- NFTs are not as profitable as they used to be, according to a report by Nansen.
- A third of all minted NFTs record little to zero activity on them.
- This is in contrast with the 2000% growth that the minting of NFTs experienced in the last 12 months.
NFTs shot to the limelight in 2021, recording impressive volumes and other metrics along the way. Twelve months later, it seems things have become sour with the rise in the number of dead collections.
One In Three NFTs Are Dead
Blockchain analytics firm, Nansen, published a report chronicling the latest trends in the NFT markets. Drawing from on-chain data, the firm noted that one out of every minted NFT collection does not get sufficient traction or trading activity.
“When analyzing the profitability of minted NFTs, it shows that, on average, one in three NFTs minted go on to become a dead collection with little or no trade activity,” read the report. Nansen attempted to deduce potential reasons for the rise in “dead projects” citing competition as the main one.
In the last year, the number of individuals minting NFTs has spiked by over 4,000% to settle at over 1.2 million. The surge in the figures has led to stiffer competition as the market naturally selects the projects that enjoy the spotlight or those that wither away. According to Stephen Young, the founder of NFTfi, “money grab projects will die” while funds will flow to projects that are better than their original minting price.
Paul Harwood of Nansen noted that the recent trend suggests that the market is “maturing” and only the viable projects will be able to thrive in the increasingly competitive space. The report noted that the average cost of minting NFTs is lower compared to 2021 and yet the number of dead collections is rising in proportion.
The Grand Decline of NFTs
Zooming out for a broader view, it is evident that NFTs have been in a general decline over the last few months. Popular NFT trading marketplace OpenSea has recorded a decline of double-digits in the last 12 months, according to DappRadar.
Prices of NFT collections are also dwindling at an alarming pace. In January, an average NFT was selling for around $6,000 but by mid-March, average prices had tumbled to below $2,000. Daily sales are at $26 million which is in stark contrast to the highs of $160 million recorded at the start of the year.
The ecosystem has also endured a series of hacks and exploits that could be responsible for the decline. Russia’s invasion of Ukraine and increased monitoring by regulators have played a role in the supposed “bursting of the NFT bubble.”