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The market is cold and chaos is frequent, where will the NFT market lead?

Read this article in 17 Minutes

New narratives and new applications can only be born after concept hype, bubble burst, and survival of the fittest.

Original author: 0xtree, NFT enthusiast

"Because I entered the pit of NFT, I was accurate before the bear market came Short BTC and ETH.”

Jason is a senior practitioner and a An old NFT player, bought CryptoKitties in 2018, played Loot in 2021, and "buy the bottom" in March this year, the boring ape that he has liked for a long time.

A sentence that seems to have no direct causal logic, but it is the current NFT market true portrayal.

1/Chaos

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At the beginning of the month, according to encryption developer foobar on his social networking site, there is a private key in the BAYC contract with unlimited issuance rights, if the private key is hacked Get, there will be a boring ape dumping on the market. This NFT is the most well-known NFT blue-chip project. Due to its high value, user assets have been stolen many times.

As the holder of the NFT, when Jason first heard the news My heart was shocked: "This is the same as just buying a house, but hearing that the housing market is profitable, everyone will feel a little bit in their hearts."

Fortunately, the official has responded. Yuga Labs co-founder and developer Emperor Tomato Ketchup tweeted on June 8 that the private key with unlimited casting rights to the Boring Ape NFT has been destroyed.

Jason's hanging heart also fell to the ground.

In fact, theft of NFT assets happens from time to time. In the first ten days, Jay Chou posted on his INS that NFT worth more than 3 million was stolen. In the following week, more than 30 NFT theft incidents occurred one after another, which once aroused the attention of the entire industry on NFT security issues.

There are both hacker phishing and project parties fishing in troubled waters/self-stealing. Even top trading platforms like OpenSea have been accused of NFT theft and plagiarism one after another.

According to the latest investigation report of the New York Times, some users broke the news that a scammer Take advantage of the flaws in the OpenSea system to buy Boring Ape NFT at a super low price. Although OpenSea has given corresponding solutions and has been working hard to prevent theft and fraud, users still complain about the slow processing speed in preventing NFT transactions from being hacked; at the same time, piracy incidents have also surged on the website, and more It is to arouse the anger of artists who regard NFT as a financial lifeline.

This month, former Opensea executives were arrested for their involvement in NFT insider trading Being sued undoubtedly exposed the "barbarism" of the NFT industry.

Compared to Jason, Liu Yu is a newcomer. In contact with encrypted assets, due to lack of experience, I started an NFT project called Spaceship under the community Fomo, but the spaceship began to dive when it rose to 800 US dollars. In less than half a month, it fell from the peak to 2 US dollars, resulting in Liu Yu’s final assets. Almost to zero.

2/The bubble is bursting

The experience of the two reflects the ups and downs of the NFT market to a certain extent, and they often return to zero.

According to the data platform Nonfungible chart, from the global NFT trading volume Look, the hottest stage of global NFT is in the third quarter of 2021, and the highest single-day transaction volume will appear on August 12, 2021, with a single-day transaction volume of 1,371,400. Since then, the enthusiasm for trading in the NFT market has declined rapidly. As of June 4, 2022, there are only about 19,900 transactions in the global NFT market on the same day, which is about 1.5% of the highest single-day transaction volume and has shrunk by more than 90%.

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This reminds Jason of the scene when he bought CryptoKitties. Although the CryptoKitties in the account have been lost together with the cold wallet, the current market atmosphere seems to be Bring him back to 2018.

"The NFT market is very similar to the atmosphere before and after the ICO bubble burst , except for rare blue-chips, most projects are a wave of popularity, come quickly, and die quickly!" Jason lamented that even if there are occasional blockbuster projects, due to the small user base and mainly supported by FOMO emotions, most of them are not. There will be long-term development.

In this regard, Shirley, a researcher at Ouyi Research Institute, said that DeFi Take liquidity mining as an example, users can get Token rewards as long as they provide liquidity for trading pairs; while coin-earning services in centralized exchanges such as Ouyi can support users to earn Token interest through regular deposits. But in the NFT market, if users are optimistic about an NFT and want to hold it for a long time, then this part of the funds for purchasing NFT is equivalent to being locked for a long time, and the utilization rate is extremely low; and in view of the uniqueness of NFT, there is a huge difference between NFTs of the same series. Whether the transaction can be made is mainly affected by the user's subjectivity, which not only causes NFTs to have no unified pricing standard and makes valuation difficult, but also further leads to the deterioration of the liquidity of most NFTs.

