Jack Kubinec

NFT trading volume in 2023 was less than half of what it was in 2022. It slid from $26.3 billion down to $11.8 billion, according to a CoinGecko report.



Barely two years after pixelated collectibles were fetching millions and Jimmy Fallon showed off his Bored Ape on The Tonight Show, digital art trading has fallen off the radar for many crypto investors.



But the <a href="https://www.coingecko.com/research/publications/2023-annual-crypto-report#5-nft-trading-volume-stood-at-11-8b-in-2023-44-of-2022-s-figures">downturn</a> has been a slow burn so far. Back in 2022, CoinGecko’s crypto industry report <a href="https://www.coingecko.com/research/publications/2022-annual-crypto-report#7-amid-first-nft-winter-opensea-s-market-share-slid-to-65-4-but-still-dominates">showed</a> that digital art volumes dropped each successive quarter, falling over $10 billion from Q1 to Q4.&nbsp;



The space’s prolonged decline was caused by uninspiring macroeconomic conditions and high-profile collapses. These issues eroded public and investor confidence in volatile sectors of crypto, according to Mysten Labs’ NFT lead Rohan Handa.&nbsp;



Read more: <a href="https://blockworks.co/news/opensea-prison-nathaniel-chastain">Former OpenSea manager sentenced in NFT insider trading case</a>



The overall downturn in the NFT market is reflected in the ill fortunes of <a href="https://blockworks.co/tag/opensea">OpenSea</a>, a trading platform that was once valued at $13.3 billion. Its trading <a href="https://dune.com/rchen8/opensea">volume</a> was roughly $170 million in December 2023 after seeing nine consecutive months above $2 billion between 2021 and 2022, according to a Dune Analytics dashboard.&nbsp;



<a href="https://blockworks.co/news/layoffs-opensea-nfts-lido">OpenSea laid off 50% of its staff</a> in early November. Days later, Coatue Management, one of OpenSea’s investment backers, <a href="https://www.theinformation.com/articles/coatue-cuts-value-of-opensea-stake-by-90-as-funds-returns-sag">reportedly</a> marked down its shares in the company by 90%.&nbsp;



OpenSea CEO Devin Finzer has <a href="https://x.com/dfinzer/status/1720516610685858218?s=20">teased</a> forthcoming product upgrades to “OpenSea 2.0.” Earlier this month, the platform <a href="https://opensea.io/blog/articles/opensea-new-onboarding-experience">debuted</a> a wallet creation onramp that only requires an email. This method, facilitated by Privy, leverages Shamir&#8217;s Secret Sharing (SSS) to make onboarding to the platform easier.



“OpenSea is already laying the groundwork for a large influx of new users by streamlining the buying / selling experience of <a href="https://blockworks.co/tag/nfts">NFTs</a> by allowing users to get started with just an email,” Finzer told Blockworks in a written statement.&nbsp;



NFT trading saw seeds of a turnaround in late 2023 and into 2024, partly driven by the <a href="https://blockworks.co/news/avalanche-ordinals-asc20-transaction-record">proliferation of Bitcoin Ordinal inscriptions</a> and excitement around the <a href="https://blockworks.co/tag/solana">Solana</a> ecosystem.&nbsp;



Read more: <a href="https://blockworks.co/news/solana-bitcoin-exceed-ethereum-nft-sales">Web3 Watch: Solana and Bitcoin top Ethereum in NFT sales</a>



Blockworks spoke with several participants in the NFT space who agreed that the future of the technology lies beyond what is often dismissively described as merely trading collectible JPEGs.



The 2021 rise of NFTs amounted to “step 1 in onboarding non-crypto native users — I see, I like, I use…We are now in the second phase of market maturity for NFTs, where the assets will be used in real-life applications,” Handa said.&nbsp;



“Rudimentary” use cases like PFPs and digital collectibles were helpful for mass adoption but led to market oversaturation, Dirk Lueth, co-founder of the metaverse gaming platform Upland, said.



