- New data shows that NFT activity is gradually recovering but remains below the robust levels seen in 2021 and 2022.
- Blur, a prominent player in the NFT ecosystem, experienced a surge in Ethereum NFT trades and surpassed OpenSea as the market leader, driven by its unique token-trading approach.
- The daily trading volume on NFT marketplaces peaked in late February but has since declined, although the market is still in a better position than in November 2022. The dominance of Blur’s trading volume is largely influenced by airdrops, raising questions about the sustainability of the NFT market.
- The decline in royalty-paying transactions and the elimination of royalty fees by some NFT marketplaces impact the income streams of NFT creators and raise concerns about the future of royalty-based income.
New data reveals that while NFT activity is gradually recovering from the crypto winter, it remains below the robust levels witnessed in 2021 and 2022. In the first quarter of 2023, there was a notable surge in trading volume followed by a subsequent decline. However, despite the decline, the current state of the NFT market surpasses the lows witnessed in November 2022. Blur, a prominent player in the NFT ecosystem, experienced an impressive surge in Ethereum NFT trades, surpassing OpenSea as the market leader. This surge was driven by Blur’s unique token-trading approach, which treated NFTs more like fungible tokens.
Trading Volume Dynamics
The daily trading volume on NFT marketplaces reached a yearly peak of $130 million in late February. However, the daily averages for March, April, and May witnessed a decrease, with figures standing at $70 million, $35 million, and $30 million, respectively. Despite this decline, the NFT market is still in a better position compared to the lows of November 2022.
Blur’s Dominance and Airdrop Impact
The competition between Blur and OpenSea has become one of the most highly anticipated events in the NFT ecosystem. Blur’s surge in trading volume was propelled by a distinctive token-trading approach and a highly anticipated token airdrop. Around the time of the airdrop, Blur experienced a peak of hype, leading to its dominance in trading volume, commanding 80% of the market share. In contrast, OpenSea witnessed a decline, settling at a 15.5% trading volume market share. This surge in trading activity was largely due to airdrop framers positioning themselves for Blur’s season 2 token airdrop.
Impact of Airdrops on Trading Activity
Galaxy Research notes that a significant portion of NFT trading activity in 2023 has been “inorganic” and heavily influenced by Blur’s airdrops. The dominance of Blur in trading volumes is expected to persist throughout the Season 2 airdrop period. This reliance on airdrops raises questions about the sustainability and long-term dynamics of the NFT market. While airdrops may drive short-term activity, it remains to be seen how the market will evolve once the airdrop period concludes.
Impact of Royalty Fees
Several NFT marketplaces, including Blur, have chosen to make royalty payments optional or eliminate them entirely to offer competitive fees. However, this move jeopardizes secondary trading markets as it diminishes the incentives for NFT creators who rely on secondary royalties for income. Transactions involving royalty fees experienced a sharp decline across major NFT marketplaces, with OpenSea and Blur witnessing a staggering 90% drop in royalty-paying transactions. This decline is attributed to OpenSea’s decision to enforce a lower royalty fee, impacting the revenue streams of NFT creators.
Future Outlook and Income Generation
As market dynamics evolve, NFT creators will need to explore new structures or strategies to generate income. The extent of control that NFT marketplaces hold over royalties will play a crucial role in determining the longevity of royalty-based income streams. Creators will need to adapt and innovate to ensure sustainable income generation as market dynamics continue to evolve in the NFT space.
A surge in trading
The NFT market has experienced a surge in trading volume driven by Blur’s unique token-trading approach and the excitement surrounding its airdrops. While trading volume has declined in recent months, the market remains in a better position compared to the lows of November 2022. However, the heavy reliance on airdrops and the decline in royalty-paying transactions raise concerns about the future of the technology and fairness towards creators and collectors alike.