The total market value and transaction volume of the NFT market increased in May, and consumer behavior is changing!
How is the NFT (non-fungible token) market doing recently? Blockchain data company DappRadar released its latest market research report on the 18th of last week.
As of the release of the report, the total transaction volume of the overall NFT market this month was US$330 million. According to this trend, May will become the first month this year where the total transaction volume of the NFT market does not reach US$1 billion.
Is the NFT market declining? Analysts say not necessarily. Although the total transaction volume is the lowest this year, on-chain data shows that a total of 2.3 million transactions were executed, and the number of daily active wallet users performing NFT operations was 173,000, an increase of 27% in May.
DappRadar analyst Sara Gherghelas said in an interview with CoinDesk:
The number of NFT transactions in May is about to surpass the number of transactions in the previous month, but the total transaction amount is far lower than the previous month's figure, which indicates that the trading behavior of investors in the NFT market has changed, and low-priced NFT transactions are gradually becoming the mainstream.
Four Latest Trends in the NFT Market
Trend 1: Selling NFTs and investing in “meme coins”
At the beginning of this month, many investors sold their NFTs at a discount in exchange for liquidity and invested in the meme coin "PEPE". This operation caused the Ethereum transaction fee (Gas fee) to exceed US$100 at one point. After considering the cost-benefit ratio, the rising fees also affected the trading volume of low-priced NFTs.
Another NFT market peak this month occurred on May 10, when Elon Musk posted a meme of Milady NFT on Twitter with the caption "Not trying to be a meme, just trying to say 'I love you'."
The tweet caused Milady's total transaction volume to exceed nearly 14 million US dollars that day, which was 20 times the transaction volume of the series of NFTs the day before. The floor price of the series also rose by 37% in 24 hours to 4.69 ETH (about 8,442 US dollars at the time), and the transaction volume also doubled.
In addition, the top ten NFT transaction price rankings this month are still dominated by blue-chip (referring to well-known, valuable and reputable) projects BAYC and CryptoPunks.
Trend 2: Ethereum transactions account for 80% of the overall NFT market
Ethereum still dominates NFT transactions, with the total transaction volume on the Ethereum blockchain accounting for 81% of the overall NFT market and a transaction volume of over US$270 million.
However, the total number of Ethereum transactions fell by 5.7%, showing that the Ethereum blockchain is still the transaction choice of the "NFT aristocracy", mainly used to handle high-priced NFT transactions.
The Solana blockchain performed well in terms of total transaction volume and is currently ranked second with a total transaction volume of US$227 billion, accounting for 6.7% of the total market; the Polygon blockchain followed closely behind with a total transaction volume of US$182 billion, ranking third in the market.
Polygon wins the first place in terms of transaction volume
However, in terms of transaction volume, Polygon ranks first with a market share of up to 26.9%. This data is also consistent with Polygon's expansion strategy in the NFT market. By actively cooperating with Web2 companies, large consumer brands, and blockchain game companies, it provides faster transactions and lower transaction fees. These features enable it to serve more diverse application scenarios. The blockchain is mainly based on low-priced NFTs, with an extremely low entry threshold, attracting a large potential audience into the market.
It is worth mentioning that although Ethereum still holds a dominant position, other blockchains have also developed their own NFT niche markets, making the NFT industry environment more competitive and diverse.
Cardano’s blockchain transaction volume exceeded $1.4 million; Arbitrum’s blockchain transaction volume also exceeded $1.5 million this month, with a transaction volume of up to 69,000.
Trend 3: OpenSea and Blur are the two leading trading platforms
As of mid-May, the NFT trading platform Blur had a total transaction volume of 180 million, with a market share of 62%, far surpassing the old trading platform OpenSea, which only accounted for 26%.
However, in terms of the number of trading users, OpenSea far surpassed Blur, with an average daily active user base of about 105,000 in the past seven days, while Blur only had about 13,000 users, showing that OpenSea still dominates the mainstream NFT market.
The battle for the leading position between the two platforms is still going on. Blur's reward plan in the second season has been effective, and the Blend lending protocol launched this month continues to attract veteran players to stay. On the other hand, in order to compete with Blur, OpenSea has also launched the "OpenSea Pro" platform for veteran players. The platform features zero transaction fees and serves as an aggregator of 170 NFT platforms, helping veteran players search for the most competitive prices on the market.
The two leading companies have made progress in product and service innovation, which will help shape the future development of NFT-related trading products and the NFT market.
Trend 4: Bitcoin "Ordinals Protocol" applications are booming
The emergence of the Ordinals protocol has made Bitcoin NFT a reality. Since its launch on January 21 this year, the protocol has received great response and attention. As of press time, approximately 7.4 million Ordinals protocols have been minted.
The emergence of the Ordinals protocol not only changed the culture of the Bitcoin ecosystem, but also represented the expansion of NFT technology.
The "BRC-20 Token" standard, developed based on the Ordinals protocol, allows users to easily issue coins on the Bitcoin blockchain. Two months after the standard was released, more than 18,000 new currencies have been issued using the "BRC-20 Token", with a total market value of up to $546 million.
Although Bitcoin NFT and "BRC-20 tokens" have increased transaction volume on the Bitcoin blockchain, they have also caused transaction fees to rise sharply.
In April this year, the average transaction fee on the Bitcoin blockchain was only $1.2; but on May 8, the transaction fee soared to $31. As of today, the transaction fee is mostly hovering around $5.6.
This craze on the Bitcoin blockchain has not only added more burden to the already congested blockchain network, causing serious congestion in the Bitcoin network, but also an abnormal state of "block production suspension". All these phenomena have caused a "three-way civil war" between Bitcoin core developers, miners and Ordinals holders.
Is the NFT market growing or declining?
DappRadar analyst Sarah believes that the total transaction amount means something different in the current market than before.
Especially after the emergence of the NFT trading platform Blur, users of the platform used a large number of wash trading to earn Blur tokens and exchange them for the qualifications to obtain more short tokens, further increasing the current total market transaction volume.
Wash trading: A market manipulation technique, usually by market participants, that creates false trading volume and price fluctuations by making large volumes of trades between the same securities or assets without actually trading. This behavior can deceive investors and market participants and cause market instability and price manipulation.
Sarah also added that the Blur platform is designed to serve professional NFT investors, so it does not care about the number of active users, but only how much money flows through the platform. According to a report by blockchain data company Nansen, most of the total transaction volume on the Blur platform in March this year came from the contributions of the top 100 users of the platform.
Although the meaning may be different, total transaction volume can still be used to measure how much money is flowing in the NFT market, so it is still an important metric.
“So far, the total deal value has dropped, but the total deal count has increased, which means that investors are not decreasing, but their behavior is changing.”
Although high-priced NFTs, mainly Ethereum, still dominate the market, the increase in low-priced NFT transactions indicates that NFTs are moving towards more diverse application scenarios. The shift in usage behavior may indicate that NFTs will soon become more popular and more widely adopted.