The future of the space involves “coupling NFTs with utility, gamification and financial incentivization,” Lueth said.&nbsp;



Several sources Blockworks spoke to suggested that a resurgence in NFTs depends on the technology showing its actual utility. Lueth gave verifying identity for governance, reward systems, or access as examples. Handa spoke of tokenizing illiquid real-world assets as NFTs to bring a representative version on-chain.&nbsp;



Read more: <a href="https://blockworks.co/news/cash-grab-trump-nfts-political-cultism">In latest cash grab, Trump mixes NFTs and political cultism</a>



Each showed optimism around NFT applications for <a href="https://blockworks.co/tag/gaming">gaming</a>. A crop of blockchain-native games let users trade in-game characters and assets as NFTs, hoping to make gaming more monetizable. An S&amp;P <a href="https://www.spglobal.com/marketintelligence/en/news-insights/research/in-game-nfts-forecast-to-grow-into-15b-market-by-2027">report</a> predicts the market for this particular NFT application to grow by several billion dollars in coming years.&nbsp;



“2024 is the year of [g]aming NFTs,” Handa said.



Updated Jan. 19, 2024 at 10:35 am ET: Added details about OpenSea’s email-enabled wallet signup and corrected the spelling of Dirk Lueth’s name.



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NFT volume fell $14.5B in 2023: CoinGecko

Bessie Liu

Crypto data aggregator CoinGecko has acquired NFT data infrastructure and intelligence company Zash.



Zash is an on-chain NFT data analytics firm that collects data from over 1 million different NFT collections and marketplaces. It provides information on NFT metadata, historical trades, lending and also detects large-scale wash trades.



Originally founded by Parit Patel and Efe Surekli, London-headquartered Zash also covers information derived from 87 different blockchain networks, including Ethereum, Polygon, Binance Smart Chain and Solana, among others.



Its NFT data will be integrated into CoinGecko’s API by the second quarter of 2024. This will give users the ability to access various information on fungible and non-fungible token data. 



Bobby Ong, founder and COO of Malaysia-based CoinGecko, told Blockworks that the company believes in a future where any asset that can be tokenized will be tokenized. 



“On that note, we believe that NFTs will continue to innovate beyond [profile pictures], GameFi and unlock new opportunities and use-cases worldwide,” Ong said. 



Ong noted that its acquisition of Zash will enable the company to become a one-stop comprehensive source for all cryptocurrency-related data. CoinGecko is mostly known for its price and market cap readouts.



TM Lee, the CEO and co-founder of CoinGecko, noted in a press release reviewed by Blockworks that the acquisition of Zash came after evaluating “all existing NFT data providers in the space.”



Zash stood out from the other providers for having built a marketplace product with a comprehensive data set in just three years,” Lee said.



“This acquisition aligns with our commitment and dedication to deliver exceptional value to the crypto community, starting with a unified token and NFT market data offering.”



The acquisition terms remain undisclosed.



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CoinGecko acquires NFT data startup Zash

James Cirrone

Crypto’s total market cap reached $1.2 trillion by the end of Q1 2023, driven by a temporary boost in daily trading volume following the banking failures in early March, according to a CoinGecko report.



The <a href="https://www.coingecko.com/research/publications/2023-q1-crypto-report">report</a> also found that bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) still reigns supreme, outperforming the NASDAQ, gold, and crude oil. It notched a quarter on quarter gain of 72.4%.



Joshua Frank, co-founder and CEO of The Tie, told Blockworks that bitcoin led the overall crypto recovery in the first quarter.



“Bitcoin’s strength this year has come on the back of the banking scandal as investor sentiment shifted towards viewing BTC as a hedge against banks, as nervous investors looked for relative safe havens to move capital out of stablecoins [and] as Circle and other issuers have faced uncertain banking situations,” Frank said.



Speaking of stablecoins, this asset class erased $6.2 billion in value in the first quarter. The report cited <a href="https://blockworks.co/news/circle-stand-behind-usdc">the USDC depegging</a> following SVB’s collapse and <a href="https://blockworks.co/news/paxos-to-cease-minting-new-busd-and-end-relationship-with-binance">Paxos ceasing to mint BUSD</a> in February, as major causes for the downturn.&nbsp;



The report also delved specifically into the growth of DeFi and DEXs. As a sector, DeFi’s market cap swelled over 65%, translating into nearly $30 billion in gains. Despite the gains, DeFi only accounts for less than 5% of crypto’s overall market cap, according to Frank.



