NFT "virtual fire" fades

 NFT News    |      2022-10-01

The world's largest NFT trading platform OpenSea

A month ago, Tencent Magic Core, one of the largest digital collection platforms in China, announced that it would stop the distribution of digital collections. At the same time, reporters logged on to multiple digital collection platforms and found that, whether it is the speed of product distribution or the number of releases, the major platforms have obviously slowed down the pace, and some platforms have even experienced slow sales and their sales prices have fallen sharply.

Abroad, in March 2021, Sina Estavi, CEO of Malaysian blockchain company Bridge Oracle, won the NFT minted by Twitter CEO Jack Dorsey with his "first tweet" for $2.9 million. In May 2022, when Sina Estavi tried to resell the NFT through OpenSea (the world's largest NFT trading platform), the first auction ended with only 7 bidders, with offers ranging from $6 to $277. In just one year, the price of "high-priced Twitter" has dropped to less than one tenth of the remaining one.

This is just a microcosm of the rapid cooling of the NFT market. The once-radical NFT market in the eyes of people is becoming calm and rational.

NFTs enter a downturn

The predecessor of the concept of NFT (non-fungible token) can be traced back to the "crypto swap card" in 1993. But it was not until 2017 that Dieter Shirley, CTO of blockchain technology company Dapper Labs, first proposed the concept of NFT. In the same year, the world's first NFT project, cypherpunk, was born in Ethereum; the first generation standard of NFT, ERC721, appeared immediately... This year was regarded as "the first year of NFT" by NFT players.

In the five years since the rise of the NFT concept, the NFT trading platform OpenSea that NFT players visit almost every day, the famous blockchain games CryptoKitties and Axie Infinity, and the player card issuance and trading platform (NBA Top shot) and other NFT applications. But it was not until 2021 that NFT ushered in a real centralized outbreak.

Player card issuance and trading platform (NBA Top shot)

From a $69 million NFT digital painting, to a $2.9 million NFT tweet with only 5 words by Jack Dorsey, to a $24.39 million boring ape NFT project... The third-party research agency DappRadar data shows that in 2021, all The annual NFT transaction volume exceeds 23 billion US dollars, of which the top 100 NFT collections have a reserve market value of 16.7 billion US dollars.

Soon, the fire also burned into the country. In June 2021, Ant Group sounded the "first horn" of domestic NFTs, Tencent, Byte, Baidu,, Station B, Xiaohongshu... Almost all the big Internet companies "swarmed up". In order to adapt to the domestic regulatory environment, major manufacturers have replaced the names of their NFT projects with "digital collections". When NFTs were at their peak, millions of users flocked to Ant Group's WhaleTracker and Tencent's Magic Core, two major digital collection platforms every day.

"Last year, I couldn't grab the digital collections on Whale Scout and Magic Nucleus. Even if I set the alarm clock, my hand speed was not fast enough." "Post-80s," Mr. Zhu told reporters. According to public data, in April this year, the sales of Magic Core reached a high of 20 million yuan.

In June of this year, Mr. Zhu finally bought his first digital collection - "Digital Dragon Boat" on Magic Core. Unexpectedly, he hardly struggled. But it didn't take long before I received an announcement in the Magic Core app about shutting down the platform.

The reporter learned that since June this year, many digital collections of "Magic Core" have experienced slow sales. The update of the public account "Tencent Magic Core" stopped on June 27. On August 13, Magic Core officially announced that it would stop selling digital collections. Not only that, the reporter logged on multiple digital collection platforms and found that both in terms of product distribution speed and distribution share, the major platforms have obviously slowed down the pace. .

"The 'hotness' and 'coldness' of the domestic digital collection market are to a certain extent transmitted from the overseas NFT market." Wu Tong, deputy director of the Blockchain Special Committee of the China E-Commerce Industrial Park Development Alliance, told reporters. Since May 2022, the total trading volume of the NFT market has hovered in the lower range for 15 weeks. According to NonFungible data, the global NFT transaction volume in the second quarter of 2022 is about US$8 billion, and the US dollar transaction volume has dropped by 24.82% month-on-month. More data shows that the NFT trading volume fell to the lowest range in 2022 in the last week of August, and OpenSea’s current trading volume is less than 10% of the bull market.

