The Dream That Did Not Materialize
NFTs emerged in early 2021’s as a cool way for traditional artists to rake in some life-changing money. and all you needed to cash into this new gold mine was a token! So artists jumped at the offer to buy ether so that they could mint NFTs of their work. Despite this, the taps didn’t flow and the money didn’t pour in as expected—unless your name was Beeple.
Now all the hype that made NFTs the major talking point of the crypto community is all but gone. And what is left of the once booming market is dust within the wind. NFTs are getting an unattractive piece of history. People aren’t trading them, and also the only ones talking about them are those trying to sell them.
NFTs have witnessed a steady decline since the start of this year. And at the moment, monthly transaction volume on OpenSea has dipped by a whopping 90 percent. In August, the monthly transaction volume on OpenSea was $500 million, compared to $4.8 billion in January, according to data from the Dune Analytics dashboard.
Layoffs and The Crumbling Market
The wall in the dam began to crack when the wave of layoffs started. The biggest indication that the hype was dissipating came in July when OpenSea announced it absolutely was scraping 20 percent of its staff. It was not clear how many they were before the layoff, but after this, OpenSea had only 230 employees left.
Those layoffs coincided with a plunge within the wider crypto markets. Bitcoin has lost 57 percent of its value since January, falling to $20,000. Ether, the second most popular crypto, has plummeted 58 percent, to $1,500, over the identical timeframe. and a number of other large crypto lending firms have filed for bankruptcy.
With inflation crippling the stock exchange, the final thing retailers want to take a position in straight away are illiquid NFTs. By their very nature, they are difficult to sell. Whereas one bitcoin is nearly as good as the other, you have got to seek out a special buyer for your NFT—and if the special buyer doesn’t come along, you may be stuck holding your NFT for an extended time.
Another noticeable sign that the NFT markets have cooled is that the ground price for popular NFT projects is falling. The minimum anyone is willing to bid for a Bored Ape guild NFT is currently 78 ETH ($117,000), in keeping with CoinGecko. At its height this year, on April 30, the ground price for a BAYC NFT was 153 ETH ($530,000).
Scams, Hacks And A Bad Name
Recently the NFT space has experienced a massive wave of fraud and hacks. such that “NFT” is beginning to become synonymous with scams in many circles. Because NFTs are really easy to mint, opportunists jump in at any new opportunity to make a quick buck.
Furthermore, the death of Queen Elizabeth II saw a flood of Queen Elizabeth-themed NFT collections and special-edition NFTs in various existing projects enter the market.
When the David Bowie estate announced plans to launch NFTs with OpenSea, fans were irate. “How about we just don’t with the NFT guff and just raise money for charity without employing a scheme,” one critic wrote.
Big Brands, Celebrities and The Poor Choice of NFTs
Some big brands hopped onto the NFT space now feeling an especially harsh backlash. Especially latecomers like Starbucks are widely mocked for extending their rewards program that allows customers to gather NFTs.
Starbucks must have known the reaction to its NFT launch would be bad because it instantly disabled replies on its Twitter announcement.
Celebrities who once shilled so-called “blue-chip” NFTs are also less inclined to try and do so. Last month, Truth in Advertising sent letters to 17 celebrities, including Jimmy Fallon and Gwyneth Paltrow, reminding them that not disclosing material connections when posting about something on social media violates FTC guidelines.
NFTs Are Not Going Away soon
Despite their bad reputation, the bad news is that they won’t go away completely. After funneling huge money into the space, venture capitalists will want to determine returns on their investments—even if it means throwing good money after bad.
In May, the venture-capital firm Andreessen Horowitz announced it had raised a $4.5 billion crypto fund, the industry’s largest to this point. that cash has got to go somewhere.
The only thing that affects how the globe views them is that Ethereum, the blockchain that the majority NFTs survive, is shifting to a more energy-efficient proof of stake, so the network will not consume the energy of a little country. The CO2 projection of Ethereum was one in every of the largest public objections to NFTs.
We’re also seeing a move far from art NFTs to gaming, as NFT promoters desperately attempt to give them utility. Since August 1, Web3 games and metaverse projects have raised over $750 million, per a DappRadar report.
After raising $450 million in an Andreessen Horowitz-led round in March, Yuga Labs, the corporate behind Bored Apes guild, has shifted to making a massively multiplayer game, which it’s now tasked with getting off the bottom.
Even when sense says that NFTs have gone the way of Beanie Babies, venture capitalists, and their over-funded projects, will still be shilling them long gone the purpose where we’ve all stopped listing.