Researchers have analysed the numbers to reveal why you don't see as many sellers of cartoon apes online these days: NFTs, or non-fungible tokens, which were originally heralded as a revolution in digital currency and art, are maybe essentially useless.
A new paper by dappGambl, a group of financial and blockchain technology professionals, is titled "Dead NFTs: The Evolving Landscape of the NFT Market." The authors examined 73,257 NFT collections and discovered that 69,795 of them have a market cap of 0 ETH, the second-most popular cryptocurrency after Bitcoin. A dramatic drop for assets that achieved a trading volume of $17 billion during a frenetic bull market in 2021 indicates that 95% of NFTs wouldn't fetch a dime today. According to the survey, over 23 million investors are in possession of these worthless tokens.
Furthermore, the supply of NFTs far outstripped the need. Only 21% of the collections examined in the report are fully owned, which means that over 80% of the collections are still unsold. The paper states that because consumers are more picky, "projects that lack clear use cases, compelling narratives, or genuine artistic value are finding it increasingly difficult to attract attention and sales."
And while individual items that sold for the equivalent of millions of dollars in cryptocurrency made news during the peak of NFT speculation, hardly any do so today. The majority of the priciest collections are priced between $5 and $100, and less than 1% are listed for more than $6,000. The floor price for about one-fifth of the "top" collections is $0. The paper points out that even for more expensive NFTs, prices may be set "without any bearing on tangible, real demand," reflecting sellers' idealistic assumptions and thus distorting investors' perceptions of an NFT's modest intrinsic value.
The researchers at dappGambl come to the conclusion that even though an NFT boom like the one in 2021–2022 may never occur again, the assets may develop to survive the wipeout. They might be assigned a specific purpose, such as serving as a ticket for special events or a virtual good that can be bought and sold in video games.
However, this would not address possibly the biggest flaw in NFTs, which sparked a significant debate as their use peaked: their environmental impact. Non-fungible tokens are created on the blockchain, which consumes energy, and are then purchased and traded on exchanges powered by cryptocurrencies "mined" with computer rigs that have a substantial carbon footprint. However, simply minting tokens has a price. According to the "Dead NFTs" report, the study's identification of roughly 200,000 NFT collections "with no apparent owners or market share" resulted in carbon emissions equal to 2,048 homes' yearly output or 3,531 automobiles'.
Of course, when NFTs were in high demand, enthusiasts weren't overly concerned about that. Concerns about the environment will probably be disregarded once more if they ever make a slight comeback. You can't let something like that obstruct the upcoming excitement cycle.
Selena Mattei