Data from Web3 developer platform Alchemy shows that while NFT trading volume fell 41% in Q2, nearly six million smart contracts were deployed across EVM-enabled chains
While fewer collectors are trading NFTs, more developers are focusing on building new use cases to mainstream Web3 technologies
The past few months have been tough for non-fungible token (NFT) trading. But it seems that builders are still optimistic about Web3.
According to the latest Web3 Development Report from developer platform Alchemy, while NFT trading volume fell 41% in Q2 2023, 5.9 million smart contracts were deployed across Ethereum Virtual Machine (EVM)-enabled networks, including Ethereum, Arbitrum, Optimism and Polygon. This number represents a 302% increase since the first quarter and an increase of 1,107% since the second quarter of 2022.
In addition, 26.8 million Ethereum software developer kits (SDKs) were installed in Q2, up 7% from the previous quarter.
While not all new smart contracts deployed or Ethereum SDKs installed will be used to build NFTs, continued development points to a positive direction for Web3’s growth and steps toward mass adoption. Despite the bear market, the price of Ethereum is up 12% since last year.
Blake Tandowsky, growth analyst at Alchemy, told CoinDesk that whale NFT trading volumes peaked in the second quarter of 2022 and fewer users are now entering the market. Still, the emerging use cases for NFTs, such as gaming, have left developers hungry to build on the blockchain.
“We saw pretty strong new users in the second quarter of 2022, but as time went on, the number of new users entering the NFT volume space basically couldn’t sustain that level of growth. a lower number than normal,” Tandowsky said. “One thing that stands out is the need for additional use cases for some NFTs … there could be many future NFT use cases that look very different from their original JPEG iteration.”
The report highlighted a number of notable Web3 use cases last quarter, including the decline of footwear retailer Nike’s Our Force 1 collection, the growth of decentralized social media platform Lens Protocol, and Google Play’s support for gaming marketplace games with integrated NFTs.
“There are obviously a lot of developers building on Google, and I think the ability for them to now implement certain integrations with [decentralized apps] is really just exciting for gaming, for NFTs, for all parts of the blockchain ecosystem,” Tandowsky said. “It reduces the friction or barriers of where you can and can’t deploy dapps.”
Despite efforts to make Web3 mainstream, NFTs have seen dramatic ups and downs in terms of trading volume since early 2023. In March, NFT trading volume hit a high of $2 billion, a number not seen since Terra’s death spiral, which some say was a catalyst for the bear market. Still, trading volume in mid-May was on track to fall below $1 billion — the lowest level since January. Since then, popular NFT collections have lost significant value from their bull market highs, including Azuki and Bored Ape Yacht Club.