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NFT

Welcome to the afterlife: 96% of NFT collections considered ‘dead’

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NFT Evening analysts say 96% of 5,000 NFT collections are dead in 2024.

The report reveals the state of the non-fungible token market and its problems in 2024. According to experts, 96% of more than 5,000 existing NFT collections are “dead.” This means that they have zero trading volume, no sales for more than seven days, and no activity on the X social network.

Source: NFT Evening

Analysts note that 4 out of 10 NFT owners currently need to make a profit from their tokens. At the same time, the average lifespan of collections is 1.14 years. This is 2.5 times less than the same indicator for classic crypto projects.

In addition, 2023 was a record year for the number of NFT collapses. During this period, almost 30% of projects from this segment fell into the “dead” category. According to experts, 44.5% of NFT owners face losses.

Source: NFT Evening

The NFT Evening team also identified the most profitable collection to date. It turned out to be the Azuki project, which, on average, increased the investments of token owners by 2.3 times. 

“This success can be attributed to the collection’s strong community engagement, unique artistic appeal, and effective marketing strategies.”

The experts also mentioned the most unprofitable NFT collection — Pudgy Penguins. It experienced a 97% drop in value, which makes it the current record holder for a decrease in owner income.

Experts emphasized that the non-fungible token market has declined, and investors in the segment must act cautiously. In addition, experts believe NFT creators should reconsider their approach to project implementation.

End of an Era

NFTs from popular collections bought on the wave of excitement in 2022 are sold at colossal losses.

For example, Arkham Intelligence calculated that NFTs purchased by pop star Justin Bieber in 2022 worth about $2 million are now worth just over $100,000. The losses reached 94.7%.

The singer’s wallet initially received $2.34 million in Ethereum (ETH). Most of the amount, $1.86 million, went to purchase two Bored Ape Yacht Club (BAYC) and a pair of Mutant Ape Yacht Club (MAYC). The portfolio also included tokens from the World of Women, Doodles, Otherdeed, and Metacard collections. Since then, the assets have lost between 89.7% and 97.4% in value.

In addition, in August, Deepak Thapliyal, the owner of the most expensive CryptoPunk #5822, who purchased the token for 8,000 ETH ($23.7 million at the time of the transaction) in 2022, got rid of the asset without disclosing the sale price. Amidst the excitement in the sector, the deal became the fourth most expensive among all NFTs in 2022.

The community suspected that the token was sold at a loss. The buyer was allegedly user X, who goes by the nickname VOMBATUS. The token was reportedly purchased for 1,500 ETH (~$3.9 million), 80% cheaper than the previous price.

The Rise and Fall of OpenSea

In January 2022, the total volume of non-fungible tokens peaked at over $6 billion. As of July 2024, it had fallen below $430 million. NFTs are still alive, but they are in a bad way.

OpenSea, once the largest NFT marketplace, is in an even worse situation, The Verge notes that claims from the Securities and Exchange Commission and the Federal Trade Commission, U.S. and international tax authorities, increased competition, allegations of discrimination, and employee layoffs.

In addition, OpenSea‘s valuation fell from $13.3 billion to $1.4 billion after one of its largest investors, New York venture capital firm Coatue Management, overvalued its stake in the crypto startup by 90%, from $120 million to $13 million.

However, The Verge notes that the company still has some steam left. An internal document shows that as of November 2023, OpenSea had $438 million and $45 million in crypto reserves. It expects that with this capital and a new business model, it will be able to overcome difficult times.

“It had $438 million in cash and $45 million in crypto reserves as of November 2023, according to an internal document, and it’s coasting on that capital as it hopes a ‘2.0’ pivot will help it navigate choppy seas.”

What will happen to the NFT market?

The NFT market has long been limited to marketplaces like OpenSea or Rarible, where users can issue new NFTs or trade them with others.

There are lending services or platforms for trading derivatives on NFTs from large collections, allowing users to speculate on NFTs without owning them.

