Less than 24 hours ago, took a look at a collection of data on the market for non-fungible tokens (NFTs). Our goal was to better understand the level of demand for NFTs in light of the number of recent funding rounds at startups that deal with the creation, trading, or monetization of the digital signatures.
Given a general decline in trading volume for a host of assets — blockchain-based and otherwise — it wasn’t a massive surprise to discover that NFT sales volumes are also falling. Not to zero, mind, but materially as the crypto market itself resets during one of its regular downturns. Much like the larger economic business cycle, the crypto market has its own gyrations between periods of optimism and pessimism.
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After we published that piece, however, some folks reached out suggesting that we were not looking at the right metrics to back our claim that the NFT slump was real. So, let’s take another look.
There are a few ways to measure the health of any market. One way is total sales by unit volume, which was the method we chose yesterday. Another way is to track how value is being conserved by individual units — for example, in the stability of floor prices for popular NFT sets. You could also track the total value of traded assets instead of their unit volume.
Let’s add the latter two to our analysis to see if we were ignoring illuminating data, and therefore being accidentally glib yesterday. To work!
NFT metrics, part two
The Block, a publication and data source, provides lots of information relating to NFT sales, sorting by category, transactions, chain and more. The Block also has a dataset pertaining to traded value. Using the same year-to-date time frame that we did yesterday, here’s how the publication tracks the trade volume of NFTs, or the dollar value of NFT trades:
Sharp-eyed readers will note that this chart supports our position from yesterday that there has been a general decline in NFT trading since the start of the year. That said, there’s a spike in the April/May time frame that sticks out compared to our chart from yesterday. What drove it? The Yuga Labs Otherdeed sale, it appears, which accounted for nine-figures worth of dollar volume.