From the perspective of industry insiders, the popularity of NFT overseas is largely related to the cycle of encrypted digital currency. "The transaction medium of overseas NFTs is encrypted digital currency. With the strengthening of the supervision of encrypted digital currency by various governments, encrypted digital currency and NFT have entered the stage of squeezing the bubble." Co-director of the Digital Economy and Financial Innovation Research Center of Zhejiang University International Business School, Researcher Pan Helin told reporters.

“Before the new round of cryptocurrency bull market in the last two years, NFTs did not have a significant transaction volume, it was more like a small circle of cryptocurrency enthusiasts. Until the latest cryptocurrency After the cyclical bull market took off, an obvious wealth effect was formed. Various celebrities such as sports and music joined, and NFT gradually became a status symbol in the virtual world. The virtual world is full of 'fancy showing off'." Zhang Yuanjie, co-founder of Conflux, commented the reporter said.

A Boring Ape user Ong said: The Boring Ape Club is like a club in college. After buying the Boring Ape NFT with huge sums of money, you can authenticate your identity through social platforms such as Facebook and Instagram, and set your avatar as an ape. Everyone will follow each other and connect with each other.

With the arrival of a new round of bear market, the NFT market has entered a downturn, and the boring ape with a market value of tens of millions of dollars is also not immune. At the end of August this year, the base price of the boring ape fell by more than 75% in the previous three months, the liquidity fell by 44.07%, and the buyers and sellers decreased by 44.85% and 46.84% respectively.

"In addition to the volatility brought by the cryptocurrency market and the bursting of the global NFT bubble, another major reason is that the theme and innovation have reached a bottleneck. The enthusiasm for user participation is slowly fading." Senior Researcher of Ouke Cloud Chain Research Institute Jiang Zhaosheng told reporters.

Some experts also told reporters that since the NFT market exploded, NFT has been lacking in technological innovation. The NFT market has not made much progress in the underlying blockchain technology, and its development prospects are therefore limited. This is why many NFT projects feel similar to each other.

NFT is moving away from the virtual to the real

"We are used to the bear market, but this does not mean that the pace of NFT exploration has stopped." Devin Finzer, founder and CEO of OpenSea, said bluntly that the first NFTs (such as generative art such as collectibles) were born in the public eye. It's more like a rich man's toy, but when more valuable applications of NFTs such as ticketing, music, real estate, etc. begin to emerge in this market, the market and users will be able to separate 'builders from speculators' and ' Signal is separated from noise. "

Boring Ape NFT

The "generative art boom" is gradually receding, and the seemingly cooling NFT market is ushering in a new wave: the influx of major global physical brands is accelerating. Different from the first batch of "savage growth" generative NFT projects, the entry of big brands is driving NFT towards the trend of practicality, enabling NFT to enter a new stage of physical equity matching and reducing its bubble nature.

Starting from 2022, many leading companies in the industry such as Adidas, Starbucks, Gucci, and Xiaopeng have begun to try to build their own brand marketing matrix through the three cycles of NFT + metaverse + private domain traffic.

Adidas sold a total of 30,000 original NFTs to consumers at the beginning of this year. What is more valuable than "being sold out within minutes after the release" is that holders of these Adidas NFTs can exchange NFTs for them. limited-edition physical products at no additional cost. Fans who buy Adidas NFT can also get limited edition sneakers and clothing for the first time.

Starbucks also released its first NFT in May this year. Members who purchase NFTs can participate in the Starbucks Odyssey "Journey" series of activities, including the opportunity to participate in a virtual espresso martini-making class, special events hosted by the Starbucks Reserve Roastery, and even a trip to the Starbucks coffee farm in Costa Rica.

Starbucks founder Schultz said that NFT issuance is a value-added service for members - connecting Starbucks members and partners, and providing them with new interactive methods and previously unavailable experiences and ownership, which will exceed the previous basic benefits of members and unlock Starbucks Exclusive digital, physical and experiential benefits.

In this regard, Zhang Yuanjie said that NFT has obvious power in brand marketing, and its technical characteristics are naturally compatible with the membership management, brand points and incentive systems involved in current brand marketing. On the one hand, the construction of consumer goods through virtualization can broaden the creative space and boundaries of brand marketing. On the other hand, digital collections build an effective way to reuse the residual value of IP, which is also in line with the mainstream values of the current Z era.

In addition to brand marketing, this year, more and more ticketing companies and sports clubs have begun to cooperate with blockchain companies to expand and extend the NFT business. Among them, the most worth mentioning is the NFT pilot program of Ticketmaster, the largest ticket company in the United States and the blockchain company Flow, which distributes NFTs as souvenirs to the participants of the specific activities of the Super Bowl LVI, and solves the problem of scalper tickets, fake tickets, and resale through NFT. It can also provide fans with a series of value-added services.