Still, there were gains nonetheless, and they were possible because of the growth of liquid staking governance tokens such as Lido DAO (<a href="https://blockworks.co/price/ldo">LDO</a>) and Rocket Pool (<a href="https://blockworks.co/price/rpl">RPL</a>), which have jumped approximately 135% and 167%, respectively, since the start of 2023.



“With the confirmation of Ethereum’s Shapella upgrade, liquid staking governance tokens saw a 210.9% increase in market cap in Q1. It has now surpassed lending protocols to become the 3rd largest category in DeFi,” the report said.



DEX governance tokens instead faltered, losing 5% of their market share since January.&nbsp;



On the NFT front, trading volume for the digital asset surged 68% to $4.5 billion in the first quarter from $2.1 billion last quarter. Blur additionally overtook OpenSea as the most popular NFT marketplace in Q1. <a href="https://blockworks.co/news/opensea-pro-nft-launch-blur">OpenSea’s rebranded release of its pro platform</a> is not reflected in CoinGecko’s report, however.



Blockworks previously reported on an early April report which showed that <a href="https://blockworks.co/news/75-percent-crypto-holders-own-nfts">75% of crypto holders own NFTs</a> — potentially another sign that the segment’s crypto winter is coming to a close.



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Crypto Market Cap Surpassed $1T, Bitcoin Reigned Supreme During Q1

Over 75% of crypto holders own NFTs, a CoinGecko and Blockchain Research lab survey found.&nbsp;



This high adoption rate is likely due to the fact that the audience for NFTs is a lot more mainstream than traditional crypto, according to co-founder of Arcade.XYZ Gabe Frank.&nbsp;



Anthony Georgiades, co-founder of Pastel Network, added that while the 75% figure could be inflated, NFTs are starting to get snapped up by more traditional crypto enthusiasts. And for normal consumers, they are easier to understand than other blockchain-based investment assets.



“NFTs certainly are more accessible and palatable than just general crypto overall. It&#8217;s easier to jump into the crypto space and ecosystem and just buy an NFT,” Georgiades said.&nbsp;



Frank said he feels that once a person buys an NFT, they “get it,” and then it becomes a game.



Georgiades agreed, elaborating that “it&#8217;s not just holding bitcoin. It might go up, it might go down and that&#8217;s it…They are very unique variables and collectibles. So it does become gamified in some way.”



The <a href="https://www.coingecko.com/research/publications/how-popular-are-nfts">survey</a> also suggested that of the people who own NFTs, just over a quarter are “avid collectors” — which according to the study, means they hold over 51 NFTs. FOMO, or fear of missing out, is a huge component behind this number, according to Georgiades.



Frank also pointed out that <a href="https://blockworks.co/news/7-nft-use-cases">use cases for NFTs</a> continue to grow. Real estate is one such example, where investors recently bought a single-family home in Texas that was <a href="https://blockworks.co/news/real-estate-investors-buy-nft-home">tokenized on Solana</a>. Other uses include gaming, event exclusives, fashion wear for digital avatars, and gated access to a variety of immersive experiences — both online and off.



However, despite the utility of these assets becoming clearer, there remains a solid chunk of crypto industry participants — about 20% — who report never having owned an NFT. Georgiades attributed this to some investors steering clear because initially, the derived value of owning an NFT wasn’t clear.&nbsp;



“I do think that that percent will change as NFTs become more of a critical point in the overall value chain of DeFi,” he said. “Just because those holders haven&#8217;t necessarily bought NFTs, doesn&#8217;t mean they won’t in the future.”



The survey included 438 respondents and was conducted from December 2022 to January 2023.



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75% of Crypto Holders Own NFTs, Survey Says

David Canellis

$10B Mystery: Is OKB Really the 7th Largest Crypto?

CoinMarketCap and CoinGecko are two major crypto analytics platforms that rank crypto exchanges based on trustworthiness.



In light of <a href="https://blockworks.co/news/worse-than-enron-sbfs-ftx-has-a-complete-absence-of-trustworthy-information" target="_blank" rel="noreferrer noopener">what happened last week</a>, both whiffed on FTX.



