For the vast majority of NFTs, the brutal bear market of the past two years wasn’t just a phase: Some 90-95% of NFT collections will never return to pre-bear market valuations, DappRadar head of research Pedro told Herrera recently. Declutter.
For many NFT owners, the question of what to do with millions of now “worthless” JPEGs looms large. One possible solution: embrace these losses immediately and use them to save taxes.
Unsellable, a startup founded last year that buys illiquid NFTs from weary holders for pennies each to allow those owners to take tax write-offs, claims it has already helped clients declare a combined $4.2 million in realized to lose.
Skyler Hallgren, co-founder of Unsellable, thinks this amount is just the tip of the iceberg for an industry that has collapsed due to more than 90% in trading volume and activity since just two years ago.
“There is a huge amount – possibly a billion dollars – of hidden, unrealized losses downstream of the 2021 NFT bubble,” Hallgren shared. Declutter. “We can really do something about that.”
Unsellable claims that the average user has been able to write off $4,200 in losses on NFTs that have lost significant value. Last year, one user of the platform – Platform Engineer Thomas Mancini of NFT portfolio app Floor – said he had written off nearly $58,000 in NFT losses with the help of Unsellable.
Use @wgmiio and @unsellablenfts (no affiliation) to do some tax collection today. I can put together a thread and/or Loom if anyone is interested? pic.twitter.com/f06dMfUzd7
— Thomas Mancini (@NFTommo) December 7, 2022
A handful of “blue chip” NFT collections such as Bored Ape Yacht Club, CryptoPunksAnd Pudgy penguins have retained value during the ongoing crypto winter; Unsellable doesn’t touch that.
Instead, it runs a sort of graveyard for broken NFT toys: rug-pulling projects, abandoned collections, and copycats riding on coattails (think: Jacked Ape Club, Rich Monkey Social Club, IRL punks, BoobBirds-plus wildcards such as My banana fuck.)
All in all, the company has collected approx 26,000 NFTs so far.
Please be careful everyone. I had 5 worthless NFTs in my car and someone broke the window and left 12 more pic.twitter.com/3Qzjn6CeAJ
— UNSELLABLE NFTs (@unsellablenfts) December 27, 2023
“Some of it is weird, some of it is grotesque, some of it is funny; a very small percentage of it is aesthetically interesting,” Hallgren said. “The majority of them are derivative projects.”
The company says it has no personal relationship with the NFT holders it purchases from. Because these holders don’t expect to be able to redeem their NFTs at any point in the future, Unsellable says the arrangement is completely legal, akin to worthless stocks. buyback programs.
Unsellable charges a modest fee of approximately $2 worth of ETH for each NFT transfer. The company has managed to convert about 300 of the NFTs it purchased, mostly for modest paydays between $30 and $200. But sporadic NFT flipping isn’t Unsellable’s goal, its founders say.
“Our goal is to eventually create the largest collection of NFTs in the world,” Hallgren said.
The entrepreneur is interested in one day selling the platform to a crypto tax office or crypto tax software company; some of which, he says, have already reached out about a possible takeover.
As for the thousands of NFTs Unsellable already owns, he says a few parties have expressed interest in purchasing the collection. Some still hold out hope that one of the thousands of dead or dying JPEGs will one day come back to life and skyrocket in value.
Others, according to Hallgren, want to own the collection as a kind of museum piece – one that captures the incredible scale of speculative excesses that emerged at the height of the NFT market.
Edited by Andrew Hayward