Annual NFT market review: Is 2023 NFT the best choice for developers?

In the current bear market, looking back at the market performance of the past year, we can find that all sectors are very sluggish compared to last year's bull market. From the common data side such as total transaction volume, transaction amount, market value, TVL, etc., the market lows are reflected. However, from the key data dimensions such as the number of developers and the number of users, it is reflected that the market is highly active and the industry is developing rapidly.
We clearly recognize that developers are still pioneering in a bear market, and Web3 in a bear market has also precipitated and accumulated more technologies and products. Today, let's review the annual data performance of the NFT track, which experienced explosive growth in 2021 and quickly cooled down in the bear market in 2022. From these data, we can also learn what directions are worth paying attention to in the NFT track in 2023 and what options are suitable for developers to plan in advance.
Review of the NFT Market in 2022
In order to better review the market situation of NFT throughout 2022, we summarized and referred to the data records of NFT data platforms such as NFTGO, and extracted the NFT annual reports of platforms such as Footprint and Ancient8. The article will review the year from industry-side data such as total transaction volume and search volume, and user-side data such as the number of users. First, let us review the total market value of NFT. According to the data disclosed by NFTGO, the total market value of NFT peaked in February and March at the beginning of 2022. After the peak time point, the overall market value showed a downward trend. At present, the total market value of the NFT industry is about 22 billion USD.
Compared with the peak of the outbreak in 2021, the monthly NFT market value in 2022 continued to be sluggish, with an average of no more than 500 million USD per month.
Trading volume
From the perspective of transactions, NFT transaction volume has had two transaction peaks in the past year, on January 13, 2022 and May 1, 2022. Sales in the first week of May reached 1.8 billion US dollars, setting a new annual high and then falling continuously. Currently, the daily transaction volume of NFT is basically hovering around 60 million USD.
The NFT market has been declining since its peak trading volume until the end of the year, with no clear signs of recovery, because the cryptocurrency market suffered a series of black swan events such as Terra, Celsius, 3AC and FTX in the bearish macro market. The NFT market is in a downward trend due to the overall market situation.
In contrast to the sluggish trading volume, the number of holders and traders continues to rise, which represents the active trading behavior of users in a sluggish market situation. From this data, we can also see the positive signal that the market has enough and continuously growing users.
popularity
By the end of the year, NFT searches had fallen by about 90% from their peak in January, suggesting that interest in digital collectibles has cooled during the bear market. NFT searches are rated on a scale of 1-100, with 100 being the peak search. Search trends generally track the ups and downs of the NFT market cap.
NFT interest by region in 2022
According to the NFT report released by Ancient8, four out of five of the most popular NFT regions are in Asia, and the remaining region is in Africa. China searches for "NFT" the most on Google. NFT, often referred to as "digital collectibles," faces a tougher market environment in China, but this has not affected users' attention to the NFT market.
NFTFi
As the name suggests, NFTFi is a combination of NFT and DeFi, where NFTFi finances transactions by using NFTs to obtain more liquid assets. The combination of DeFi and NFT opens up a variety of possibilities for NFT holders by making NFTs a more liquid asset. NFTFi's innovation allows NFT holders to put their idle digital collectibles to work to earn a yield, making them more liquid. Some notable use cases of NFTFi include NFT splits, NFT rentals, NFT derivatives, and NFT lending. While NFTFi solves the liquidity problem, it is still prone to exploits and pricing issues.
According to the data in the report, NFTFi also failed to achieve its expected goals, mainly due to the overall market downturn and decreased liquidity. However, the market value of blue-chip NFTs (BAYC, CryptoPunks, Azuki, Moonbirds) is very rich, with a total valuation of approximately US$3.5 billion, which motivates NFTFi builders and developers and will also attract more developers to join. The figure below shows the current market landscape of NFTFi.
Trading Platform
The six major NFT market players are OpenSea, Genie, Gem, LooksRare, Blur and X2Y2. OpenSea continued its decisive position and dominated the NFT market in the first half of 2022, with a record trading volume of $3 billion in February and April. However, the NFT market in 2022 has been full of dark horses. The newly established platform X2Y2 entered the NFT trading platform landscape and received considerable market attention. At its peak in July, X2Y2's trading volume reached a high of $170 million, making it the second largest player in the field.
NFT market transaction volume in 2022 (Source: Dune Analytics)
In addition to X2Y2, the "dark horse" Blur also performed well. Blur is a trader-centric NFT market supported by Paradigm. Despite its late start, Blur replaced OpenSea as the number one NFT trading platform in December and currently occupies more than 50% of the market share.
In addition to the above data, the major reports also disclosed more detailed and diverse data, such as weekly transaction volume. However, the overall situation is consistent with the conclusion drawn in the previous article. Affected by the macro market, the overall data in 2022 is lower than that in 2021, showing a continuous decline, but key indicators such as the number of traders, the number of developers, and trading platforms also allow us to see the "tip of the iceberg" under the market. The NFT market is still accumulating under the iceberg, waiting for the next peak of outbreak.
