Summary of the NFT track in 2023: Reform or Silence?

Original title: “The Current State of NFT 2023”

Original author: Francesco

Original compilation: Luccy, BlockBeats

*Editor’s note: Many people are adamant that NFTs are dead, but NFTs have never been the same since Blur released the airdrop. *

*Crypto researcher Francesco provides an in-depth analysis of the current state of NFTs, using BAYC and DeGods as examples to illustrate the multifaceted challenges facing NFTs, supported by analysis and market trends. Francesco argues that if we judge the industry based solely on the current wave, it is equivalent to declaring that cryptocurrencies are dead in the bear market of 2018. The future of NFTs should depend on the ability of creators and platforms to evolve, providing real value and utility that goes far beyond pure speculation. *

Non-fungible tokens (NFTs) have been the subject of much discussion in the dynamic and often unpredictable space of digital assets. Once highly anticipated as the next major revolution in the art and collectibles market, NFTs have now seen a dramatic shift in their place in the public mind.

Many people insist that NFTs are dead, and this article will delve into the current state of NFTs and discuss it based on data analysis and market trends.

Hopefully, no one here is using them as the only basis for getting NFT news. It seems to me that this is a signal of a bottom.

Although the crypto market seems to have rebounded recently, driven by the expectation of BTC ETFs and BTC halving, the NFT market seems to be lagging due to the lack of a strong catalyst.

Perhaps the only necessary catalyst is to ensure that NFTs are no longer silent and will eventually return to hype.

NFT = Bad time

I mean, has there been a drastic decrease in the trading volume of NFTs compared to 2022? Yes.

So are they dead? This may be a bit premature.

By definition, NFTs are on-chain and will therefore be around forever.

In short, you just can’t destroy them.

However, it would be disingenuous not to mention the fact that we are far from the glory days of NFTs. We have to admit that there has been a significant drop in sales and public interest over the past year.

The decline of NFTs is undeniable: during this time, high-profile NFT sales have decreased, and market saturation (with countless new NFT projects deployed) has led to consumer fatigue.

What are the main problems with NFTs?

There are several core issues with the NFT downturn:

False promises of new projects: 99% of new projects on the market are deployed for the hype of chasing NFTs. Similar to “shitcoins” in 2018, many NFT projects are built on hype and lack a substantial or long-term vision, leading to their inevitable decline.

Blue-chip projects struggle to reinvent themselves as global brands: After the success of their NFT collections, some blue-chip projects are now facing the dilemma of reinventing themselves and providing value to holders.

It’s not for nothing to compare NFTs to the 2018 “shitcoin frenzy.” Many NFT projects lack a clear purpose or utility and are more like speculative assets than sustainable digital goods.

This led to the creation of a bubble, and when the bubble burst, the assets in the hands of many investors became worthless.

Another group

Although the lines are often blurred, the NFT crowd is another type compared to crypto degen. They have different morals and different reasons for getting involved in this field.

Overall, the NFT crowd is less engaged in the ideological aspects of this space, focusing more on the artistic and economic aspects.

In addition, many scammers have found that NFTs have become the hype of the moment, just like previous trends (multi-level marketing, cross-border e-commerce, etc.), and they have followed suit.

This is also evidenced by the fact that countless celebrities have started promoting scams or started their own scams in order to make money quickly, especially Kim Kardashian, Mayweather, Paul Logan, etc.

Therefore, the position is that we cannot think of the NFT crowd as part of the crypto community, but rather as an external subset with different reasons for participating.

Still, we must also acknowledge that NFTs have indeed empowered artists across the globe, which is a positive aspect.

Challenges for blue-chip projects

Even so-called “blue-chip” NFT projects are facing difficulties. Once at the forefront of the NFT boom, these projects are now battling an uncertain future.

The challenges they face are manifold:

Uncharted territory: Many of these projects are in uncharted territory, trying to navigate a market that is constantly evolving and the future is difficult to predict.

Evolutionary challenges: Evolving from a simple NFT project to something more substantial, like integrating games or other utility features, has proven difficult. Where should the focus be?

Decline in complexity and interest: Some projects, such as Otherside and DeGods, overcomplicate the whole process, leading to a decline in public interest.

We can use Bored Ape Yacht Club (BAYC) and DeGods as examples to illustrate this dilemma.

BAYC

BAYC needs no introduction, and like Cryptopunks, Ape is one of the most iconic and iconic NFT collectibles.

BAYC started with a collection of 10000 bored apes.

The project then airdropped a mutant ape (MAYC) and a puppy companion to BAYC holders – essentially giving holders thousands of dollars in airdrops.

However, the airdrop strategy doesn’t work forever. In fact, by launching a new collectible, you’re actually diluting the total supply of the entire collectible.