In addition, in the process of market development, there are usually several small cycle. The NFT Summer in 2021 will achieve the "broken circle" of the circulation layer to a certain extent, bringing the NFT market into a hype period of brutal growth. After the hype, it will naturally usher in a stage where the bubbles in a small cycle will gradually burst.

Users should be wary of individual explosions that create wealth effects and drive market FOMO Most of the teams behind such projects have vague background information and extremely high risks, which are very unsuitable for large-scale capital investment.

3/After the bubble

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A bursting bubble is not necessarily a bad thing.

Although the overall data performance of the NFT market is showing a downward trend, according to OKLink Data show that as of June 1, the total market value of the NFT market was US$16.972 billion, a 533-fold increase from US$31.7781 million on the same day two years ago.

The explosion of NFT has also led to the springing up of NFT trading platforms, Whether it is a comprehensive market, or focusing on subdivided tracks such as art, music, photography, sports, games, etc., new competitors can be seen running into the arena.

According to the NFT quarterly research report recently released by Nansen, an on-chain data analysis platform It shows that the NFT industry has outperformed the cryptocurrency market on a year-to-date basis, with ETH returning 103.7% year-to-date and USD returning 82.1%. While markets across most asset classes globally are down through February 2022, the NFT-500 gained 5.9% in the first 30 days of March. The market valuation is expected to reach $80 billion by 2025.

NFT track financing is also showing a good trend.

According to incomplete statistics, since April the NFT track has been completed at least 60 rounds of financing. In addition to common well-known crypto VCs, there are many traditional Internet VCs, Tencent/Alibaba/Xiaohongshu and other companies, as well as venture capital departments of major mainstream cryptocurrency trading platforms.

Take OKX Blockdream Ventures as an example, as the investment incubation of Ouyi Institutions, they announced their strategic investment in AlienSwap, an NFT market, this week.

Founder Dora said that the NFT competition will start as early as 2021 Dao, NFT is an important component of Metaverse, web3.0, and Gamefi. Although it is in the early stage of development, limited by the performance bottleneck of the current underlying public chain, there are no Dapps with tens of millions of monthly active users, but it represents tens of billions of dollars. blue ocean market. With the joint efforts of practitioners, the existing problems will be gradually improved.

Actually, about the series of problems caused by the lack of liquidity in the NFT market , the industry has successively proposed solutions such as NFT fragmentation, NFT-based Token issuance, and NFT mortgage lending.

However, these solutions are still in the water testing stage. With the continuous development of the NFT ecology and the influx of more users, liquidity problems will inevitably become The key to breaking through the bottleneck of development in the NFT field, the agreement to solve the NFT liquidity problem will capture huge value in the future.

In addition to entrepreneurs/developers who are paying attention to this direction, "Big factories" such as Ouyi/Coinbase/Binance, which hold encrypted market traffic passwords, are also deploying one after another.

Taking Ouyi as an example, its NFT market has now integrated Ethereum Fang/Polygon/BSC/TRON and OKC and other public chains, and aggregated the liquidity of multiple NFT trading platforms such as Opensea/LookRare. According to the person in charge of the NFT business, the team will provide users with a simpler and more convenient Web3 entrance by integrating liquidity. At the same time, it also hopes to use strong production and research experience and keen insight to strictly control the issuance of primary market projects and help NFT A virtuous circle of industry development.

Although the current market has entered a downturn, the NFT market has also followed suit However, just as the cryptocurrency market has developed from a market value of billions in 2017 to a market value of trillions in 2022, new narratives and new applications can only be born after concept hype, bubble bursting, and survival of the fittest. Moreover, compared with the strong financial attributes of DeFi, the scarce and unique NFT has a wider range of application scenarios. Except for some native gameplay in the Crypto circle, almost all web2.0 industries and brands can use it NFT to complete the transformation and upgrade of the Web3 era.

Like the two random characters at the end of Season 3 Just like the QR code, users can jump to the "Love, Death + Robots Official" series NFT casting page after scanning the QR code, and carry out NFT casting. Attracted by the novel design, unfold unlimited imagination.