Original author: stella@footprint.network
In August, the cryptocurrency market experienced significant volatility, with a large fluctuation in the price of Bitcoin. At the same time, the NFT market saw a sharp decline, raising concerns about the future development trends of this emerging industry.
Have we reached the bottom of the bear market? Positive industry news has not stopped, with 5 Ethereum ETF applications submitted this month and the first cryptocurrency exchange license issued in Hong Kong. However, the bearish sentiment in the NFT market still prevails, with a noticeable decrease in user activity and engagement.
In this report, we will delve into the highlights of the NFT industry in August, exploring the blockchain, trading markets, and investment dynamics in the NFT field. Despite the recent market slump, we have still identified a glimmer of hope: innovative NFT projects continue to emerge, prioritizing the true interests of creators and users, attracting attention and support.
The data in this report is sourced from Footprint Analytics' NFT research page. This page provides an easy-to-use dashboard that includes key statistics and metrics to understand the latest developments in the NFT industry and is updated in real-time. You can click here to find the latest information on transactions, projects, fundraising, and more.
Key Overview
Cryptocurrency Market Overview
In August, the value of Bitcoin fluctuated significantly, ranging between a low of $23,664 and a high of $30,057.
NFT Market Overview
In August, the NFT market experienced a significant decline; compared to July, trading volume decreased by 21.7%; transaction volume declined by 20.6%; the number of unique users dropped by 27.4%.
The blue-chip index is showing a downward trend, indicating a stronger bearish sentiment in the market.
Public Chains and NFT Trading Markets
After falling behind Polygon for three consecutive months, Ethereum has regained its lead in terms of independent user count.
Blur's leading advantage in trading volume continues to shrink, from 52.5% to 48.3%.
NFT Investment Situation
In August, the NFT market remained sluggish, with a total of 5 rounds of financing amounting to $14.45 million.
Although NFT investment activities have been inactive recently, projects that demonstrate innovation and prioritize the interests of creators and users continue to attract attention and support.
Highlight of the Month: Royalties
OpenSea announced that it will stop mandatory royalty fees starting from March 2024, making it optional.
Key Developments this Month
MasterExchange raised $2.7 million in funding and completed its first music offering (IMO).
NFT startup FirstMate raised $3.75 million in funding, led by Dragonfly Capital.
OpenSea released redeemable NFT industry standards.
FingerprintsDAO partnered with CryptoPunks creator Larva Labs to launch a membership-based NFT series called "Voxelglyph".
Magic Eden launched a $1 million fund to nurture blue-chip NFT series on the Polygon chain.
Sotheby's faces a lawsuit for alleged misleading and manipulating the BAYC NFT sale.
Cryptocurrency Market Overview
In August, Bitcoin experienced significant price fluctuations, ranging between a low of $23,664 and a high of $30,057 within the month. On August 1, the submission of 5 Ethereum (ETH) applications led to a brief surge in Bitcoin's value, reaching $30,000. However, the excitement was short-lived as BTC and ETH prices quickly fell due to the market weakness following the downgrading of the US government's credit rating.
On August 8th, Bitcoin once again surpassed the $30,000 mark, possibly stimulated by the news of PayPal launching a new stablecoin called PayPal USD (PYUSD). However, Bitcoin quickly reversed its course and dropped to nearly $25,000. This decline was driven by a series of negative events, including reports of SpaceX selling a large amount of BTC, the Evergrande crisis in China, and a massive liquidation of $1 billion in the cryptocurrency derivatives market in a single day.
In late August, a U.S. appeals court made a favorable ruling for Grayscale in its lawsuit against the U.S. Securities and Exchange Commission, causing the price of Bitcoin to surge from $26,000 to $28,000, ultimately stabilizing around $26,000.
NFT Market Overview
In August, the trading volume in the NFT market dropped significantly, reaching a total of $527 million, a decrease of 21.7% compared to July. The number of transactions decreased by 20.6% to 1,119,066, and the number of unique users decreased by 27.4% to 313,610.
