Decentralized Arts #19: NFT Market Retrospective
BanklessDAO Weekly NFT and Cryptoart Newsletter
Dear Bankless Nation,
We are at the end of the year and it is time to take stock. The NFT market is certainly positive and the growth projections are stellar. Not only did 2021 break all previous records, but it went beyond all expectations from the visibility of the phenomenon beyond the borders of the crypto world.
The word NFT is now known to millions of people, and certainly this is the sign of a progressive expansion of the blockchain world to groups of people who until a few months ago did not know it or, for several reasons, snubbed it.
The cryptoartists themselves are increasingly well-known, gradually becoming stars within the metaverse.
The only sore point is given by the low level of representation of artist minorities, but the sensitivity to the issue is getting stronger and we hope that 2022 will establish itself as the year of greater democratization and representation of artists from all over the world.
Welcome to Decentralized Arts.
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📰 Curated NFT News
Global Search for 'NFT' Surpasses 'crypto' for the First Time
According to Google trends, the term “NFT” has surpassed “crypto” for the first time ever in the week ending on December 19th. This is a clear indication that NFTs are entering the mainstream.
Kraken Developing NFT Marketplace Offers NFT-Backed Loans
Chief Executive Officer Jesse Powell says the cryptocurrency exchange is working on a non-fungible token marketplace that could appeal to customers who want to do more than just collect digital art. Kraken is working on a system to determine the liquidation value of the NFT deposited.
“If you deposit a CryptoPunk on Kraken, we want to be able to reflect the value of that in your account. And if you want to borrow funds against that,” Powell added.
While decentralized finance project NFTfi, founded in February 2020, and crypto lender Nexo already offer NFT-backed loans, Kraken will probably be the biggest exchange thus far to try it as the exchange is among the top 20 globally by trading volume.
Solana NFT Project Fractal Becomes a Victim of a Discord Attack
Last week hundreds of Fractal members who joined the NFT platform’s Discord lost $150,000 worth of Solana (SOL) in the 10 minute attack.
Attackers hacked the announcements bot on Fractal’s Discord server and posted a link to a limited-edition NFT from Fractal, the new marketplace focused on gaming collectibles. Users who followed the link and connected their wallets found that their holdings of SOL were transferred to the scammer’s account.
Discord hacks are increasing lately—Boss Beauties and the Monkey Kingdom NFT also had their Discords compromised. In addition to this, scammers hacked Phantom Galaxies Discord last month, stealing over $1 million worth of ETH.
The Open DAO Announces Free SOS token
The Open DAO has taken the NFT community by storm by releasing the SOS token on Christmas Eve. The Open DAO, which is not affiliated with OpenSea, will let all users of the NFT marketplace since its launch claim the tokens. The snapshot was taken on 23 Dec 2021 12:00 (UTC).
The smart contract (0x3b484b82567a09e2588a13d54d032153f0c0aee0) is open source, has been audited and was created without a contract owner. The only thing that devs can/will do is to move unclaimed SOS by 30/JUN to the DAO.
The Open DAO has already been active on Snapshot and has taken the first two decisions to vote.
To check your eligibility for the airdrop, go here.
The NFT Market in 2021, a Retrospective
According to the Collins dictionary, NFT is the watchword of 2021, the year the NFT market started to be worth billions of dollars. DappRadar—a company that analyzes decentralized applications, including blockchain-based NFT sales platforms—shows that the phenomenon has literally exploded in the last twelve months and only in the first half of 2021 has it produced an estimated sales volume in the order of $2.5 billion. In the same period of the previous year, the value was $13.7 million.
NFT trading began to accelerate earlier this year and exploded in March, following news of the sale of the most expensive NFT ever, Beeple's “Everydays: The First 5000 Days”, auctioned by Christie's for $69 million. Sales continued to grow, peaking in May when it hit a record $102 million generated in a single day. After May, a physiological decline began in which the total value of sales began to decrease while the number of daily transactions steadily increased.
Also, as indicated in this week’s news, according to Google trends the term “NFT” has surpassed “crypto” for the first time ever in the week ending on December 19th.
Choosing to sell tangible and intangible assets in the form of NFTs is a path traveled by various artists, companies, well-known personalities, and social networks. For example, this year we saw the sale of Jack Dorsey's first tweet for $2.9 million, with the proceeds donated to charity at GiveDirectly, the auction for $5.4 million of the World Wide Web source code created by Tim Berners and the sale of Edward Snowden's work Stay Free, which portrays it in the background of the sentence that condemns the American National Security Agency for the Datagate case.
