in 2021 and have seen steady growth, though perhaps not as much as had been anticipated.
In 2020, Compound famously spurred a wave of adoption following the release of the COMP token, which was used to distribute governance rights to users of its platform. This week, the Optimism team teased in a blog post “a new chapter”, hinting to a similar transition to becoming community owned.
Airdrop incoming? Though nothing has been confirmed by the Optimism team, rumors about the OP token being rewarded to users circulate
- The announcement spiked activity in Optimism, reaching a new high in total value locked shortly after
- There is also a high likelihood of an incentive program to applications built on top of Optimism, similar to those offered by Polygon and Avalanche
- These prospects suggest adoption in layer 2s is poised to accelerate soon, leading to what many are calling “L2 2022”
While specific details on Optimism’s transition to community governance remain unclear, it is evident that decreasing fees for Ethereum users is a large need
$60 fees do not suit average users — Mean fees on the Ethereum blockchain have gone over $60
- Such fees have been a barrier to entry for users who may be unwilling to pay these amounts for small transactions
- At peak times, such as during NFT mints, these fees often go over $200 per transaction
20x cheaper — Transacting on Optimism is already 20 times cheaper than on Ethereum Mainnet
- These fees are expected to go even down further after its current capacity throttle is lifted
- Additional liquidity would also create incentives for more activity to migrate following a token launch
Overall, layer 2s are likely to be the next step in scaling Ethereum. While many of these solutions are already live, their lack of liquidity may be hindering their adoption. Through the release of the OP token, Optimism is likely to lead the way towards cheaper Ethereum transactions to the mainstream.
Upcoming Webinar
Sign up for our next webinar. Limited amount of free seats available.
The building blocks of a DeFi trading infrastructure. Stories about surviving liquidity manipulation attacks, hacks, governance changes and the many challenges of the DeFi market.