However, the bearish dynamics in the non-fungible token market persist, as evidenced by the rapid decline in prices of NFTs from the blue chip collections.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News

NFT

New NFT attack: Why the SEC issued a $750k fine and what does a restaurant have to do with it

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American restaurant Flyfish Club has signed a settlement agreement with the U.S. SEC regarding an “unregistered offering of crypto asset securities.”

Flyfish Club will pay a fine of $750,000. According to the SEC ruling, between August 2021 and May 2022, Flyfish Club sold around 1,600 NFTs to investors. These tokens were supposed to become an exclusive means of obtaining membership in the club.

According to the regulator, the project earned $14.8 million, and the capital was planned to finance the construction and launch of a private restaurant, Flyfish Club, intended only for club members. In addition, 42% of investors bought several NFTs, although only one token is needed to become a club member.

“Flyfish engaged in significant marketing efforts that promoted the NFTs as investments and led investors to expect profits from Flyfish’s efforts.”

Why the SEC is interested

The regulator argues that these NFTs fall under federal securities laws because token holders can resell them at a higher price and earn passive income by renting them out.

Based on these findings, the agency said Flyfish Club violated Sections 5(a) and 5(c) of the Securities Act of 1933 by failing to register the collectible tokens as securities. The SEC’s order requires Flyfish Club to pay a civil penalty of $750,000 and destroy all NFTs in the company’s possession within ten days.

However, not all SEC officials agree with the agency’s actions. Former SEC representatives Hester Peirce and Mark Uyeda insist that Flyfish Club’s NFTs are utility tokens, not securities. They were created to provide access to exclusive dining offers and not as speculative investment vehicles. Peirce and Uyeda are concerned that the SEC’s intervention could negatively impact NFT holders by making them even more difficult to transfer and resell.

“Leaving crypto to be addressed in an endless series of misguided and overreaching cases has been and continues to be a consequential mistake.”

The commissioners emphasized that NFTs are a new tool for chefs and artists to monetize their talents and provide unique experiences that overly restrictive regulatory interpretations shouldn’t stifle.

SEC scares NFT industry

In August, the SEC threatened to sue OpenSea, arguing that the collectible tokens traded on OpenSea are securities.

OpenSea CEO Devin Finzer reacted to the SEC’s Wells notice, calling it “regulatory saber-rattling” that’s venturing into “uncharted territory”. He feared it could backfire and cause creators of NFTs to stop making digital art.

Finzer said the company would defend the rights of digital artists and promised to set aside $5 million to cover legal costs for any NFT developers who might receive a similar notice from the regulator.

Politicizing the SEC’s approach

The SEC, meanwhile, continues to face criticism from the crypto community and U.S. lawmakers. In 2022, the agency first turned its attention to NFTs, accusing a Los Angeles-based media company of selling unregistered securities through NFTs. The case ended in a $6 million settlement.

In the wake of the harassment, the U.S. House Subcommittee on Digital Assets, Fintech, and Inclusion said it would hold a hearing titled “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Assets.”

Subcommittee said SEC Chairman Gary Gensler “prioritized and pursued an enforcement and regulatory agenda to the detriment of the digital asset ecosystem” during his tenure on the panel.

“During Chair Gensler’s tenure, the SEC has not released guidance on how the SEC determines whether a digital asset meets the definition of a security. Rather, Chair Gensler and the SEC have publicly opined.”

They cited inconsistencies with SEC Chair’s position on digital assets as securities under the Howey test and disagreements among commissioners.

Former SEC Commissioner Dan Gallagher and former agency lawyer Michael Liftick are expected to testify at the hearing on Sep. 18.

Coinbase joins the fight against the SEC

In September, Coinbase founded the legal advocacy group Stand With Crypto and launched a Legal Defense Fund to protect NFT projects.