Source: NFT Market Overview
The recent market volatility has had a significant impact on market capitalization and trading volume. The blue-chip stock index is trending downwards, indicating a stronger bearish sentiment in the market.
The floor price of the second-ranked blue-chip NFT BAYC has been continuously declining since January 2023. In August, it dropped below 23 ETH, indicating that the bear market is still ongoing and more time is needed for recovery.
Source: NFT Market Cap & Volume
Source: BlueChip Index
These data indicate a continuous slowdown in the NFT market, with significant changes in user participation and investment activities. Similar to the cryptocurrency macro market, the current characteristics of the NFT market are lack of confidence and a risk-averse mindset.
In August, the buyer/seller ratio in the NFT market was 131.63%, a decrease of 17.5% from July. There were a total of 211,696 buyers and 160,822 sellers during the month. It is worth noting that compared to the previous month, the number of buyers decreased by 29.4%, and the number of sellers decreased by 20.1%. In this month, except for a significant increase in the number of buyers on August 3rd, the daily number of buyers and sellers remained relatively stable.
Source: Daily Buyers & Sellers
On this day, buyers of the StarPass project on the Polygon chain accounted for the largest proportion. According to PolygoScan, the largest NFT holder, with 62.7% ownership, engaged in frequent transactions on August 3 at low or nearly zero prices and royalties. However, in terms of transparency, the details disclosed by the project are very limited.
Source: NFT Buyer & Seller
The trend of daily active users shows a similar trend to that of daily buyers and sellers, suggesting a positive correlation between the two.
Source: Daily Unique Users
Public Chains and NFT Trading Markets
In August, Ethereum continued to dominate the NFT market, accounting for 97.8% of the total trading volume. However, Ethereum's overall trading volume decreased by 21.9% compared to July, totaling $515.2 million, reflecting a downward trend in the entire NFT market.
The number of unique users on Ethereum is 147,140, a decrease of 10.7% compared to July. It is worth noting that, after lagging behind Polygon for three consecutive months, Ethereum has regained its leading position in terms of the number of unique users.
Source: Monthly Unique Users by Chain
In terms of the NFT trading market, Blur's leading advantage in trading volume continues to shrink, dropping from 52.5% to 48.3%. On the other hand, LooksRare has shown an upward trend during the same period, increasing its market share from 11.3% to 14.7%.
Source: Monthly Volume by Marketplace - Distribution
OpenSea still maintains its leading position in terms of the number of independent users, with a large user base of 268,300 people. However, the overall user activity in the industry has declined, leading to a decrease in the number of users using the platform.
Source: Monthly Unique Users by Marketplace
The NFT market is entering a period of adjustment, which provides a valuable opportunity for the industry to explore innovations and upgrade its products.
OpenSea is actively pushing for industry standards for redeemable NFTs. On August 28th, OpenSea released a blog post outlining the standards and roadmap for redeemable NFTs. Redeemable NFTs have intrinsic value or utility and can be "redeemed" for another NFT, whether it exists on-chain or off-chain. These initiatives enable creators to establish closer connections with their communities, foster more immersive member experiences, and unlock new applications for Web3 technology. Notable examples of redeemable NFTs include GutterMelo by PUMA x Gutter Cat Gang, Invisible Friends Physical Collectibles, and Crowd Phase 3 by Creature World. In general, the process of acquiring a new NFT through redemption involves the destruction of the original NFT. However, OpenSea's groundbreaking standards and user experience go beyond this traditional approach by introducing the concept of feature exchange.
Source: Invisible Friends - OpenSea
Redeemable NFTs are one of the most exciting applications in the NFT space, but they lack a standard. OpenSea has released four improvement proposals (ERC-7496, ERC-7498, SIP-14, and SIP-15) and actively seeks community feedback and partnerships to drive the future development of projects.
NFT Investment and Financing Situation
In line with the previous month, the NFT market remained sluggish in August, with a total of 5 rounds of financing amounting to $14.45 million.