While BAYC used to be a collection of just 10,000 NFTs, it now has 10,000 dogs and 20,000 MAYCs. In addition, each dog and MAYC are currently airdropped with a Otherside plot (with a total supply of over 100 k). Fragments are now created for each Otherside plot as well, and don’t forget the HV-MTL collection (there are 30,000 of them).

The post-NFT direction taken by BAYC is focused on two main verticals:

· Game

· Lifestyle (as a global lifestyle brand, e.g. BAPE, Supreme)

However, with this differentiation, holders need to put in more and more effort and effort to stay updated and keep an eye on everything.

For example, users are expected to grow their Otherside plots through day-to-day efforts. As a holder, I’ve given up, simply because I haven’t been paying attention.

What was once a simple community is now evolving into an increasingly complex and fragmented ecosystem.

Also, the question about the game competitions created by BAYC raises the question: if they want us to hire only pro gamers to win these in-house tournaments, is that really a community-focused focus? What about ordinary people who have not been able to succeed with NFTs and have a normal life? Will they be forever excluded from any victory?

It feels like the project is moving away from its origins and neglecting its core community.

Another example is Legends of Mara, yet another standalone experience related to Otherside.

In addition, users have been waiting for news about Otherside for more than a year, and many of them eventually gave up waiting and left the community.

Is it too much? When will it stop?

Expanding their cinematic universe is, on the one hand, a powerful tool for expanding wider public participation. However, it can also have the opposite effect, weakening the core values of BAYC’s original and major collections, thereby threatening the community foundations of the project.

Since the project was unclear on how to move forward and received significant investment from VC firms (a16z invested $1 billion in BAYC), many expressed concern that BAYC would never go back to the way it was and would eventually turn into Mr. Hyde, a Web2 giant.

DeGods

For DeGods, the situation is even worse, due in large part to the team’s strategic decisions rather than the expansion of the ecosystem.

Once one of the best and most promising projects on Solana, it is now synonymous with chaos and incompetence.

Here’s a summary of what’s going on roughly:

DeGods have released their second collection, y00ts, promising a revolutionary points system, referencing Steve Jobs, and positioning themselves as the new apple of NFTs;

After the collapse of FTX, DeGods eventually left Solana (their headquarters), migrating DeGods to Ethereum and y 00 t to Polygon (because they received a grant);

This is actually a major betrayal of the community that has supported them from start to finish and has pulled their price from 3 SOL to over 10 ETH;

It’s the pinnacle of DeGods, and everyone is talking about how they became the new BAYC, and how their token DUST and the company behind it will become precious in the future;

Fast forward a few months, and Dust Labs didn’t offer anything of any bit of value, DUST the price was reflected.

DeGods has announced an aesthetic revamp plan: DeGods Season 3, which is scheduled to launch on August 9, 2023.

As part of their marketing, DeGods employs their preferred tactics: over-promise, late delivery, and the results fail to materialize.

The highly anticipated third season drove DeGods’ volume to record highs.

However, the situation quickly became serious.

What will be included in the third season?

y00ts migrating back to Ethereum from Polygon (admitting a major failure, who will host their NFTs on Polygon unless they received a grant?) ）

DeGods’ art downgrade: more simplified, removing unnecessary features. However, with a twist, users had to pay 333 DUST (about $450 at the time) to downgrade their DeGods (one might say, finally giving the DUST token some utility).

In reality, however, it’s like saying, “This is our third attempt at making DeGods’ artwork because we failed to convince our community through previous attempts.”

They have also launched a “Point Parlor” where users can stake their Season 3 DeGods to earn points and win rewards and prizes.

Here are some of the prizes for “Point Parlor”: of course these are good, but I’m not sure that 10, 000 DeGods holders will be satisfied with dozens of good prizes.

Like many other collectibles, the holders of DeGods elevated their founder, Frank, to a mysterious figure with business acumen and Steve Jobs-like brand potential.

This can also be seen in Frank’s Messiah way.

However, we have seen that over-reliance on god-like founders never brings any good.

The third season has sparked a lot of controversy and controversy.

What the team promised never actually materialized, leaving a huge gap between commitment and execution.

As a result, they ended up losing more than 50% of their value in just over a week.

In any case, the example of DeGods teaches us the importance of promising less and delivering more, not the other way around.

If you act like the Messiah and then can’t cash out, the hand will eventually flip. The DeGods team has shown many times that they are a mess when it comes to roadmaps and plans. They were capricious in their art and never really charted a long-term path forward.

Each new update touches on the artistic dynamics of the collection in some way. In addition, they failed to make the most of Dust Labs and DUST, which was a huge missed opportunity.

Last but not least, this was exacerbated by the actions of their founder, who reluctantly admitted their mistake.

While I may sound a little biased, it’s actually not. I have high hopes for DeGods and even hold some DUST, and I am personally very disappointed with what happened during the execution.

