With cryptocurrency prices fluctuating this year, non-fungible tokens (NFTs) and other investors in the sub-ecosystem have also found themselves in the grip of a bear market.
However, looking beyond the trading value of Ether
ETH
pointers down
$1,270
NFTs were primarily created to represent assets and ownership in the real and virtual world. As a result, the bear market has reignited discussions about how NFTs can take a step back and focus on attending to use cases while the market recovers.
In a conversation with Cointelegraph, Tony Ling, co-founder of analytics platform NFTGo, shared insights into the NFT ecosystem, revealing the expected path for the ecosystem.
Cointelegraph: NFTs’ rise to mainstream popularity is often attributed to the various real-world use cases that they can and have been solved. What do you think of the NFT bear market? Do you think the market is poised for recovery?
Tony Ling: Answering that question requires explaining the value base of NFTs first. Currently, the NFT market is mainly driven by four categories: Art, PFP (Profile Pictures), Land and Organic. At the moment, PFP is the most dominant. The value base of PFP NFTs mainly includes three parts: financial products, collectibles/luxury goods, and memberships, among which financial products are currently dominant, while the derivative model of NFTs is still in a very early stage. So, with the overall bubble clearing of the cryptocurrency market, NFTs, as a low-liquid derivative of tokens (FT), are bound to decline accordingly. This is what I expected.
However, I believe that as the crypto market rebounds in 2023-2024, the value of the NFT has room to grow several times that of the larger crypto market. Its value growth will come from at least two aspects:
First, with the development of NFTs and related meta-universe technology, NFT usage scenarios will be more abundant, and the consumption characteristic of NFTs will grow, and this consumption characteristic is not only for solving real-world problems but also for creating new scenarios that do not exist in the real world.
For example, all the assets in Otherdeed’s metaverse are NFTs, and these same NFTs will generate various economic interaction scenarios, thus realizing new consumption to help people better meet their needs and even develop into new production tools and business forms.
Secondly, the development of various NFT derivatives, including NFT hash, NFTFI, real estate lending NFT, and fixed income NFT products. These new financial products will enable investors to participate in NFT-linked investments in a more flexible form, thus attracting more capital, both from institutional and retail investors, to this market.
CT: Despite the losses and the low hype, many projects are still considered viable investments. What do you think is driving this trend? How important are NFTs to service use cases, or are they just investors looking to make a quick buck?
TL: The driving force of any trend is the “story created by the speculator” and the “true value”. Particularly in the early days of the industry, a bubble is a reaction to uncertainty, and I think it is builders like us who embrace uncertainty that are driving this trend. Of course, in addition to builders, big money, including money in the crypto space, mega funds and even money that used to focus on traditional areas are also very important drivers. In fact, some of them want to make a quick profit, but from the point of view of capital efficiency, I don’t think that now is the right time to make a quick profit in the cryptocurrency market.
CT: What trends are still relevant from the early NFT days, regardless of price fluctuations? And what new trends do you think will be popular in the near future?
Logacek: First of all, more and more people are interested in NFTs and there are bound to be orders of magnitude more in the future. Data from NFTGo shows that there are currently more than 2.96 million wallets on Ethereum that contain NFT, compared to just over 200,000 in August 2020. Despite the current cold market sentiment, there are still 20-30,000 NFT addresses trading each day. Of course, this number still has enormous room for growth. Secondly, builders are continuing to build. You can see that many NFT-related companies have recently secured funding. Moreover, even though the market has been bearish lately, there are still successful new projects like Goblintown and Memeland emerging in the market.
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Although the various PFP projects of this past summer NFT had their own unique characteristics, many of them still followed the model set by the Bored Ape Yacht Club (BAYC). With the further development of the NFT industry, a huge new trend is bound to emerge. This new trend, I believe, will be the outbreak of the content environment from the metaverse. The definition of “content” here is broad, and games are in Metaver