As a representative of digital rights on the chain, the core value of NFT lies in that it can record and mark multi-dimensional data objects on the chain, and realize data traceability through marking, so it naturally has diversified application value.

Carbon asset NFT issued by China's carbon neutrality

In March this year, China Carbon Neutral announced the use of blockchain technology to issue carbon asset NFT for the first time in the world, supporting institutions, enterprises or individuals to purchase carbon asset NFT through the platform to offset related emissions and achieve carbon neutrality. It is understood that the carbon asset NFT issued by China Carbon Neutral represents the registered digital carbon asset endorsed by the real carbon asset. Through the on-chain write-off, it helps institutions, enterprises and individuals offset their own carbon emissions, and by creating an open and transparent carbon emissions account book, the related transactions can be traced and stored on the chain.

The mainstream consensus believes that NFT will not be a short-lived. As the market bubble continues to be squeezed out, NFT has gradually embarked on the "right path" of "removing the virtual to the real", and the creator economy, digital commodity certificates, tickets, and account management all have broad prospects .

Embracing the New Internet Form

In the early days, NFTs attracted encryption enthusiasts, and later they gradually gathered fans in niche fields, but this is not the real value of NFTs. It will definitely go to the public and serve the public. In the future, each individual individual can be marked as a unique NFT, and if these users wish, they can use the NFT to find groups matched by these characteristics. Based on these characteristics, NFT can create an Internet world where everyone's data is equalized.

In this regard, Devin Finzer had a vision: In the world of NFT, artists and creative people make a living by selling digital art; loyal fans buy collectibles from their favorite athletes and musicians; groups with common hobbies and interests pass Shared ownership finds other members, community and a sense of belonging; more new careers such as virtual world real estate agent, virtual reality sculpture designer are constantly emerging.

"This is a new form of the Internet. In this form, the data generated by users belongs to themselves for the first time. But the premise is that these data need to run in an open and safe public database. ." Zhang Yuanjie said.

User data is highly fragmented, and data on users' social and consumption behaviors are often accumulated in multiple dimensions, multiple businesses, and multiple occasions. When these data are increasingly recorded in an open and public database that can be accessed by any third party (with the user's permission), content entrepreneurs who are in full bloom will be able to provide users with different service scene.

For the domestic digital collection platform where "the underlying chain has not yet been interconnected and the rule system has not been established", the vision of NFT is even more difficult and long.

"The alliance chain is gradually showing obvious fatigue, and even the digital collection platforms endorsed by major Internet companies are showing signs of failure." In Jiang Zhaosheng's view, Tencent's shutdown of the magic core is an important part of the domestic NFT market. A turning point, it makes more users who really want to participate in the digital collection market begin to realize the problem of their own digital assets and data security - even if it used to be the largest NFT platform in China, it is difficult to guarantee that the NFT purchased by users will not be suddenly disappear. Those users who buy domestic digital collections suddenly find that the NFT they bought may not belong to them from beginning to end.

Thin Box Mints Digital Collection Platform

At the beginning of this year, the thin-box Mints digital collection platform based on the public chain created a 3D virtual world for Jay Chou, and sold hundreds of thousands of NFT metaverse keys. With this NFT, users can not only "interact" with Jay Chou, but also hear the demo of the song "New York Subway" that Jay Chou himself has never released on other public platforms. Since then, more and more creators have begun to start businesses in the virtual world. On the public chain NFT platform, NFT returns the ownership and economic control of data and information to creators, allowing creators to directly realize value creation and Value acquisition, thereby bringing about new changes in the Internet and the creator economy.

For creators, especially waist and first-generation creators, they often have to compete with channels, and they often face "choose 1 from 2". The cost is either handed over to offline channels or online channels. "The essence of NFT is a unique digital asset that can be freely released and circulated. Under the new Internet form, the pricing and bargaining power of NFT works belongs to the author himself, and the creator's work can also feed back the platform and stimulate the prosperous UGC. (User-generated content) Internet ecology." Zhang Yuanjie said.

“While today, some people may think of NFTs as just simple jpegs, there may be a day when almost everything we own will be owned and transferred on the blockchain in the form of NFTs.” Devin Finzer firmly believes that NFT technology will eventually drive The largest market on earth and fundamentally changing society.