By Ezequiel Pescetti, Director of Research at Finanflix
Throughout this article, you’ll come to understand how the NFT market has changed during the last year.
We have to understand that the NFT market is an unconventional one, with ever-changing rules (tendencies), defining it as a dynamic market.
Why is it? You’ll be wondering about the nature of this space, and how founders and designers within NFT projects are always looking to reinvent themselves with the look set on generating bigger income or being the next bluechip project that everyone’s gonna be talking about.
As a consequence, within the last year of this young market we’ve had 3 pretty clear stages:
Early NFT boom (golden age): February 2021
This stage could be described as the Golden Age, as every collection launched during this period generated thousands of dollars in profits, with no clear tendencies nor complex marketing strategies, only FOMO and hype. Anyone could launch an NFT collection and make money. Great exponents of the NFT scene were born during this time, such as Bored Ape Yacht Club created by Yugalabs studio on one hand and RTFKT on the other “We are a creator-led organization. RTFKT uses the latest in game engines, NFT, blockchain authentication, and augmented reality, combined with manufacturing expertise to create one-of-a-kind sneakers and digital artifacts”.
During this stage, P2E was also born, with Axie Infinity being the one standing out from the crowd and having a squad price that went from $150 to $3000 due to big demand and low supply. This kind of NFT had its peak but collapsed due to various factors to the point where people were losing money while playing.
To sum it all up, it was a time of growth for the NFT market plagued with oversupply and FOMO, and those who benefited the most were the early adopters.
I’d describe as a transition one, where projects started adopting different methods for launches, marketing strategies and even creating narratives for them since now people were wearier when investing in a project. During this stage, generalized FOMO wasn’t as big and several projects born during the first stage either ceased to exist or were left by their founders. Also, almost by default, projects started to include the well-known “NFT UTILITY” which ended up losing relevance due to an excess in supply (although well implemented it is actually a plus)
Something to note is that this was when we had the first
This event got its name from degens due to how Tx volume and traded NFTs on the Solana blockchain spiked. Golden Age had reached Solana, but not to stay.
A large number of projects started to get deployed in Solarium SOL/USD due to low commissions, and the large amount of transactions per second this blockchain is able to execute and so avoiding gas wars like they happen on ETH ETH/USD. (Spoiler alert: Solana’s blockchain had to be reset over 3 times in the current calendar year).
Not everything was great as the same thing happened as with the last stage: the market got saturated and the projects were just copy-pasted without much innovation from the founders, with several of them using the same strategies for launch and marketing, resulting in none of them standing out from the crowd.
That’s how we reach the final stage
Current affairs: During this period we can observe how those projects who focus on building during the first stage (Bayc & RTFKT) are the ones who dominate the NFT scene today. They managed to create an ecosystem surrounding their brand that fits perfectly with the essence of the NFT market. Something to highlight is their ability to innovate and how these 2 projects paved the way in this market. Be it because of the wearables on RTFKT created in collaboration with Nike or the Theotherside metaverse.
On the other hand, due to NFT market history founders started reinventing ways of launching their projects. To catch the eyes of degens, the one who made the most noise during the last few months was GoblinTown. In very few words, the collection came up from nowhere without any marketing campaigns nor influencers shilling them. They just launched a collection one day, no discord, no roadmap, and with the mint price being free. This caught the attention of several users as it was a less-than-common practice up until that day (May 22nd, 2022). With a characteristic aesthetic and an unusual minting process, Goblintown.wtf set a precedent in the industry, and so it happened that only a few hours later thousands of collections hit the market trying to imitate its launch strategy and take advantage of the hype created when a collection has this kind of impact on the market.
Three things to note:
Due to not having a discord server, the only way Goblintown holders to meet each other was through Twitter, so the project achieved great organic growth due to the exposure its holders created.
Due to market context (traded volume was decreasing over the past few months), the founder set the mint price to 0, so anyone could mint and there was no entry barrier, they just had to pay for gas fee.
They created a new business model where the founder’s biggest income didn’t come from the collection’s launch but from the traded volume it generates. The flip side to this is, that if your collection doesn’t have that much success, it’s likely it won’t have much traded volume so you’ll be at a loss.
This market’s biggest actors understood the game and they keep raising the bar, so the winning formula keeps evolving. Which one do you think will be the next trend?