What happened to NFTs?

After the fomo that characterised the financial bubble a few years ago, NFTs seem to be just a memory. But is it really all over?

Between the end of 2021 and the beginning of 2022 the NFTs market – that property certificate of a digital asset saved on blockchain  – reached its peak, engulfing investors in a real collective “fear of missing out” that, riding the wave of enthusiasm for the possibility of artificially creating unique pieces, had quickly led to the famous speculative bubble. Astonishing figures have made history, such as the iconic Everydays: The First 5000 Days by Beeple, sold for a staggering $69 million, or CryptoPunk #5822, passed by hand for 23 million. Two years later, collective hysteria seems to have left room to a quiet requiem: in 2023, the specialised portal CryptoSlam reported a 92% drop in the volume of non-fungible token, with an average price down 84% and a 47% drop in the number of buyers.

Homer Pepe, Rare Pepe Wallet Homer Pepe, the currently most expensive and rarest NFT card of the first NFT collection to collect public success: Rare Pepe Wallet, created in 2016. The last auction that saw it as protagonist dates back to 2018, purchased in Ethereum for a value corresponding to approximately 320,000 dollars.

Genesis, first CryptoKitties Genesis is the first NFT generated among the CryptoKitties, the collection that brought NFTs to the limelight, the kittens that congested the Ethereum network for the unexpectedly high number of sales, a few days after their release in December 2017. Genesis is born in November 2017 and is currently owned by Stimpson J. Cat who purchased it for the sum of 246926 Ether currently corresponding to approximately $ 750,000.

MoonCat #3531 MoonCat #3531 belongs to a collection launched in 2017, and which was recently “adopted” by Sotheby’s: the MoonCat.

Sir Gregory, Axie Infinity Sir Gregory is currently the most valuable NFT on Axie Infinity, the NFT-based online video game that in recent months has seen its users and consequently also the value of its tokens soar. Purchased in June 2021 for the sum of 369 Ether, currently corresponding to 800,000 Dollars. The rarity value of these characters, usable in the game, depends on their attributes and their “mystical parts”. Sir Gregory has three attributes: “Pink Turnip claws”, “Dreamy Papi eyes” and "Lam Handsome fangs” and a “Shiba tails”, apparently very popular.

Color by Snowfro (generative script), Art Blocks Currently on sale in Sotheby’s Metaverse, Color is an NFT work composed of a generative script and therefore capable of generating almost infinite forms. Color is the perfect example of what can be found on Art Blocks, a collection of generative content hosted on the Ethereum network.

Potato The legendary work of the artist and video game creator David OReilly, sold on the site of the Japanese auction house SBI Auction in November 2021 for the sum of approximately 12,000 dollars. Among other things, the artist declared: "POTATO literally represents my Irish roots, while as an NFT, depicts my future as a cyber-organic hybrid. POTATO embodies the collision between the past and the future.⁠ "

Mapping the NFT revolution One of the database views of Mapping the NFT revolution: market trends, trade networks, and visual features. The densest clusters display very active moments in the history of a collection.

This downfall deserves to be contextualised in the particular context of the post-pandemic economy, which has seen the cryptocurrency sector fall, in one year, by 70% (the same applies for shares related to Silicon Valley giants). 

The result is that, as the headlines of several specialised newspapers thunder, NFTs are worth nothing: and, as a matter of fact, last September the cryptocurrencies site dappGambl, based on data from NFT Scan and CoinMarketCap, announced that 95% of the more than 73,000 collections of non-fungible tokens has no value (leaving in fact 23 million collectors with empty hands).

Courtesy Decentraland

The same trend can be observed in different sectors of which NFTs are an integral part, such as blockchain-based "metaverse", which after the boom of recent years sees the number of users go into a slump. It is the case of the "virtual world" of Decentraland, a digital space whose economy initially generated 1.3 billion dollars, causing general sensation, but which today has gone from 300 thousand to 57 thousand monthly users. The same goes for The Sandbox, its main competitor, which has lost about a third of its users in the last year. In short, there’s no one in the metaverse anymore.

It is likely that, with the loss of ‘occasional’ buyers, the NFTs market will finally stabilise in a niche of few loyal investors.
Nft CryptoPunk. Courtesy CryptoPunk

However, there is a window of opportunity: the phenomenon of memes tokens, cryptocurrencies that base their value on the virality of memes distributed in online communities (which follow an extremely variable trend, bound to the temporary popularity of the meme). In 2024, the institutionalisation of meme coins has significantly increased their popularity, leading them to establish themselves as a significant part of the cryptocurrency market, despite the very high risk associated with rapid and unpredictable price movements.

Meme token. Courtesy Binance Academy

So what is the future (if there will be a future) of NFTs? To answer this question it is necessary to consider, in first place, that the burst of the bubble does not mean the end of what, in the end, is nothing more than a tool to attribute uniqueness to a digital piece. 

What is currently in prospect, therefore, is not a worthy burial of the NFTs, but rather a change in the target of investors: it is likely that, with the loss of “occasional” buyers, the NFTs market will finally stabilise in a niche of few loyal investors.

Opening image: The Sandbox. Courtesy The Sandbox