NFT
While NFT activity shows a gradual recovery after the crypto winter, it remains significantly below the robust levels of 2021 and 2022, new data shows.
Trading volume experienced a notable increase in the first quarter of 2023, followed by a subsequent decline.
According to a May 18 Galaxy Research report, daily trading volume on NFT marketplaces experienced a decline after hitting an annual peak of $130 million in late February.
The daily averages for March, April and May showed a decrease, with figures of $70 million, $35 million and $30 million respectively.
But when we consider various metrics, the current state of the NFT market significantly surpasses the November 2022 lows.
According to Galaxy, the NFT market battle between Blur and OpenSea has emerged this year as the most highly anticipated event in the NFT ecosystem, drawing the attention of many.
With a notable 361% increase in Ethereum NFT transactions, Blur surpassed OpenSea as the NFT market leader in February by adopting a distinctive token trading approach, treating NFTs more as fungible tokens in the focus of the trader.
Around the much-anticipated token airdrop on February 14, Blur experienced the height of hype.
Subsequently, Blur’s dominance in trading volume rose to an all-time peak, with 80% of the market share, while OpenSea witnessed a decline and settled on a 15.5% share of the market, Galaxy noted.
“This activity was largely due to airdrop framers positioning themselves for Blur’s season 2 token airdrop,” research analyst Gabe Parker wrote.
The ongoing “season” 2 airdrop, determined by a user’s loyalty score and listing volume, is expected to end with a substantial airdrop of over 300 million BLUR tokens.
Originally scheduled to end in April 2023, the airdrop was reportedly extended until May 2023, with speculation among users that it may be extended further.
Galaxy said a significant portion of NFT trading activity in 2023 was “inorganic,” heavily influenced by Blur’s airdrops. It believes Blur’s dominance in trading volumes is expected to continue through the Season 2 airdrop period.
In an effort to offer competitive rates, several NFT marketplaces like Blur have opted to make royalty payments optional or eliminate them altogether.
However, this move jeopardizes secondary trading markets as it reduces incentives for NFT makers who rely on secondary royalties for revenue.
According to Galaxy’s findings, royalty transactions experienced a sharp decline in major NFT marketplaces from February onwards.
OpenSea and Blur, which previously had notable year-to-date highs, witnessed a staggering 90% drop in royalty-paying transactions.
The main reason behind OpenSea’s sudden drop in royalty-paying users has been attributed to its decision to enforce a 0.5% royalty fee instead of the usual 5% to 7.5% range.
Galaxy said that with the two largest marketplaces now operating under a royalty-optional model, it’s becoming clear that creators need to explore new structures or strategies to monetize NFTs.
The degree of control that NFT marketplaces have over royalties will ultimately determine the longevity of royalty-based revenue streams.