On Sep. 13, Stand With Crypto announced a $6 million fund backed by venture giant a16z and NFT marketplace OpenSea.

Leading law firms back the fund: Fenwick & West LLP, Goodwin Procter LLP, and Latham & Watkins LLP will provide critical legal resources to those working in the blockchain and NFT space. According to the statement, a16z contributed $1 million to the Creator Legal Defense Fund, while OpenSea donated $5 million.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News

NFT

A16z, OpenSea partner with Stand With Crypto to create NFT legal fund  

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Andreessen Horowitz’s a16z Crypto fund has partnered with Stand With Crypto and OpenSea to create the Creator Legal Defense Fund.

According to releases from OpenSea and a16z, this initiative is designed to provide legal support and consultation to artists and creators using blockchain technology, particularly those working with NFTs. 

A6z has pledged $1 million to the defense fund, joining OpenSea, which committed $5 million. 

NFTs have empowered artists to directly monetize their work, maintain authenticity, and earn royalties through smart contracts. 

Legal challenges and assistance

Recent legal challenges, including a Wells Notice issued to OpenSea by the United States Securities and Exchange Commission, have raised concerns within the NFT community.

The growing regulatory pressure on blockchain-based creators has made legal assistance a priority.

The fund will offer creators legal assistance from firms such as Cooley LLP, Fenwick & West LLP, Goodwin Procter LLP, and Latham & Watkins LLP.

These services will help artists ensure their projects are legally compliant and provide defense against potential government actions, according to a16z.

Miles Jennings, General Counsel and Head of Decentralization at a16z, wrote that “the fear of potential legal repercussions should not hold back well-meaning artists” from exploring new initiatives like NFTs.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News

NFT

Polygon rises as Polymarket, Pokemon Cards growth continues

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Polygon price continued rising this week, helped by the strong performance of Polymarket and Pokemon Cards.

Polygon (POL) rose to a high of $0.4200, up by over 12% in the last seven days, bringing its market cap to over $1.3 billion.

This rally occurred as the network upgraded and migrated its token from MATIC to POL. After the upgrade, POL became the native and staking token for the Polygon Proof-of-Stake network. In the future, it will be the main token for the AggLayer.

The token has also rallied amid ongoing ecosystem growth. Polymarket, one of the biggest prediction platforms, has seen strong growth in the past few months. Data from SimilarWeb shows that the website had over 13.8 million visitors in August, a 52% increase from the previous month.

The amount of money in the network has also been growing. The presidential election winner prediction market holds almost $900 million in assets, while the popular winner prediction has $201 million.

Data from DeFi Llama shows that Polymarket has over $122 million in total value locked and has a market dominance of 82% in the prediction market. This growth will likely continue as the platform goes mainstream, with popular media outlets like CNN and Bloomberg mentioning it.

Meanwhile, Pokemon Cards NFT sales are doing relatively well. Data from Dune Analytics shows that the monthly sales volume rose to a record high of $1.6 million in August, up from $1 million the previous month. Sales this month have so far reached $749,000.

Pokemon Card sales | chart by Dune

Meanwhile, the total value locked in Polygon’s Decentralized Finance ecosystem rose by 2.46% to $861 million in the last 30 days. The amount in Ethereum (ETH) fell by 10% while that in Arbitrum and Base fell by over 2% in the same period. 

However, Polygon’s market share in the decentralized exchange industry has been declining. The volume of coins traded on its blockchain dropped by 12.2% in the last seven days to $476 million. Base and Arbitrum, other popular layer-2 networks, handled $3.18 billion and $3.2 billion in the same period.

Polygon flips key resistance, gets overbought

Polygon price chart | Source: TradingView

The POL token was in a consolidation phase after its launch last week. This performance ended on Friday, Sept. 13, when it went parabolic, crossing the crucial resistance point at $0.3900, its highest swing on Sept. 10.

