Written in front
The recent popularity of Send it on Solana has made the stagnant NFT market a hot topic again after a long time. The market's attention has also made everyone think: Can NFT recover and reignite?
It has been two years since the NFT narrative went from the Spring Carnival of 2022 to its complete marginalization today. Even in this bull market, NFT has not seen any signs of recovery. The new narrative is weak. OpenSea, BAYC, Azuki, these star projects that were at their peak at the time have almost disappeared in the current market. It seems to be the default consensus of most Web3 users that NFT is completely hopeless.
The dire situation
1. Trading volume has shrunk significantly
From August 2021 to May 2022 (the so-called NFT Summer), the market's average weekly trading volume was over $1 billion, reaching a peak of $3.24 billion, comparable to Uniswap's total trading volume.
But even at a time when DeFi is in the cold, Uniswap's daily trading volume is still over $1 billion, while the weekly trading volume of the NFT market is now only around $100 million, less than 10% of its peak.
What is even more disappointing is that in this bull market cycle, other sectors have rebounded to varying degrees, while NFT is completely decoupled from the overall market in terms of market popularity and the amount of capital entering the market, looking like a hopeless case.
2. The trading market continues to be sluggish
The entire NFT trading market is dominated by OpenSea, Blur and Magic Eden, which together account for nearly 80% of the market share.
OpenSea is a typical platform that lives off its past success. There haven't been any positive moves in the past two years. It has barely maintained its number one position relying on its previously huge user base. Its trading volume has shrunk by more than 90%, and its monthly revenue is only $740,000, which is comparable to Curve ($790,000), which has been plagued by negative news. The two are in the same boat.
Blur once showed a trend of catching up, but with the weakening of airdrop incentives and the end of Blast, it was unable to hold up the banner.
Magic Eden has an advantage in the BTC and SOL ecosystems, but unfortunately these two chains cannot be compared with ETH in terms of user volume or project market value. A large part of the current trading volume depends on potential airdrop expectations.
3. Blue chips are falling, and the wealth-creating effect is no longer there
For many users who have been deeply involved in the last round of NFT (especially Ethereum NFT), the most intuitive impression of NFT is a bunch of small pictures in the warehouse that have returned to zero and blue chips that have been forced to sell.
Blue chips are in this situation, not to mention small and medium-sized projects. Except for a few with strong market makers that can barely hold the floor, the rest are no different from .jpg files.
At the same time, project updates in the market have also stagnated. Currently, there are basically no popular NFT projects waiting to be launched on X, and even if they are released, they face the embarrassing situation of no one minting - opening below the issue price - passively returning to zero.
A few projects that can temporarily break out of the circle by relying on celebrity effects or community support can hardly escape the fate of reaching their peak as soon as they open. There will no longer be evergreen projects like the previous round.
Ordinals and the dawn of ERC404
1. Bitcoin NFT lacks stamina
In December 2023, sales of Ordinals (Bitcoin NFT) reached US$881 million, surpassing the sales of Ethereum and Solana. Although there is still a certain gap from 22 years, it at least allows the market to see the dawn of revival.
In the fourth quarter of 2023, blue-chip projects such as Bitcoin Frog and NodeMonke emerged in the market. The floor price of BTC Frogs reached as high as 0.42 BTC, and the daily trading volume exceeded 50 BTC. The highest price of NodeMonkes was close to 1 BTC, and its market value exceeded BAYC, the leader of Ethereum NFT at the time, with a daily trading volume of 163 BTC.
But the good times did not last long. In January 2024, the transaction volume of the BTC NFT market fell by more than 24.7% month-on-month. By May, the transaction volume of Bitcoin NFT had fallen by 80.5%.
The number of NFT traders has also declined compared to previous months, especially for Bitcoin, which has dropped from 393,000 in April to 114,400. The total market value has fallen by more than 90%, and the top projects have fallen by more than 80%. They have not been able to reverse the downward trend in the following months.
Ordinals expanded the users of NFT to the BTC ecosystem, bringing a group of higher net worth participants to the entire industry. However, due to the high transaction fees and unfriendly user experience in the BTC ecosystem and the lack of NFT community culture, the demand for short-term price increases of projects is more urgent. A large number of participants left the market in a hurry when they saw that profit expectations were no longer there. The flywheel of the market often comes and goes quickly. Bitcoin NFT took only three months to complete the three-year journey of ETH.
The core problem is that Ordinals has not solved the problem of weak narrative in small pictures. In fact, it is old wine in a new bottle, and the market is in a mess when the hype funds leave.
2. Pandora: A flash in the pan
Pandora experienced a surge in February this year. The concept of ERC404 currency duality brought great surprise to the market, especially NFT players. However, there is a strong voice in the community saying that this may be an important opportunity to revive NFT.
The narrative of ERC404 is very attractive. It allows NFTs to be traded in fragments, solving the entry barrier problem that has plagued the entire NFT track.
By integrating the liquidity of the two largest markets in the industry - images and coins, it further releases the two-way liquidity of NFT and Token, and has new features such as "drawable cards", "native fragmentation" and "AMM liquidity".
PANDORA surged 43 times in a week, with weekly trading volume exceeding $300 million and NFT prices reaching as high as 10 ETH, becoming the talk of the town.
However, this situation did not last long. The explosion of the ERC404 protocol that the market had been looking forward to did not come. Instead, the market suffered a setback in March.
The trading volume has almost returned to zero. Although Pandoraâs floor price is still 1.2 ETH, the Best Offer is only 0.2 ETH, and there have been only a few transactions in recent months. The Holders who originally shouted that the market value was tens of billions are now stuck at the top of the mountain, without even a chance to cut losses. The entire sector is basically over.
The new gameplay of combining image and currency has brought a certain degree of innovation to NFT, but it cannot solve the problem of NFT liquidity. And this is not the first attempt to fragment NFT. The Fractional and Feisty Doge NFTs in 2021 both set off a wave of enthusiasm, but in the end they all ended in a mess. ERC404 is like a replay of a tragedy.
Send it in the blink of an eye
Back to the introduction, SEND has drawn the public's attention back to NFT. The dream of doubling your money after waking up is particularly attractive during the market volatility. As the overall market has slightly warmed up, everyone's attention has shifted, and the price of SEND has returned to the pre-liberation level overnight.
Judging from the downward trend of the floor price and trading volume, market sentiment tends to be pessimistic. In the short term, Send it's market may continue to face high volatility. As the first application of the Blinks ecosystem and a project called by the founder of Solana, SEND still needs more content and time to enrich its story and development.
The road ahead: starting from zero or rebirth?
A very direct reason for the sluggish NFT market is the lack of NFT liquidity: lack of counterparties, difficulty in valuation, inability to split, and insufficient underlying technical support.
To some extent, whoever solves the problem of NFT liquidity will win the entire market.
NFT fragmentation, NFTFi, Blur, Ordinals, ERC404, and SEND are essentially trying to solve this problem. Although none of them have been able to provide a complete and effective solution, these projects have made very good attempts and have received positive feedback from the market. This shows that the basic market of the entire NFT is still very large. It also shows that despite the deep bear market, innovation in NFT is still being explored. It is still too early to say that NFT is over.
From a more macro perspective, NFT will still be a very important bridge connecting Web2 and Web3, and its advantages in real-world asset mapping, community connection, brand building, and game empowerment will still exist.
NFT and DeFi are the most Web3 and Crypto Native narratives, and as long as Crypto continues, the story about NFT will not stop.
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