Non-fungible tokens (NFTs) were popular in 2021, as the hype around cryptocurrency prices encouraged new traders to explore this market. However, as of 2022, the environment has changed significantly, with casual traders and a deluge of NFT projects from Web2 brands no longer present. This is due to an extended crypto winter which has resulted in the prices of cryptocurrencies falling from their former highs, leaving previously enthusiastic traders with fewer returns. According to data from Web3 developer backend Alchemy, NFT trading volume has dropped 88% since the third quarter of last year. Additionally, the collapse of various crypto-related businesses such as Terra, Celsius, and Three Arrows Capital has worsened the situation.
Despite these challenges, there are still some pockets of success in the NFT market. One example is the Goblintown NFT collection which was released in May 2022. Even though ETH had lost a significant percentage of its 2021 value, dropping to around $2000, the project made $7 million after launch, and its floor price soared to a high of $13,000. The success of this collection is attributed to the sense of community fostered by its artwork and narrative. Experts predict that NFTs that focus on community building and long-term utility will be the ones that succeed in 2023. Additionally, some data shows that smart contracts deployed on Ethereum grew by over 40% since the end of Q1, indicating some level of conviction and continued development of Web3 projects, despite frosty market conditions.
