In terms of volumes, June saw the worst performance for NFTs since the beginning of the summer of 2021. While January saw record highs, the sector’s activity has since dropped off significantly. But this trend is not completely correlated to the crypto market.
NFTs see volumes fall
While non-fungible tokens (NFTs) saw their volumes explode at the beginning of the year, the trend has since reversed. This is especially true since June recorded its worst performance since the beginning of the summer of 2021.
While June concluded with a total volume of $1.04 billion, the January high peaked at $16.57 billion. For a more rational comparison, May had recorded $4 billion. But in the space of one month, the volume still fell by 74%.
This downward trend can also be seen between the two main competitors, namely OpenSea and LooksRare.
The drop is even more severe for LooksRare. While the latter, which was aiming to dethrone OpenSea, represented the majority of volumes in the first quarter, its fall is more violent.
Taking the day of February 2, 2022 as an example, LooksRare generated $703.1 million in volumes, compared to $182.58 million for OpenSea. As of June 30 of this year, OpenSea generated $15.59 million in volume when LooksRare stood at $5.52 million.
Comparing these two extremes, if they are comparable at all, we can see that even if the drop is important and generalized, it is even more severe for the outsider. Indeed, the latter sees its volume divided by 127,4 on the two compared days, when this coefficient is 11,7 for OpenSea.
The consequences on Ethereum (ETH)
If we focus on the Ethereum blockchain (ETH), OpenSea remains the largest consumer of daily gas. The size of the volumes of the famous NFTs marketplace is actually the barometer of the price of transactions on Ethereum.
However, that didn’t stop the network from seeing the average cost of a transaction hit its lowest since December 12, 2020 on Saturday. Back then, the average price recorded $1.62 compared to $1.69 this weekend.
Of course, the health of the NFT market is not the only reason for the drop in fees. This trend is part of an overall drop in network usage. Nevertheless, this decrease in volumes still impacts the price of gas on Ethereum.
To know the gas consumption of OpenSea, we must study the protocols used by the platform. Since the deployment of Seaport in mid-June, OpenSea has typically been charging between 200 and 400 ETH per day.
If we compare this trend to Wyvern, OpenSea’s previous smart contract, we can see the full extent of the decline in activity. On Wyvern V2, active from March to June this year, OpenSea was generating between 300 and 1000 ETH in fees per day. But the drop is even more pronounced when comparing the current period, to when the application was running on Wyvern V1.
The data from the various smart contracts used by OpenSea therefore corroborates the general decline in activity in the NFT sector.
With the drop in volumes recorded by NFTs, one might think that their prices have collapsed. While the trend is indeed down, it is not comparable to the crypto market as a whole.
For the Bored Ape Yatch Club (BAYC) collection, for example, average selling prices are seeing a 30-35% discount since a high in late April. That high was due to the arrival of the Otherside metaverse.
Overall, the decrease in volume will instead lead to a decrease in liquidity. An NFT will then be harder to sell, but it will not necessarily be sold for less.
On the other hand, it seems difficult to give a general price trend for this asset class. And for good reason, their value depends directly on the popularity of a project and the community that supports it. In this respect, price behavior is more disparate than in crypto-currencies, where Bitcoin (BTC) is the trend.
However, it is certain that the slowdown in activity is purging the market of projects without added value.