It seems that a large mainstream audience has finally arrived in the NFT market. The change is related to the type of NFTs that are offered: no longer just very expensive works of art—mid-year, an analysis by NFT Qt highlighted how 43% of NFTs are the result of the sales of artists such as Beeple, Larva Labs and Pak—but also gadgets in NFT versions such as Hot Wheels, Funko Pop or WWE.
After Hashmasks posted a transaction value of over $380 million during the week of July 4, 2021, a new peak started in August, largely driven by the release of a new collection from the famed NFT creator group Bored Ape Yacht Club.
To better understand the performance of NFTs in 2021, download and read the Third Quarter 2021 Non-Fungible Tokens Report by Nonfungible. The Report provides insights into the latest market trends, sales, projects, category performances, and details on retention rates and liquidity for NFT platforms and markets. For example, the report highlights the number of wallets that interacted with an NFT smart contract. This number increased by 102.52%, from 203,719 active portfolios in the second quarter to 412,578 in the third quarter.
Analysts at investment bank Jefferies predict that the value of NFTs will double by 2023 and approach $80 billion by 2025.
In reviewing the data of various rankings and sales of 2021, NFTs worth over $10 million stand out, with account to the exchange rate at the time of sale.
At the top of this particular ranking is The Merge by Pak, an anonymous artist. Pak sold over 267,000 NFTs for $91.8 million on the Nifty Gateway platform. The Merge is a collection of 266,445 NFTs purchased by 28,983 collectors. The auction was held with a particular mechanism: each individual NFT was offered at $575, or $299 in the case of collectors who already own NFTs created by Pak. Every six hours from the start, the price went up by $25. The collection has a built-in scarcity mechanism that makes the availability of individual units scarce. In the buyer's wallet each Merge token transfer is merged by adding the bulk value into a single token. According to Nifty Gateaway, this is the largest sale of art pieces by a living artist.
We spoke already about Beeple’s Everydays, sold at Christie's first digital auction via the Ethereum blockchain. The collector Metakovan, born Vignesh Sundaresan, purchased the work: a collage of over 5,000 images created and shared by Beeple over the last 13 years, representing the progression of technology.
Another work by Beeple reached $28.9 million at Christie's 21st Century Evening Sale on November 9th. Human One, accompanied by an NFT, is the artist's first physical work. It is a hybrid sculpture of about two meters made of LED screens with dystopian images, accessible on the Ethereum blockchain. As the auction house and the artist explained, the work is generative, that is, it updates and evolves creating a continuous conversation between artist and owner.
Among the more expensive NFTs are pieces of the CryptoPunk series, a project launched years ago by Larva Labs that uses the 8-bit style. Last June, an anonymous buyer paid $11.8 million for CryptoPunk #7523, with a size of 24x24 pixels, at an auction held at Sotheby's. In April, CryptoPunk #3100, one of nine aliens in the entire series, was sold for $7.67 million. CryptoPunk #7804, an alien with a cap, sunglasses and pipe, was also bought for a record 4,200 Ethereum. On December 10th, CryptoPunk #4156 sold for 2,500 Ethereum, at that time worth about $10.3 million. The peculiarity of the collection are the types of characters who, in addition to humans, contains zombies, gorillas, and aliens, and combine different accessories that make them more or less rare.
But in the exciting and ever-changing world of NFTs there remains a major problem, which we began to address in past issues of Decentralized Arts: diversity among the artists.
In the past 21 months, female artists have accounted for just 5% of all NFT art sales, according to the most recent report from Art Tactic. They also made a lot less money for their work. Musician Grimes is, in fact, the only woman to enter the top 10 NFT earnings of 2021, according to a report that analyzed the market activity through Nifty Gateway.
Cryptoart has been presented as a great democratizing element of a notoriously masculine world. "We've worked so hard to create resources for women," said Danielle Davis, an artist on the leadership team that took over the Fame Lady Squad in August. Danielle Davis wanted to create a website with the basics of breaking into space and a podcast aimed at women to help bridge the representation gap in the NFT art market.
Continuing gender disparities were also evident at this year's NFT.NYC conference. Women made up only about 18% of the speakers, and only 30% of the sponsors' exhibitions featured female artists.
We therefore greet 2022 with several wishes: that the NFT art market will continue to grow, allowing more artists to express themselves, and that it becomes more inclusive and increasingly an instrument of affirmation of diversity and minorities.
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