NFT Trading Volume on Track to Drop Below $1B, But Does That Metric Matter?

NFT

The non-fungible token (NFT) market is evolving, and measuring its success will depend on which metrics you are .

In response to a brand new report launched by DappRadar on Thursday, NFT buying and selling quantity for the month of Could has reached $333 million to date, placing it on observe to fall beneath $1 billion for the primary time this 12 months. In distinction, there have been 2.3 million gross sales executed to date this month and a notable enhance within the variety of weekly energetic wallets interacting with NFTs.

Sara Gherghelas, a blockchain analyst at DappRadar, informed CoinDesk that the variety of NFT gross sales seems to be on observe to achieve or surpass final month’s numbers, versus buying and selling quantity, which is considerably lagging behind final month’s rely. In her view, this might sign that there are extra NFT merchants out there making smaller dollar-figure trades.

The variety of distinctive energetic wallets linked to NFT actions grew by 27% in Could, the report added, attributing the expansion to the Miladys NFT assortment – which acquired a notable pump from Elon Musk – in addition to earnings comprised of the hyped PEPE token that funneled again into the NFT market. This contributed to an uptick in on-chain exercise, which despatched Ethereum fuel charges skyrocketing.

General, Ethereum (ETH) continues to guide the NFT market in buying and selling quantity, although different blockchains like Solana and Polygon have the next variety of NFT gross sales, with 26.9% of NFT gross sales happening on Polygon and 13% on Solana, in line with DappRadar.

“With regards to the variety of NFT gross sales, Ethereum’s [market] dominance slips to simply 5.7%, indicating that the blockchain is primarily being utilized for conducting giant quantity gross sales, positioning it because the platform of selection for the ‘NFT aristocracy,’ the report says.

And at last, Blur and OpenSea stay at odds for NFT market dominance, although each are excelling in several areas, DappRadar says. Blur wins by a big margin when it comes to buying and selling quantity, with round $181 million in trades this month, largely catalyzed by the discharge of its Season 2 rewards marketing campaign and the launch of its lending protocol Mix. Nonetheless, OpenSea continues to have a bigger variety of energetic NFT merchants than Blur, suggesting that it continues to dominate with a mainstream viewers.

Does buying and selling quantity even matter?

So what does this all imply?

Gherghelas informed CoinDesk that buying and selling quantity stays an vital metric for measuring success within the NFT market, although the quantity has the potential to be manipulated by wash buying and selling, particularly amongst collectors seeking to earn rewards on platforms like Blur.

“We noticed the market manipulation that was taking place on Blur,” she mentioned. “Individuals are utilizing the platform to farm [Blur tokens] and take part in airdrops.”

She added that Blur just isn’t as involved in regards to the variety of energetic merchants on its platform, because it caters to a smaller variety of skilled merchants with giant pockets and expansive portfolios.

“Proper now, if you happen to go on Blur, you are utilizing Blur to purchase costly NFTs and that is its goal,” she defined. “[Pro platforms] want the massive cash flowing in and do not care about getting extra customers.”

Different knowledge backs up Gherghelas’ observations. Nansen tweeted in March that a lot of Blur’s buying and selling quantity on the time got here from simply its high 100 NFT merchants.

Nonetheless, she mentioned buying and selling quantity stays an vital metric, as long as you think about the context.

“I feel the buying and selling quantity, at some factors, is an important metric to see precisely how a lot cash is shifting by means of the NFT market,” she mentioned. “Throughout the bull market, large buying and selling quantity meant that lots of people had been coming into the area and that folks had been enthusiastic. You might have made some huge cash.”

“Proper now, if the buying and selling quantity is down however the gross sales rely is up, which means that we have now the identical quantity of merchants, however their conduct has modified.”

She added that it is vital to think about what sort of NFT you are when contemplating buying and selling quantity. She cites the sale of parcels of land throughout metaverse platforms as totally different from gross sales of art-based NFT collections.

“Once we take a look at the buying and selling quantity for the metaverse, I feel that is an entire totally different subject,” she defined. “The buying and selling quantity issues there as a result of buying and selling quantity equals the utility of the land, which equals the revenue that you could make. It is the entire ecosystem. It is a new economic system there.”