PFP NFT Project
The most important and popular NFT is the "PFP" project. PFP (Profile Picture) NFT refers to NFT used as a personal avatar. Some NFT players will use this NFT on social media such as Twitter, Facebook, and Instagram to express their socioeconomic status or belonging to a certain community, which has made the popularity of PFP NFT reach an unprecedented level. The prices of PFP NFTs range from low to high. The most expensive PFP NFTs at present are BAYC and Moonbirds. PFP NFT sales are still high this year, and now exceed US$5 billion. In addition to reviewing the overall data of the NFT market, we also summarized some PFP NFT projects with outstanding performance in 2022.
Bored Ape Yacht Club
Initially minted in April 2021 at an initial price of 0.08 ETH, the series of around 10,000 apes is one of the most successful NFT projects of all time. BAYC is currently priced at 68 ETH/piece, with a total sales volume of 717K ETH. BAYC's best performance was in April, with a total sales volume of 41.9K ETH.
Azuki
Azuki is one of the hottest NFT projects in 2022, and its community development and construction have performed very well in the bear market. Azuki was released in January 2022 and is a collection of 10,000 anime-style avatars. Within a month of its release, Azuki's sales reached $300 million, and its total sales even surpassed CryptoPunks and BAYC at one point. Azuki became very popular in late March 2022, with a reserve price close to 40 ETH.
Moonbirds
The series is described as a "utility-enabled PFP with extremely rich and unique rare features". Moonbirds' attractive pixel art design and the reputation of PROOF Collective helped the project attract a lot of attention from the community. After launching in April 2022, Moonbirds' total sales reached $238 million, making it one of the highest-grossing projects in NFT history. To date, the top 10 most expensive Moonbirds sales have all exceeded 100 ETH, with the most expensive transaction price as high as 350 ETH.
Valhalla
Valhalla, the “crypto-native brand for global gamers,” hit the social media scene here in late 2022. Valhalla’s 10,000 PFP Avatars were a hit on the secondary market after the November minting, making the top three along with CryptoPunks and BAYC. Valhalla now has 3.4K unique owners with a total trading volume of 11.6K ETH.
Reddit Collectible Avatars
Reddit launched a collection of 40,000 avatars, and the project can be said to be the first real case of the Web2 social media giant entering the crypto space to bring NFT PFP to the masses. It is worth mentioning that Reddit used the term "digital collectibles" instead of NFTs. At the time of launch, Reddit successfully sold out all of their digital avatars and obtained 2.5 million Reddit Vault wallets created on their market. A highly accessible platform coupled with an affordable price (about $10) helped the series reach millions and obtain a total sales of $12 million.
Outlook for 2023
Looking back over the past two years, the NFT market has made great progress and improvement. In 2021, the explosive growth entered the mainstream vision. Although affected by the market in 2022, it is still developing in a spiral upward, and technology and products have been better accumulated and precipitated. Looking forward to 2023, what will be the popular trends of NFT? What space will developers have to enter?
NFT PFP Trends
From the PFP popularity trends highlighted in the previous article, PFP NFT will continue to be a popular project in the community and ecosystem. From the data, users' interest in NFT PFP increased by 509% in 2022 compared with the previous year, bringing the current search volume of the term to 1.8K searches per month. Due to the strong community, unique utility, partnerships and valuable collectibles of PFP NFT, the PFP NFT project will continue its popularity in 2023.
AI and fragmentation
The combination of artificial intelligence and NFT is also likely to explode its potential in 2023, and AI attributes will give NFT a more unique and dynamic experience. At the same time, NFT fragmentation is also a new trend worth paying attention to. The fragmented setting can make high-value NFTs more liquid, and investors have more investment portfolios and choices. The improvement of market liquidity will also bring a more stable upward trend.
Web2 + NFT
The 2022 Qatar World Cup, which is still hot, has launched many NFT projects, such as Coca-Cola's NFT airdrop at this year's World Cup. Web 3 game company Limit Break also revealed plans to provide free minting at next year's Super Bowl event. Web2 + NFT has already had successful use cases, and major Web2 giants have also laid out and launched NFTs.
With the amazing potential brought by the unique properties of NFT, Web3 and Web2 industries use NFT for marketing to connect with consumers through physical and digital media; while achieving marketing goals, the combination of NFT and Web2 games, brand IP, knowledge products, etc. also demonstrates the various functions and gameplay of NFT. Reddit allows the integration of NFT avatars, Twitter allows the display of NFT avatars, and Instagram supports the casting and release of image content as NFT.
NFTFi
The prospects of NFT in the field of financial services cannot be ignored. The NFT market liquidity and richer investment options brought by the combination with DeFi will also attract more crypto users, so NFTFi will still be one of the focuses in 2023. Exploring NFTFi and creating more possibilities will also bring a field with more opportunities and advantages for developers who are looking for space to enter NFT.
Conclusion
The astonishing data that the NFT market size plummeted by 92% does not mean that the NFT track is sinking. The more bearish the market is, the more projects with real value and technological prospects emerge one by one, providing more possibilities for the crypto world. This year's NFT market has ushered in exciting projects in various fields such as Azuki, Moonbirds, Skyweaver and DigiDaigaku, and has led to the outbreak of new markets and platforms such as X2Y2 and Blur. NFT still has potential development directions such as NFTFi and AI + NFT in 2023.
Although the crypto field is currently in a sluggish market situation under the bear market, the potential and prospects shown in the NFT track are still unlimited. From the user's perspective, 2022 is not affected by its declining market value. Instead, it can be regarded as a continued effort after the first year of NFT, and it is a very successful year for NFT.