Blockchain

The NFT bubble may have burst, but the industry is still ready for expansion

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Non-fungible tokens (NFT) Swept the world in March and April of this year, and the daily headlines were all about Record sales with big company Give up their own unique digital artwork and dominate the mainstream media.

Fast forward a few months and the story has turned to the bursting of the “NFT bubble” and the doom and pessimists warned that NFT investors are on the verge of losing all their funds.

1 year history of NFT market. source: Irreplaceable

The rapid decline in prices and activities in the top NFT markets has prompted many Presumed death Despite the well-known cyclical nature of the crypto market, it can immediately come back to life.

Active users switch jobs

Active users are the lifeblood of the NFT market, but the volatile nature of the cryptocurrency market in the past two months, including the sell-off on May 19, caused the market value of cryptocurrencies to evaporate 1.2 trillion U.S. dollars, leading to a sharp decline in the number of users.

The number of active wallets in the NFT market. source: Irreplaceable

As shown in the figure above, the active wallets in the NFT market peaked at the end of March, and thereafter due to the decline in value and High transaction costs In Ethereum (Ethereum) The network shuts out traders.

The decline in active wallets coincided with the decline in sales across the space, as the rapid decline in token prices exacerbated the losses for holders and collectors who saw their precious artworks lost up to 90% overnight value.

The total number of sales on the NFT market. source: Irreplaceable

The decline in active users has led to a 60% drop in total daily sales, from a high of US$325 million on May 7 to the current US$110 million.

NFT is closed but not yet exited

However, nothing is lost, because entrepreneurs and traditional enterprises have noticed and accepted many reliable value propositions and use cases of NFT.

The blockchain ecosystem has proposed a variety of feasible solutions to solve the problems faced by the NFT field, such as the launch of Enjin Efinity and JumpNet protocol This helps reduce costs and allows interoperability across different networks.

Another popular solution is Polygon, an Etheruem sidechain, which allows projects to stay on Ethereum while still having access to a fast, low-cost environment. In the past three months, a large number of NFT-oriented and game projects have migrated to Polygon. With the improvement of the encryption and NFT market, these low-cost environments should help promote network activities.

The top 5 NFT markets. source: Application radar

Although from a longer time frame, the current statistics may look bad compared to recent historical highs, it can be seen that from January to the end of May, the average sales of NFT increased by nearly 300 %. This shows that although the market began to plummet on May 12, the industry still has strength.

In the past month, the activities of the NFT ecosystem and the value of tokens may have dropped significantly, but it is too early to announce the demise of the NFT, because the world has only touched the surface of this emerging smart contract technology.

The views and opinions expressed here only represent the views of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading action involves risk, and you should conduct your own research when making a decision.