The Average Directional Index, a popular trend indicator, rose to 36, while the Relative Strength Index reached the overbought point of 87. Therefore, POL may retreat soon due to profit-taking, which could see it retest the support at $0.40.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News

NFT

CryptoPunk sells for $1.5 million amid NFT market downturn

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A CryptoPunk from the Ape Punk collection was sold for roughly $1.5 million as the broader non-fungible token market continued to struggle amidst waning demand.

According to CryptoPunks Bot, CryptoPunk 6915, one of the 24 rare Ape Punk, was acquired for 620 ETH (around $1.48 million)  by an anonymous collector identified by “0x8bbccd.” The NFT is one of just 24 other Ape Punks issued on the Ethereum blockchain by Larva Labs.

Data from Cryptoslam indicates that the Punk 6195 was initially acquired for just 3.5 ETH ($2455) in late December 2017. The recent transaction marks a 59,390.10% profit. The seller, identified as “0xe38ee2,” also sold CryptoPunk 9479 for 35 ETH (approximately $82,466.39) moments after the Ape Punk changed hands. 

CryptoPunk 9368, one of the 88 Zombie Punks, marked the second-highest sale for the collection on Sep. 5, selling for 310 ETH ($734,179). Interestingly, the Punk has already received an offer for 1500 ETH, but the deal is yet to be closed. If the sale transpires, it would mark the highest CryptoPunk sale since March.

CryptoPunks are currently the most valuable NFT collection, with a 24-hour sales volume of around $1.68 million. However, the recent sales are far from the most valuable NFT transaction for the apex collection.

In March 2024, CryptoPunk 3100 was sold for $16.03 million worth of ETH, while CryptoPunk 7804 was sold for around  $16.42 million just weeks later. These, however, pale in comparison to CryptoPunk 5822, which was sold for 8000 ETH ($23.7 million) in February 2022.

The $1.48 million sale has sparked fresh optimism within the NFT community, with many influencers exuberantly claiming that NFTs are making a powerful comeback.

Despite the recent uptick in activity, the NFT market has struggled over the past month, fueled by dwindling sales and buyer exodus. At the time of writing, the cumulative NFT sales volume was down 42.15%. Additionally, total NFT transactions declined by 24.48% to 7.1 million, signaling that demand for these assets has weakened.

Adding to the woes, a sudden Wells notice from the Securities and Exchange Commission aimed at NFT marketplace OpenSea has further fueled the downturn, raising concerns within the community about the potential classification of NFTs as securities.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News

NFT

Magic Eden dominates NFT market as its share nears 37%: CoinGecko

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Magic Eden maintains its dominance in the NFT marketplace, holding a 36.7% market share in August with a trading volume of nearly $123 million.

Magic Eden solidified its position as the leading marketplace for non-fungible tokens in August, capturing 36.7% of the market share with a trading volume of $122.47 million, according to data from CoinGecko.

In a Sept. 4 blog post, analysts at the crypto price data aggregator website noted that August marked the sixth consecutive month that Magic Eden has led the market, further establishing its influence in the rapidly evolving NFT sector.

Top 10 NFT marketplaces by trading volume since 2022 | Source: CoinGecko

Initially launched as a Solana (SOL) centric platform in 2021, Magic Eden rose to prominence in 2022 as the second-largest NFT marketplace, capturing a 31.7% share. However, a decline in Solana NFTs saw its market share drop to as low as 3.4% in 2023, the analysts say.

The platform managed to rebound in 2024 by integrating Bitcoin Ordinals — basically NFTs on the Bitcoin network — pushing its trading volume to $734.6 million in March and surpassing its rival Blur to claim the top spot with a 38.5% share.

OpenSea’s market share falls below 20%

Blur, once a close competitor, saw its market share decline from 35.4% in January to 25.4% in August, while OpenSea, the former market leader, now holds a 19.9% share, up from 9.9% earlier this year. Together, Magic Eden, Blur, and OpenSea dominate the NFT market with a combined 82% share, the data shows.

