Market Minute: How has NFT Marketplace activity dwindled in 2022?

By FKlivestolearn | Technicity | 3 Nov 2022

In conjunction with the crypto bear market, Non-Fungible Token (NFT) market activity has taken a nose dive this year

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Everybody is willing to pay a premium on buying assets that are promising healthy returns and this narrative seemed to play out well in 2021 for cryptocurrencies. The massive bull run last year provided many such opportunities to investors. One of the new entrants to the Cryptoverse was Non-Fungible Tokens (NFTs) — an image-based file format that transfers data and value on blockchain networks like Ethereum via smart contracts. NFTs saw explosive growth in 2021.

And then 2022 happened. As another crypto bear market ensued, everything associated with them plummeted. Of course, in such a scenario, more speculative instruments like NFTs suffered the most. As you can see in the charts above, NFT activity has been in a steady decline for the past six months. Despite the severe downturn, there has been a silver lining — new players have entered the space attempting to find their niche, as the NFT space matures.

OpenSea dominates the NFT Marketplace with its trading volume and weekly users. New entrants like X2Y2 and LooksRare are challenging the hegemony of incumbents like OpenSea by introducing a zero-royalty fee structure. Previously platforms like OpenSea were charging fees of up to 10% on behalf of collection creators. And this has enabled these novice NFT platforms to keep pace with OpenSea’s dominating trading volume.

According to Messari Research, this year has seen the average number of weekly active unique (WAU) traders is down 48% on OpenSea and nearly 80% on LooksRare. Meanwhile, the relatively new player X2Y2 has seen steady growth since its launch. Similarly, the trading volumes present an ugly picture too, where all three platforms mentioned above have lost trading volume anywhere between 50–90% since January of this year.

Originally, most NFT marketplaces charged two fees per sale: one for the marketplace and one for the creator. But to navigate the crypto bear market, they have resorted to new methods for boosting activity on their platforms. While this may not help turn their fortunes, it would certainly help them in maintaining their competitiveness — waiting for a time when the larger crypto picture improves.

Originally Published on Medium

Crypto Blockchain Ethereum (ETH) NFTs Non Fungible Tokens

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FKlivestolearn

I am a prolific Blogger on Substack/Medium with a newsletter. Extensive trading experience in Forex & Stocks based on technical studies. Cryptocurrency trader and Enthusiast, Blockchain/Fintech Evangelist & generally just a Technology Freak.