Summer 2022: NFT Winter?

Making sense of the data

There have been a lot of dramatic statistics and headlines about the NFT market circulating over the past few weeks. I was curious what was really happening under the surface, so decided to dig into a few key metrics.

Source: Dune Analytics
Source: Dune Analytics
Source: Dune Analytics
Source: Chainalysis
Source: NFT Price Floor
  • NFTs are a large market: Total NFT sales will be higher in 2022 than 2021, which means that the NFT market will see year over year growth as well as two consecutive years of multi-billion dollar NFT sales.
  • Demand has not fallen off a cliff: Transaction volumes cooled from all-time highs, but have not fallen off completely and are (so far) staying in line with last year’s volumes.
  • User adoption has persisted: The number of users transacting has remained relatively stable, and the number of total buyers and sellers continues to grow (even if at a slower rate than before).
  • Individual NFTs still hold significant value, even in a bear market: Blue chip NFT prices have come down from all-time highs, but continue to trade at prices in the hundreds of thousands of dollars.

Creator sentiment and outlook

In addition to examining NFT market data, I wanted to hear how NFT creators and builders are feeling about the market and how recent events may have impacted their plans and strategies. I asked some incredibly talented folks in the space to share their thoughts. Here are the insights I gathered from those conversations:

What will the future hold?

What’s clear from both the data and the creator commentary is that like the broader crypto and web3 space, the NFT space has gone through cycles of speculation and likely overinflation. We are clearly seeing a market correction now, but that in itself is not necessarily cause for panic. Despite the negative market conditions, consumers continue to buy and sell NFTs at a significant rate and NFT creators are continuing to build meaningful projects in the space.

  • Products that help NFT creators manage and strengthen their existing communities (Co:Create, Highlight, Portal, etc.)
  • Products that help brands build deeper relationships with and experiences for their customers via crypto-powered commerce (e.g., PERCS**)
  • Products that are creating new utility for NFTs, such as tokenizing physical assets (Courtyard, RareMint, 4K, IYK, One of None, etc.)
  • Products that enable consumers to access financial benefits (e.g., liquidity) with their NFTs (Vera, Arcade, PWN, etc.)

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Lisa Xu

Lisa Xu

VC @FirstMark investing in early stage startups | former homes: Handy, Peloton, Bain & Company, Wharton