In early November, <a href="https://www.coingecko.com/" target="_blank" rel="noreferrer noopener">CoinGecko</a> had FTX <a href="https://web.archive.org/web/20221101144322/https://www.coingecko.com/en/exchanges" target="_blank" rel="noreferrer noopener">ranked</a> as the third-best cryptocurrency exchange, with its trust score a perfect 10. On Nov. 8, <a href="https://coinmarketcap.com/" target="_blank" rel="noreferrer noopener">CoinMarketCap</a> ranked FTX as crypto’s <a href="https://twitter.com/ChrisLeeML/status/1590030685305442304?s=20&amp;t=i7xuMjU5hE9osK9fgHHQpg" target="_blank" rel="noreferrer noopener">third-best</a> exchange, behind only Binance and Coinbase. On Nov. 11, FTX declared bankruptcy after it was found to have propped up related company Alameda Research with customer deposits and illiquid native tokens that blew a hole in its balance sheet.



CoinMarketCap and CoinGecko <a href="https://www.similarweb.com/website/coingecko.com/vs/coinmarketcap.com/#traffic" target="_blank" rel="noreferrer noopener">garnered</a> 104 million and 33 million visits last month, respectively. The sites serve as a sort of front porch for crypto, as the top two results if you Google “crypto market cap.” David Tawil, the CEO of ProChain Capital, says this reputation may not last.



“I don&#8217;t think their services are going to provide much value to anybody for a long time. I don&#8217;t think that they&#8217;re gonna get advertising dollars because they&#8217;re not gonna get clicks,” Tawil told Blockworks.



Tawil cast CoinGecko and CoinMarketCap as crypto’s answer to TradFi credit rating agencies, such as Moody’s, S&amp;P and Finch. The scores serve as a starting point for bond investors, but users also run the risk of the ratings being wrong — <a href="https://www.bloomberg.com/news/articles/2008-09-24/bringing-down-wall-street-as-ratings-let-loose-subprime-scourge" target="_blank" rel="noreferrer noopener">as was the case</a> leading up to the 2008 mortgage crisis. And investors seem unlikely to forgive and forget firms who promoted FTX as crypto’s own liquidity crisis unfolds.



“I think [CoinGecko and CoinMarketCap’s] reputation is thrown out the window,” Tawil said.



The two analytics platforms rank exchanges based on an opaque algorithm that uses factors such as liquidity, security, and usage in their scoring. Asked how FTX was rated trustworthy despite being, well, not trustworthy, Zhong Yang Chan, CoinGecko&#8217;s head of research, said factors like whether an exchange’s assets are liquid were not talked about much before the past two weeks.



“Only with recent developments surrounding FTX has there been a concerted push for centralized exchanges to adopt greater transparency around their reserves,” Chan said in a statement to Blockworks.



CoinMarketCap did not directly comment on how FTX achieved its ranking — a spokesperson told Blockworks the company’s exact methodology is kept private to prevent exchanges from gaming its rankings. On Nov. 2, the platform ranked FTX third in average liquidity, which CoinMarketCap measures based on price slippage during trades.&nbsp;



In the past week, CoinGecko began tracking liquidity by adding a <a href="https://blockworks.co/news/crypto-exchange-proof-of-reserves-not-calming-investor-fears" target="_blank" rel="noreferrer noopener">proof of reserves</a> tab where users can see the amount of assets exchanges have on-hand, based primarily on data from DeFiLlama and Nansen. Learn More: <a href="https://blockworks.co/news/what-are-proof-of-reserves-and-can-they-build-back-trust" target="_blank" rel="noreferrer noopener">What is Proof of Reserves and Can It Build Back Trust?</a>



By the end of 2022, “only exchanges that have made attempts to prove solvency will be scored well,” Chan said.



CoinMarketCap does not yet include proof of reserves on its site, but the platform told Blockworks it plans to do so “as soon as possible.”



Both platforms currently rank Binance as the top crypto exchange, though the firm’s lead is especially pronounced on CoinMarketCap, where Binance is scored 9.9, and No. 2 Coinbase is an 8.0.



Also, Binance <a href="https://www.coindesk.com/business/2020/04/02/they-have-the-users-binance-ceo-explains-why-he-bought-coinmarketcap/" target="_blank" rel="noreferrer noopener">owns</a> CoinMarketCap.



“Binance and CMC operate independently,” CoinMarketCap told Blockworks in a written statement.



Be that as it may, Tawil said, “That&#8217;s inappropriate, because that conflict of interest is absolutely clear.”



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CoinMarketCap and CoinGecko Ranked FTX Highly. Why?