Other platforms like the CryptoPunks marketplace and X2Y2 have also seen gains, while OKX NFT Marketplace experienced the most significant drop, from 18.4% to 2.4%, after a brief surge in late 2023. Analysts at CoinGecko say the NFT trading space has evolved from a monopoly dominated by OpenSea, which had gained a stronghold during the NFT bull run, to more of an “oligopoly in 2024 with healthier competition and diversity among NFT marketplaces.”

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Theo Crypto News

Phân tích

Immutable X braces for a big token unlock as NFT sales drop

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Immutable X token is stuck in a deep bear market ahead of a big token unlock and as the outlook for non-fungible tokens darkens.

Immutable X (IMX) retreated to $1.958 on Sep. 3, 67% lower than the year-to-date high of $3.74. It was also hovering near its lowest point since November last year.

Immutable X, the popular layer-2 blockchain for gaming and NFTs, will be in the spotlight on Thursday, Sep. 6, as it unlocks more tokens.  According to CMC, the network will unlock 32.47 million IMX tokens worth over $41.2 million, leading to more dilution for existing holders. 

These new tokens will move to project development, ecosystem development, private sales, and the foundation reserve. Immutable X is then scheduled to unlock over 113.7 million more tokens by December this year. 

According to TokenUnlocks, Immutable has unlocked over 1.58 billion tokens and has 416.15 million to go. If all goes well, the vesting schedule will end in November next year.

Token unlocks are seen as negative catalysts for a cryptocurrency because they dilute existing holders, especially stakers. According to its website, staking rewards are generated from the 20% protocol fee and are then distributed to stakers every 14 days. As such, additional tokens in these pools often lead to lower returns.

Immutable X token has also dropped as concerns about the NFT industry continue. Recent data shows that the monthly NFT sales and transactions have continued to fall this year. According to CryptoSlam, total NFT sales in the last 30 days dropped by over 24% to $16.8 million. Buyers and sellers also fell by 41% and 25%, respectively.

On the positive side, there are signs that the network’s gaming ecosystem is doing well. This week, Immutable X partnered with Portal, a leading Web3 distribution platform. This partnership will lead to enhanced distribution of games built on Immutable X and liquidity improvements.

Immutable X price is nearing a key support

Immutable X price chart | Source: TradingView

The IMX token has slipped from the year-to-date high of $3.7570 to $1.200, the 78.6% Fibonacci Retracement point. It formed a death cross in June and then retested the key resistance point at $1.7185 in August. A break and retest pattern is a popular sign of a continuation.

Therefore, Immutable X token will likely drop and retest the important support at $0.9043, its lowest swing in August. A drop below that point will lead to more downside.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News

NFT

SEC probes OpenSea, but NFT artists are likely not the target | Opinion

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Coinbase, Uniswap, Robinhood, Kraken, and Consensys are the names the digital asset industry has grown used to watching receive the dreaded Wells Notices from the United States Securities and Exchange Commission. These companies are exchanges offering a wide range of tokens on their platforms, many of which are clearly investment vehicles with the promise of future profits thanks to the work of centralized teams. It would make sense for some of the offerings on these platforms to fall under the category of security.

But, last week, a new and unexpected name joined the list: OpenSea, the largest online NFT marketplace. And now hundreds of thousands of online artists feel as if they are under attack. But it is likely the true artists don’t need to worry. An NFT project for the sake of art is likely not the type of project the SEC has on its radar.

Most NFTs are not securities

The move by the SEC came as a major surprise, as most NFTs are clearly not securities—they’re just art people buy and sell. And there is a long history of people—indeed, investors—buying art that the SEC does not regulate as a security. And so, the precedent for going after OpenSea is thin.

Heretofore, NFTs have generally been viewed as a consumer product, not a financial product, stripping the SEC of any regulatory authority. Sure, there are some exceptions—such as fractionalized ownership in ventures—though OpenSea did try and keep projects promising returns off the platform.