Both of these blue-chip examples show that sometimes, simplicity is the best way to go.

Complex ways often make things too complicated.

NFT Marketplace

After discussing how blue-chip projects are working to create the next wave of development for their projects, let’s dive into the market data.

Is the trading volume of NFTs declining?

Is anyone buying NFTs at the moment?

We do this by analyzing ETH Workshop and the Solana NFT marketplace.

Starting with the monopoly of OpenSea, the leading platform for NFTs, ETH Fang faced a series of challenges in terms of issues and development involving NFTs.

The marketplace on ETH Square is adapting to changing consumer preferences and the evolving nature of NFTs. These platforms are grappling with accessibility, scalability, and environmental protection.

In particular, the market has been involved in two major trends:

· From OpenSea’s monopoly to Blur’s dominance

· The Royalty vs. Non-Royalty Debate: Should Users Who Buy and Sell NFTs Pay Royalties to Artists or NFT Marketplaces? More and more markets are eventually moving to royalty-free. This article provides a brief overview.

Since Blur announced its launch and released the airdrop, NFTs have never been the same again. Many have accused the platform of unilaterally pulling down the NFT market as whales farm Blur points by offering and listing NFTs.

Currently, more than 78% of total NFT trading volume occurs on Blur, while OpenSea accounts for less than 18% of the total.

Still, even though it’s far-fetched to think that Blur is responsible for the decline of NFTs, they have introduced new dynamics that affect buyers and sellers.

What about royalties?

Initially, NFT marketplaces enforce royalties, either to compensate the artists or the team behind the NFTs. This eventually sparked an industry-wide debate involving major markets.

As you can see in the chart below, March 2023 marks a pivotal moment for the market to begin introducing optional royalties.

Currently, only just over 45% of total NFT transactions have paid royalties.

So what about Solana’s NFTs?

Solana has emerged as a high-profile contender in the NFT space, being praised for its high transaction speeds and lower costs. Solana-based NFT projects offer an alternative to ETH high gas fees, but they also face the general challenge of maintaining relevance and public interest.

In particular, over the past few weeks, there has been an increase in on-chain NFT activity as Solana’s most hated spike to $60, particularly with an increase in trading volumes from ETH and Arbitrum to Solana.

As is clear from the chart above, Solana’s daily trading volume has been on the rise since the beginning of November 2023.

But not only that, NFT trading volume and active traders have grown by 300% since September.

But is this the only trend in Solana?

The current state of NFTs

The number of NFTs has increased on all fronts.

In fact, since October, the NFT space has experienced a small resurgence in transaction volumes.

Of course, if we consider this leap in the larger context, more arguments are needed to show whether NFTs have returned. Still, we can observe that sales are slowly returning from oblivion, and at the same time, buyers and sellers are returning (probably happy to see that the NFTs they once owned in the bull market, that now almost worthless, are now in some demand).

Here are the top NFT sales from last week:

Here are the top 11 NFT collectibles ranked by sales volume (surviv 000 rs):

Interestingly, Mad Lads (from Solana) rose to prominence and is now worth more than 4 ETH (170 SOL).

Finally, an important question is that we’re finally seeing some big bids again (maybe some of the guys making money with memecoins?). ）。

More Original Technology: NFT Perpetual Contracts

Another very important development driving the next (if any) development of NFTs is the development of more NFT-based original technology. In 2021, there’s almost nothing you can do with your NFTs. Things are about to change with the development of new original technologies, such as NFTperp V2, which allows users to go long or short on their favorite NFTs.

Related Reading: How to Make NFTs Liquid and Tradable with NFTperp V2

Provoke thought

The world of NFTs is facing a choice. Although the current state may seem bleak, the potential for innovation and adaptation remains.

The future of NFTs will depend on the ability of creators and platforms to evolve, offering real value and utility that goes far beyond pure speculation. Whether NFTs will make a triumphant comeback, or fade out of the context of digital history, is a question that only time will answer.

In particular, we expect the most successful companies to finally be able to chart a clear path forward from the PFP collection.

Although we are living in a 3-year bear market, the size of the NFT market is expected to expand at an average rate of 30% between 2023 and 2030.

In particular, the next wave of development will have the opportunity to geographically decentralize the sector, as currently, the United States (including Canada and Mexico) accounts for more than 30% of total revenue.

Another foreseeable trend in the future is that more and more NFTs will be designed for commercial use, not just personal use.

Judging the entire industry based on this initial wave is the equivalent of declaring crypto dead during the bear market of 2018.

We all know what that’s all about.

Unfortunately, due to the scope of this article, I can’t focus on touching on Ordinals and xNFTs, two very interesting developments in these two areas, especially given the recent volume increase in BTC NFTs.

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