Despite NFT sales reaching $25 billion in 2021, one in three non-fungible tokens ends up as a “dead collection” with little to no trading activity, highlights a report by Nansen – a blockchain analytics firm. This is based on observations of blockchain-based collectibles with either fewer than 10 sale transactions in the past 30-days or those that are no longer listed on the marketplace.
Market participants usually buy and sell the NFTs, while some prefer to mint them. Minting involves putting the item on-chain, thus making it into an NFT. This is usually done through the Ethereum, Polygon, or Solana blockchains; it also involves a certain amount of fee. The report highlights that the number of participants minting non-fungible tokens increased by around 500 to 1.2 million in 2021 – the market saw a growth of 2,000 times.
Moreover, the profiles of NFT minters have seen a gradual rise in retail or non-whale minters. Paul Harwood, a product manager at Nansen, said this shows a trend towards more affordable projects out-performing the initial minting price. He highlighted that this means the NFT market is maturing. The best-performing projects are able to connect better with communities and markets underpinning them.
It has also been observed that the amount of Ether spent on minting has declined gradually, suggesting a slight correction in the NFT market. Kevin Kang, the founding principal at BKCoin Capital, had said that NFTs will see a correction like cryptocurrencies. He highlighted that non-fungible tokens are not immune to the risk-off sentiment in the market. Mainstream art collectors see NFTs as a riskier asset.
