2021 was a hype year for the NFT industry. In 2021, according to a DappRadar report, trading volume in the NFT industry reached $25 billion.
A little over a year ago, the average person started hearing about big digital art sales, like the Beeple digital collage of 5,000 paintings that sold for $69.3 million in ETH. Then came the NFT boom in the form of collections like CryptoPunks, Bored Ape Yacht Club (BAYC) and Art Blocks, etc. Traditional art didn’t take long either: in 2021, the Hermitage sold NFT copies of paintings from its real collection for 32 million rubles. The most valuable of them was the “Madonna Litta”, which was bought for 10 million rubles. – The Uffizi Gallery in Florence also tokenizes some of its most valuable works of art in the form of NFT and sells them. For example, a digital copy of Michelangelo’s Madonna Doni was sold for 140,000 euros. Then major brands such as Coca-Cola, Gucci, Nike and Adidas also entered the market, then famous athletes. The key question now is whether a similar success will be repeated in 2022.
First Quarter 2022.
In the first quarter of 2022, NFT showed decent results when compared to the overall cryptocurrency market. Blockchain research firm Nansen has developed a series of indices that can be used to evaluate the NFT market. According to the company, when evaluating the performance of the NFT-500 index from January 1 to March 9, 2022, it was found that the price of assets rose by 68.5% when expressed in ETH and by 20.9% when measured in U.S. dollars.
In addition, another very important trend was observed: the success of different segments of the NFT market varies greatly from one industry segment to another. The Metaverse-20 index grew 129.4% in the first quarter (expressed in ETH), while the gaming and digital art sectors saw NFT growth decline. The Gaming-50 Index, which reflects the gaming NFT market, performed worse mainly due to declining interest in games with Play-to-Earn monetization. The Art-20 Index’s decline was driven by a drop in NFT prices related to generated art. Yields in the NFT market remain strong, but a number of sectors are in decline.
While the NFT industry continues to grow rapidly, the digital art market and GameFi are overheated. For example, according to Dune Analytics data, the volume of trading on OpenSea (one of the largest NFT-marketplaces) reached its peak in January 2022 and started gradually dropping in February and March.
Of course, this was not only due to falling interest in the field of digital art, but also due to a number of infrastructural problems. In January 2022, OpenSea, the largest NFT marketplace, faced numerous complaints from users about massive platform failures. The glitches made it possible to buy NFT at old, low prices, which was quickly taken advantage of by attackers. For example, the Etherscan platform managed to track down a user with the nickname jpegdegenlove, who was able to take advantage of the vulnerability and thus extract 347 ETH.
Predictions for the rest of 2022
So, the prognosis for 2022 is as follows:
The NFT market will continue to grow, but interest in digital art and GameFi will decline. The use of financial NFTs, the use of interchangeable tokens to tag real assets, NFTs in meta-villages, NFTs as tickets, NFTs as tokenized rights, etc. will grow in popularity. The GameFi industry may rise again, but if developers stop releasing raw products, eager to get to market.
Monopoly and NFT will continue to move away from the Ethereum blockchain – slow transactions and high fees are doing their job, and it will still be an indefinite time before the move to Proof-of-Stake. This clears the way for blockchains like BNB Chain (formerly known as Binance Smart Chain), Polkadot, Flow, Terra, etc.
There is plenty of reason to be optimistic, as NFT technology has yet to realize its full potential. But don’t expect digital art and GameFi to be as fast money as it was in 2021, so it’s time to start understanding NFT technology as more than just pictures on a blockchain.
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