Music investment trading platform MasterExchange has raised $2.7 million in seed financing from investors, including Vectr Fintech, a venture capital firm based in Hong Kong, and Claes-Henrik Julander, CEO of Pan Capital.
MasterExchange provides a First Music Offering (IMO) system, similar to Initial Public Offerings (IPOs), to notify investors about potential song investment opportunities. Any copyright beneficiary, including artists and music labels, can initiate an IMO on the MasterExchange platform. Investors who purchase song copyright shares can receive income generated from song usage, such as streaming or commercial albums. MasterExchange provides comprehensive investment prospects for each song, prioritizing transparency to enable users to make informed decisions.
Source: MasterExchange Website
This innovation allows music enthusiasts to interact with their beloved music in a novel and engaging way through NFTs. It provides creators with the opportunity to sell partial shares of future earnings, thereby promoting artistic development.
The NFT issuance platform DRiP on the Solana blockchain has successfully raised $3 million in seed funding, aiming to accelerate the development of collectible content and Web3 social platforms. DRiP enables creators to send digital gifts to supporters on a weekly basis. DRiP's flagship event is the Showcase, a free art release curated by the DRiP team showcasing the works of artists, animators, musicians, and other creators on Solana. Previous works include bunjil's Solana Spaceman, Flag Monkez's RIVALS, Peblo's The UP Only Cet, and Daramola's Metropolis.
Source: DRiP Website
FirstMate is a startup company dedicated to providing digital storefronts for NFT creators. It recently completed a funding round of $3.75 million, led by Dragonfly Capital with participation from Coinbase Ventures and NextView. Unlike traditional trading markets, FirstMate prioritizes meeting the needs of creators by offering a unified platform. On this platform, artists can showcase all of their works, regardless of their source. Additionally, FirstMate empowers artists with full control over royalties, ensuring they have complete control over their creative activities.
Source: FirstMate Website
Although NFT investments have been less active recently, projects that demonstrate innovation and prioritize the genuine interests of creators and users continue to attract attention and support. While the entire market may have experienced a slowdown, there are still noteworthy attempts within the challenges. These projects not only bring novel concepts but also steadfastly commit to empowering creators and creating value for users. As the market adjusts and evolves, these innovative efforts serve as inspiring examples, showcasing that there are still opportunities for growth and success in the NFT field as long as the right approach is taken and sufficient effort is put in.
Hot Topic of the Month: Royalties
On August 18th, OpenSea announced that starting from March 2024, they will no longer impose royalties fees compulsorily, making it optional. This decision highlights a shift in the market as major trading platforms will no longer require mandatory royalties. Examples of platforms adopting optional royalty models include Blur and LooksRare, while SudoSwap has implemented a zero-royalties policy.
Source: OpenSea Twitter
OpenSea's decision has triggered various reactions. Those who support this measure believe it is an important step towards finding a balance that benefits both creators and buyers while meeting the diverse needs and preferences of participants in the NFT ecosystem. However, Yuga Labs (BAYC creators) responded to OpenSea's decision by announcing that they will block the trading of their new NFTs on the platform.
OpenSea's announcement has caused shockwaves within the NFT community, sparking discussions about its potential impact on creators and the entire NFT ecosystem. As the NFT market continues to evolve, finding the right balance between attracting sellers, ensuring fair compensation for creators, and maintaining a competitive edge will be a delicate task.
The above research data includes:
Chains: Ethereum, Polygon, BNB Chain, Cronos, Optimism
Trading platforms: OpenSea, LooksRare, Blur, X2Y2, Cryptopunks, Rarible, SuperRare, Foundation, Decentraland, Aavegotchi, Element, Era 7, the Sandbox, Minted
This article is contributed by the Footprint Analytics community.
Footprint Community is a global collaborative data community where members use visualized data to create impactful insights. In the Footprint community, you can get help, make connections, and engage in discussions about Web 3, metaverse, GameFi, and DeFi, as well as blockchain-related learning and research. Through mutual motivation and support, a diverse and highly engaged community of active members has been formed, contributing data, sharing insights, and driving the development of the community.
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