Despite the facts, the SEC is considering a case against the NFT marketplace. 

The facts are on the side of OpenSea and NFT artists

The facts of any case against OpenSea are that the platform generally allows users to buy and sell art, not securities.

There would be no precedent for the SEC to go after NFT artists. In fact, any and all of the facts speak against categorizing art in any shape or form as a security. It doesn’t make sense. Everyone knows individuals and entities buy and sell art that is not regulated as a security.  Online NFTs, in most cases, follow this model. 

Therefore, as far as most of the projects on OpenSea go, the SEC won’t have a leg upon which to stand when it comes to any potential legislation. 

Instead, the SEC’s focus will be on NFTs promoted as investments and also offer some future profits due to the efforts of an NFT collection’s founders rather than pure artists just trying to sell their art online in a new and exciting way.

SEC precedent vs. NFTs similar to token precedents

In past SEC cases against the NFT industry, the SEC has established a clear pattern. How the NFTs had been promoted was at the heart of the case, as well as the promise of future profits thanks to the work of the NFT collection’s team.

Just like during the ICO days, when many projects made bold promises without working on tech, many non-NFT projects functioned as vaporware or vehicles by which founders attempted to raise investments. Instead of innovation, many projects were based on hype and hype alone, especially around the potential resale value of the project, which the SEC sees as a red flag.

NFT projects with royalty schemes, revenue distribution, and similar are the ones the SEC is likely after. For that reason, most NFT artists can breathe a sigh of relief, leave the fight to OpenSea lawyers, and get back to creating. 

Those who are attempting more complicated NFT structures must now play a waiting game. Indeed, if there is to be a benefit of the SEC’s Wells Notice to OpenSea, it will long at least be for the possibility of regulatory clarity in the realm of NFTs.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News

NFT

Hyperspace shuts down NFT marketplace on Solana

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Hyperspace, a multi-chain non-fungible token marketplace and launchpad, is shutting down its platform on Solana.

The project announced this on Sept. 3, noting that the decision to shut down its NFT marketplace on Solana (SOL) was a difficult one. Hyperspace plans to fully sunset the Solana offering by September 17, 2024, and has advised users to delist their NFTs before this date.

In addition to removing website support for Solana NFTs, the platform will also sunset its application programming interface. This will begin on Sept. 17, as the Hyperspace team posted on X.

“While it’s a difficult decision to make, we’re proud of having been a part of this vibrant ecosystem since Solana summer first started and we’re excited for all that’s to come.”

Hyperspace Avalanche and Sui NFT marketplaces

Hyperspace launched in 2021, entering the market just as the NFT boom followed the Covid pandemic. The platform boasted backing from some of the biggest crypto venture capital firms in the industry, including Dragonfly, Pantera, and Coinbase Ventures.

Despite a slowdown in NFTs in late 2021 and 2022, Hyperspace quickly grew. Apart from Solana, the NFT marketplace is shutting down on Sui (SUI).

Are NFTs dead?

In the broader digital collectibles market, projects such as CryptoPunks, Bored Ape Yacht Club, Pudgy Penguins, and Art Blocks remain top NFTs by sales and volume.

However, the NFT market has failed to see any meaningful recovery since the broader crypto market’s slump during the 2022 bear market.

A recent report suggests that nearly 96% of NFT projects are dead, with 43% of holders currently at a loss. Declines in volume amid this collapse have impacted NFT marketplaces and aggregators, including market leaders OpenSea, Magic Eden, LooksRare, and Blur.

The bear market aside, regulatory issues are also likely to be a major factor. Recently, the U.S. Securities and Exchange Commission issued a Wells Notice to OpenSea over allegations of offering unregistered securities.

Tổng hợp và chỉnh sửa: ThS Phạm Mạnh Cường
Theo Crypto News