With every week that goes by it becomes clearer that peak NFT has passed. Or does it?
It’s true. Google searches for the term “NFTs” are down by almost a third from mid-January. And daily volume on OpenSea has fallen more than 65% since Feb. 1, according to data from DuneAnalytics.
Don’t dismiss NFTs as just another crypto fad just yet. Even as the buzz gets lets buzzy, the number of successful NFT projects is quietly increasing, according to a report released today by Nansen, a blockchain analytics platform, and shared with The Defiant.
The proportion of minted and profitable NFT projects recently hit an all-time high, according to a graph provided in Nansen’s Minters Report. This indicates that a market known for froth and scams (Pixelmon notwithstanding), may be growing up.
“I think we’re seeing more successful projects,” Paul Harwood, a product manager at Nansen, told The Defiant. “We’re seeing the market mature and the real innovative projects really taking off and maybe the cash grabs not doing so well.”
This contrasts with January 2021 when “dead” minted projects (defined as having less than 10 sales in the past 30 days) made up almost half of the NFT market. Now, such anemic projects make up only a fifth of minted NFTs.
The average NFT mint price has also hovered between .07 ETH and 1 ETH since July 2021 after seeing major spikes earlier that year. Nansen’s report suggests mints are getting more competitive, compelling project leaders to lower prices.
Harwood notes that the increasing proportion of projects fetching higher sums than their mint price is happening amid insane growth of NFT minters. According to Nansen’s report, there were only 500 people minting NFTs at the start of 2021 and there are now a staggering 1.2M as of February.
The idea that the NFT craze is a replay of the initial coin offering (ICO) era of 2017 has become rather shopworn. Yet in both periods the best of the bunch have demonstrated true staying power and wealth creation. Ethereum was an ICO after all, raising $16M in 2014, according to icodrops.com, before becoming the $300B smart contract network it is today. Now Bored Ape Yacht Club is charging ahead — its floor price has skyrocketed 587% since August, to 103 ETH and it recently released its own token.
There are other examples of successful ICO projects emerging out of the 2017 craze — Cosmos, now a player among smart contract platforms, raised $17.3M in 2017 and its ATOM token now sports a market cap of $8.1B. ChainLink, Decentraland, Tezos, and more all held ICOs as well in 2017 and each project is worth over $3B as of Mar. 23.
NFTs may be following the same pattern. Though not all NFTs fall into the same category — for every funny Bored Ape there’s plenty of NFTs with more prosaic utility, Javier Cerdán González, a research engineer at Nansen, told The Defiant. He said he found Solana NFTs to be particularly utility driven.
With the hype cycle for NFTs may be ebbing, the market appears to be maturing into a new phase. That’s the upshot of the Nansen report. While worldwide searches for NFTs may continue to flag, let’s not forget that the term “ICO” has trended towards zero since spiking in late 2017. While many have faded, some have thrived. The same may be said of NFTs.