A recent study has shown that only 5% of NFTs actually have any value in the current market. Eric Ma, CEO of TIDEX, comments…
It’s hard to believe now that NFTs (Non-Fungible Tokens) trading volumes soared to a staggering $2.8 billion in August 2021. However, two years is a long time whenever you’re talking about anything blockchain.
A recent study delved into the NFT market’s current state to uncover a concerning trend — the rise of “dead” NFTs. Over the past year, searches for “Are NFTs Dead” surged by a whopping 114%, signalling growing scepticism among enthusiasts.
The analysis scrutinised more than 73,000 NFTs listed on NFTScan and the top 8,000 NFTs on CoinMarketCap. The goal was to identify how many NFTs had plunged into oblivion, sporting a market cap and floor price of $0, and how many collections had faded into redundancy.
Eric Ma, CEO of TIDEX, commented: “These days whenever NFTs are spoken about, you’ll hear a lot of moans and sighs. That’s because many who’ve invested and held have seen their portfolios drop in value to nearly zero. Some, however, still have hope that in the next bull run their NFTs will rise again.”
The Numbers
Among the 73,257 NFT collections scrutinised on NFTScan, a staggering 95% boasted a market cap of 0 Ethereum, rendering them worthless. A mere 5% retained some semblance of value.
Furthermore, 79% of all NFT collections (4 out of 5) remained unsold, indicating a widespread struggle to find buyers.
To gain a comprehensive view of the market, the study turned to the top 8,850 collections on CoinMarketCap. Here, they uncovered that 18% of these prominent collections sported a floor price of zero, highlighting that even the NFT elite grappled with dwindling demand.
It’s important to note that the number of “dead” collections might exceed the reported figures. Many NFTs overvalue themselves in the millions, despite witnessing all-time sales barely scraping $20. This disconnection between listed floor prices and actual sales exposes inflated valuations that fail to reflect genuine buyer interest or real-world transactions.
It’s a damning prognosis, but is there a way forward for NFTs? Eric comments, saying: “I do believe NFTs will have a future, however, that all hinges on their utility and real world usefulness. This will require more development in smart contracts, especially ones that integrate NFTs as a key component of their code.”
As the NFT market matures, it’s no longer enough for NFTs to serve as mere “flexes.” Instead, they must offer tangible value, whether by preserving cultural heritage, enabling in-game purchases, or venturing into industries like real estate. In this evolving landscape, NFTs with genuine utility are poised to define the future of this digital realm.
Eric concludes, saying: “I hope the days of buying and trading useless digital art are over. NFTs without real world utility make it difficult for people to take this industry seriously. For me, I can absolutely see NFTs be used for real estate, in vehicles, gaming transactions and identity verifications. But for this to happen, we will need to see further development especially regarding its functionality and security. Don’t count NFTs out just yet. Current market values do not predict its future utility, especially when the majority don’t understand the potential of digital non-fungibility.”
