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NFT Market
Initially discounted as a passing fad, the market for NFTs surged to $44.2 billion by the end of 2021. That puts its size on par with the global fine art market: an estimated at $50 billion.
The popularity of NFTs grew dramatically in 2021, with wallets trading in NFTs increasing to around 28 million. How many individuals this represents is harder to determine.
Use case opportunities for NFTs are also reaching beyond art and collectibles. However, art NFTs in the form of dNFTs are reported to account for about 40% of all NFT sales. The majority of such sales take place in the context of crypto games. NFT marketplaces are demonstrating the resale value of popular art NFT collections. For example, a unique CryptoPunk dNFT #3100 sold for 4,200 Ethereum (roughly $7.6 million at the time of sale) in March 2021.
dNFTs are also demonstrating their ability to ride the turbulence in the crypto ecosystem. Many dNFT collections have held their value relative to ETH’s May 2022 drop in price. CryptoPunks, Doodles, and Bored Apes have all weathered the storm better than Ethereum’s Ether, or ETH. For example, the dollar value for Doodles’ dNFTs dropped by approximately 16% during the first week of May 2022, whereas ETH depreciated by approximately 33% in the same period.
Furthermore, the NFT market is continuing to support extension and innovation. Consider Doodles, a collection of 10,000 generative NFTs launched by creators who were well-established in the NFT community, thanks to their previous NFT project from 2017, CryptoKitties. Rather than launching a new collection of NFTs to follow the first, the Doodles team proposed a mechanism that will allow Doodles owners to re-theme their existing NFT. Such innovations are set to further stimulate the secondary market and facilitate a non-dilutive strategy to extend NFT collections. Doodles’ primary sale raised 420 ETH for the treasury and has generated approximately 80,000 ETH in secondaries by the first quarter of 2022 – which reflects less than six months of trading.
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