Ben Strack

<div id="highlights-block_6116bac58c8d1" class="highlights">
 <ul>
 <li>Potential wide adoption of the blockchain platform’s upcoming smart contracts offering could lead to a valuation for Cardano similar to Ethereum, industry executive says</li>
 <li>ADA token was above $2 on Friday, up 46% from seven days ago, according to CoinGecko data.</li>
 </ul>
 
</div>



<a href="https://cardano.org">Cardano</a> (listed as ADA) has become the third-largest cryptocurrency by market capitalization as it is just weeks away from its planned hard fork that will bring smart contracts to the platform.&nbsp;



The token was priced at $2.02 as of 2 p.m. eastern time Friday, <a href="https://www.coingecko.com/en">according to CoinGecko</a>, bringing its market cap to more than $64 billion. ADA’s price was up about 16% from the previous day and up 46% from the previous week, the data shows.



ADA’s market cap, which is below only bitcoin and Ethereum, is now slightly above Binance Coin (BNB) and Tether (USDT).



The boost in price comes as proof-of-stake blockchain platform Cardano gets set to execute an upgrade on its main network. The hard fork is set to occur on Sept. 12, Cardano executives revealed in a <a href="https://www.youtube.com/watch?v=mnV4eWw37Ts">YouTube video</a> on Friday morning.



“As we come up to this hard fork, we will deliver the Plutus capability — our full toolbox of smart contract capability — and then we’ll start to iterate from there,” said Nigel Hemsley, Cardano’s head of delivery. “It gives us the foundation to build on Cardano. We’ll have more and more [decentralized applications] and other innovations coming out shortly afterwards.”&nbsp;



<a href="https://testnets.cardano.org/en/programming-languages/plutus/overview/">Plutus</a> is Cardano’s platform for smart contracts, which are contracts stored on a blockchain that are executed when predetermined conditions are met. To write a smart contract using the platform, one can code directly in what is called the <a href="https://playground.plutus.iohkdev.io/">Plutus Playground</a>.



Founded in 2015 by Ethereum co-founder Charles Hoskinson, Cardano’s price accelerated as the rise of DeFi in 2020 caused congestion on the Ethereum protocol, creating incentives for developers <a href="https://cms.blockworks.co/eth-remains-strong-despite-coin-challengers/">to build alternatives</a>. Though now worth more than $2, a Cardano token was worth 10 cents in late 2020.



David Tawil, president of ProChain Capital, called the hard fork and smart contract update “critical,” noting that Ethereum is now seeing more competition.&nbsp;



“If there is a major uptick in adoption, investors will be justified in a valuation of Cardano that is similar or equal to Ethereum now that the functionality will be the same or better,” he told Blockworks.&nbsp;



Though smart contracts overall are still in the early stages of development, they will continue to be perfected over time, Tawil said.&nbsp;



“We’re lucky to have very smart and ambitious competitors focused on the product,” he noted. “These participants will continue to sharpen each other; it is capitalism in the truest sense … [and] regulators should hang back and allow animal spirits to run.”



Cardano launched a public testnet about a week ago, Hemsley noted, which will allow 500 community members to work with smart contracts on the network before the upgrade. It plans to hard fork the testnet on Sept. 1.



“We have components, we’ve got dependencies, we’ve got implementations going on [and] we’ve got different testing routines that we’ve got to perform across the end-to-end stack,” he said in the video. “This period of stability we’ll have on the Cardano testnet is very important to us to make sure that we get the confidence that we’re ready to hard fork the main net, and we haven’t found any potential catastrophic issues.”



The testing stage is also a way for exchanges to test their set-up in a pre-production environment. So far, 140 exchanges have listed ADA on their marketplace, Hemsley said, and getting them on board ahead of the hard fork is crucial for liquidity purposes.



“The best thing of course is all of this additional functionality, all of the new [decentralized applications] that people are going to be writing won’t require another hard fork,” Kevin Hammond, a software engineer working with Cardano, said in the Friday video. “We will be in a situation where people can develop the DeFi applications that they want to.”



Want more investor-focused content on digital assets? <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Join us</a> September 13th and 14th for the Digital Asset Summit (DAS) in NYC. Use code ARTICLE for $75 off your ticket. <a target="_blank" href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/" rel="noreferrer noopener">Buy it now</a>.