The non-fungible token (NFT) seemed like a fad a few months ago. Not anymore. Transaction volumes have quickly rebounded to all-time highs and new platforms have emerged that push the industry in exciting new directions.
Here’s how the NFT sector is rebounding and evolving in 2021.
Shortly after Beeple’s digital artwork sold for a record-breaking $69 million via NFT, the market started to cool off. In April, sale prices and transaction volumes were down double-digits. By June, activity had dropped over 90% from its peak.
Nevertheless, the industry seems to have caught the attention of institutional investors and venture capitalists who’ve continued deploying capital despite the dip. Jay-Z, Mark Cuban, Marc Benioff, Google Ventures, and Andreesen Horowitz all bought stakes in NFT marketplaces and startups throughout the first half of 2021. Now, some of these well-funded startups have started pulling the sector out of its malaise.
Play to earn
After raising $9 million in funding during the first half of 2021, Vietnam-based Axie Infinity saw parabolic growth in its decentralized NFT game. The ‘Pokémon’-inspired monster battler allows players to earn Ethereum-based digital tokens for playing and winning. The play-to-earn model has been so popular that transaction volumes hit $1.1 billion earlier this month. That makes Axie Infinity the highest-grossing NFT project ever.
Axie’s growing popularity and innovative economic model could be a key reason why the NFT sector has rebounded so swiftly. However, it’s not the only project that’s gaining steam in this latest cycle.
Other trending projects
Non-fungible token (NFT) marketplace OpenSea has been a clear winner of the NFT rebound. According to data published by Dune Analytics, transaction volumes on Open Sea crossed $78 million on August 8th, 2021. By comparison, the marketplace’s total transaction volume throughout 2020 was just $21 million.
In fact, Open Sea now completes more transactions than the biggest Decentralized Finance (DeFi) app Uniswap. In other words, NFTs are becoming more popular than DeFi applications and financial instruments.
A surprisingly popular new NFT project is Pudgy Penguins. A collection of 8,888 digital penguin avatars have sold out in under 19 minutes. The Penguins are now listed on OpenSea for as much as $250 million a piece.
Meanwhile, legacy brands like Gucci and Warner Bros. have joined the fray, with unique NFTs based on their vast intellectual property collection. The flow of institutional investor capital and interest from legacy brands cements NFTs as a mainstream phenomenon.