The market for non-fungible tokens (NFTs) has been experiencing a surge in popularity in recent months, with trading volumes reaching nearly $2 billion in March. According to data from DappRadar and supplemented by on-chain data from Dune, the total trading volume in March was just over $1.95 billion, which represents only a slight dip from the record-breaking $2.04 billion seen in February. The vast majority of this trading volume came from Blur, a relatively new NFT marketplace, which logged almost $1.35 billion worth of Ethereum NFT trades in March, up slightly from about $1.32 billion in February.
One of the reasons for Blur’s dominance in the NFT market is its rewards system, which incentivizes traders to flip NFTs in exchange for the platform’s BLUR token. This has attracted large “whale” traders who hold large positions in a given collection and act as market makers. However, the surge in trading volume and the resulting boost in overall NFT market sales has raised questions about whether such trading activity should be classified as “manipulated” or “wash trading,” as data platform CryptoSlam has done.
Despite the controversy, the trend has continued, with more token rewards promised for users. OpenSea, still the leading NFT marketplace in terms of total unique wallets, logged about $424 million worth of trading volume in March, down from $587 million in February. Overall, Ethereum NFT trading was nearly even in March, from $1.81 billion in February to $1.82 billion.
While the total number of NFTs sold in March was lower compared to February, with about 5.8 million NFTs sold compared to almost 6.5 million NFTs in February, the surge in trading volume has continued to attract attention to the NFT market. However, the dominance of one marketplace raises concerns about the sustainability of the trend and its impact on the broader NFT market.
BLUR’s disruptive marketing approach, which includes more incentives and liquidity of its airdrop, has impressed some industry experts, such as John Stefanidis, Co-founder and CEO of Balthazar. He believes that BLUR’s approach is exciting as it offers a better user experience and a more creative go-to-market approach. However, he also stresses the importance of incentivizing creators, as taking that away in the short term might be a great way to drive attention to the creators, even though they’re trading off on royalties.
In terms of market share, Blur is leading with 64.5% share across the five NFT marketplaces, followed by OpenSea with 17.6%, X2Y2 with 16.2%, while LooksRare held 1.7%, and Solanart with 0.01%. OpenSea still has more users than the other marketplaces, with 750,874 recorded in February, although this has fallen by 14.8% since January, while Blur has more than doubled its user base over the same period, to 348,940.
The total volume across these five NFT marketplaces (OpenSea, LooksRare, Solanart, X2Y2, and Blur) has almost doubled (90.8%) in February 2023 compared to January 2023, to $2.06 billion. It was largely due to Blur’s $1.33 billion of trading volume in February. Although the NFT market’s total trading volume in February 2023 was the highest monthly total since May 2022, there are concerns about the market’s sustainability, especially given the dominance of one marketplace and the role of incentives in driving trading activity.
In conclusion, the NFT market has seen a significant surge in trading volume in recent months, particularly in February and March of 2023. Despite a slight dip in March, the market is still thriving and has seen nearly $2 billion worth of trading volume per month.
The majority of this trading volume is attributed to the NFT marketplace Blur, which has dominated the market with its reward token BLUR. This token has incentivized mass flipping from whale traders and has raised questions about the legitimacy of trading activity on the platform.
While the surge in trading volume is exciting, it’s important to consider whether it is organic and sustainable. As Balthazar’s CEO John Stefanidis has pointed out, incentivizing creators is crucial to the continuity of innovative NFT projects.
Furthermore, while Blur may currently hold the largest market share, it’s important to note that OpenSea still has more users than any other marketplace. The NFT market is constantly evolving, and it will be interesting to see how these marketplaces continue to compete and innovate.
Overall, the NFT market is still relatively new and continues to see significant growth and development. With more legitimate and higher quality projects emerging, it’s clear that the market is evolving and maturing. The use cases for NFTs are expanding beyond just art and collectibles, with NFTs being used in gaming, music, and other industries.
As the market continues to evolve, it will be important to ensure that creators are properly incentivized and that the trading activity is organic and sustainable. It will also be interesting to see how new marketplaces and projects emerge and how the existing marketplaces adapt to remain competitive.
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