NFT Update

  • Crypto pretty much moving in lockstep with QQQs again; most tokens are down, with biggest losers = previous biggest winners (ADA, MATIC, LINK, ATOM, GRT, etc.)
  • OpenSea set new record as it surpassed previous monthly trading volume ATH ($3.4bn in Aug); current cumulative volume for Jan’22 is $3.8bn (Chart 2)
  • Both trading volume and trade count (Chart 1,3) have been normalising, in line with blue chip floor prices consolidating (Chart 4), implying market is taking a breather. However, number of projects with increasing value (Chart 5, 6) are rising, hinting that market is moving further down the risk curve for ‘cheaper’ projects
Chart 1: OpenSea Daily Transaction Volume (Blue, Bar) and 7dma (Orange, Line) in US$
Chart 2: OpenSea Monthly Transaction Volume in US$
Chart 3: OpenSea Daily Transaction Count (Blue, Bar) and 7dma (Orange, Line)
Chart 4: Floor Price of Selected NFT Projects in ETH
Chart 5: Number of NFT Projects (from Zeneca) with Increased ETH Value (Orange) and Decreased ETH Value (Blue)
Chart 6: Net* Number of Projects With Increasing ETH Value
Chart 7: CryptoPunks vs. BAYC Floor Price
  • OpenSea vs. LooksRare: LooksRare launched on Jan 10th, and has seen impressive $1.6bn in trading volume vs. OpenSea’s $4.2bn during the same time period (Chart 8)
  • Trading rebates incentives have caused serious wash trading
  • Evidence #1: Top NFT sales for the week are many of the same NFT trading between a few addresses, e.g. Meebit #15115 transacting 32x for several hundred WETH in the past week between 2 addresses (vs. floor price of 3.6 ETH))
  • Evidence #2: Top 5 zero royalty collections on LooksRare (Meebits, Terraforms, Loot, CryptoPhunks V2, The n Project) accounted for 96–99% of total LooksRare trading volume in the last 1 week (Chart 9). Meebits has been #1 most traded NFT in the past 7 days, boasting $2bn trading volume (vs. the runner-up, Loot, which is at meagre $295mio 7d trading volume), representing ~57% of all NFT trading volume. It’s also worth noting that out of the $2bn trading volume, only $3.6mio Meebits were traded on OpenSea.
  • More on gaming the incentives: For the first 30 days, ~2.87mio $LOOKS/day (~$14mio) are emitted for trading rewards, with trading rewards calculated every day based on each user’s trading volume as a % of total platform trading volume. To put into perspective, with ~$520mio daily trading volume, $1mio of trading would result in ~$27k worth of trading rewards (aka 2.7% trading rebates). Coupled with high staking rewards clocking in at 852% APR, many wash traders are taking advantage of zero royalty collections, where only 2% fees are paid on each transaction toward the platform and back to $LOOKS stakers, to churn volume. With Phase A ending on February 9th, we expect volume to die down, and that to be a good opportunity to short $LOOKS token.
Chart 8: LooksRare vs. OpenSea Daily Trading Volume
Chart 9: LooksRare Zero Royalty Volume vs. Rest of the volume
Meebits 15115
  • More about OpenSea x Dharma Labs
  • What is Dharma Labs: a DeFi wallet startup that connects to the bank, with estimated valuation of $110–130mio (exact number was not disclosed); with the acquisition, Dharma.io will be shutting down in 1 month, and customers have to transfer/sell their tokens in their wallet
  • More about Coinbase x Mastercard
  • The deal: the partnership will allow people to use their Mastercard cards to make purchases on Coinbase’s upcoming NFT marketplace. CEO of Coinbase, Brian Armstrong, previously said that NFTs will onboard the next billion crypto users, potentially shedding light on Coinbase’s new strategic direction
  • Why it matters: Both partnerships show NFT marketplaces’ focus on simplifying and expanding ways in which users can purchase digital collectibles and art. NFTs have caught the attention of the public, the way DeFi and BTC/ETH could not, onboarding new users to the blockchain-ecosystem. Simplified fiat on-ramp could serve as additional tailwind for the already-growing NFT market, and help realise the true total addressable market.
  • Animoca Portfolio & Investments: the firm’s major blockchain game projects include The Sandbox, the upcoming Phantom Galaxies game, the REVV token ecosystem; while for investments, Animoca has already invested in >150 NFT and metaverse-related companies, including OpenSea, Axie Infinity, Dapper Labs, etc.
  • What is Metaplex Foundation: developer of the Solana-based NFT protocol Metaplex; this represents their first fundraise, and was conducted via SAFT (wen META token?). Metaplex also announced this week that it is working on a new metadata standard for both fungible and non-fungible tokens.
  • Why it matters: gaming is the new (ok maybe not that new) big thing. Other funds that are targeting the gaming space include the below, and ‘traditional’ incumbents are also exploring P2E models.
  • 12/14/2021 $100mio fund announced by Gala Games, C2 Ventures
  • 12/15/2021 $150mio fund announced by Solana Ventures, Fote, Griffin Partners
  • 11/5/2021 $100mio fund announced by FTX, Lightspeed, Solana Ventures
  • Our view: Blockchain gaming is VERY early, with lack of clear winners (and will continue to not have clear winners, just like current gaming industry). For now, the games in the space are not fun (with graphics comparable to a college student homework), and projects need people to play the games (which becomes more of a job, not a game). We sincerely look forward to fun-to-play games.
  • What is BSN: blockchain network backed by the Chinese government; they started Open Permissioned Blockchain initiaitve, which allows local companies to harness blockchain without violating local anti-crypto regulations
  • What are they doing: BSN is expected to roll out infrastructure enabling the creation and launch of NFTs by the end of this month, and all transactions will be settled in RMB
  • NFT in China: tech giants, from Ant Group, Baidu, JD.com have all made forays into digital collectibles in recent months
  • More about the marketplace: RMDS Lab, a California-based data and AI platform, will create first NFT marketplace for science and technology IP by March
  • More on IP NFT: Last November, Jack Fonss and his consulting company, True Return Systems LLC, auctioned US patent on OpenSea
Chart 1: YTD Relative Price Performance of NFT Blockchains
Chart 2: YTD Relative Price Performance of NFT Marketplaces
Chart 3: YTD Relative Price Performance of NFT — Others

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