Blockchain analysis says a third of NFTs are dying


NFTs couldn’t have gotten much foamier over the past year, and recent data suggests the fizz is still flowing — though it may well be bubbling, too.

That is, a third of NFTs minted since January 2021 ended up as “dead collections with little or no post-minting trading activity.” reports the blockchain analysis company Nansen, which examined around 8,400 collections containing more than 19 million NFTs on the Ethereum blockchain. Another third of NFTs now trade below the initial cost to issuers of minting the tokens (a so-called gas tax associated with the creation of new NFTs).

The last third is traded at a higher minimum price than the minting cost. That would likely be the NFTs that make up the volume on which one in five NFT minters make a profit, according to stats from blockchain data firm Chainalysis. However, it is likely that these gains will become increasingly elusive over time. Between January 2021 and February 2022, the number of minted collections increased from 39,802 to 1,970,886 — a staggering 4,800% increase, Nansen reports. Despite the stories and frenzy of get-rich-quick buyers, there’s no way the NFT racket can make millionaires out of them all.

“NFT mining is becoming increasingly competitive as more projects are brought to market,” says Nansen.

In a way, this has helped to erode barriers to space: for example, the trend has brought the average minting cost down to between 0.07 ETH and 0.1 ETH from a peak of 0.56 ETH in May 2021. But it also means the space is far more crowded for minters looking to make money: The community of NFT minters has multiplied from 500 people in January 2021 to 1.2 million at the end of last month. Most appear to be amateurs; The vast majority have spent less than 0.5 ETH (around $1,700 USD) in total. In the meantime, the proportion of so-called whale minters issuing over 100 ETH has decreased.

Believe the tiredness, not the hype

The bloat of NFTs may also have led to some hype fatigue. According to Google data, search interest in NFTs peaked around the turn of the year and then plummeted. Still, minting activity is stronger than ever, according to Nansen, with minters spending more on gas fees this year than last year, spearheaded by a blockbuster Pixelmon project that rivaled Meebits and Mutant Ape Yacht Club mints in 2021. (Those investors ended up losing millions when the collection flopped.) The general uptick in activity is likely being driven by the explosion of unique mints, Nansen says.

But is that all good? Crucially, the payout for a minter has trended downwards over time: in January and April of last year, average profits hit highs of over 90 ETH per collection per month, and at one point they were 115 ETH. Since then, however, it has declined and stayed below 20 ETH for the most part.

And while recent events in Ukraine and Russia have cooled the market, even beyond the short-term ebb and flow, some in the industry have expressed concerns about where the journey is headed.

“Money is flowing into space too quickly and too ignorantly,” Whaleshark, the alias for someone believed to be one of the largest NFT holders in the world, said Bloomberg. “In the current market, it’s a pump-and-dump cycle between PFPs [profile pictures] Because of this, it causes the market to fall,” the investor said, referring to a popular form of NFTs that often end up as a flash in the pan when secondary market values ​​plummet. “There is not enough new money coming in to support PFP projects. . . Similar to a pyramid scheme.”

Check out Nansen detailed report here. Blockchain analysis says a third of NFTs are dying


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