Review 2021 through data and look forward to 2022 by following trends

Overview of the NFT Market in 2021

So far, NFT sales on Ethereum have exceeded $9 billion in 2021, a 2,500% increase over the total sales in 2020. 2021 is the first year of NFT, and it also appears in the context of a bull market cycle. The scale of the NFT market has shown an astonishing growth trend, with a market value of over 10 billion US dollars.

NFT sales on Ethereum from 2018 to 2021 (USD), data source: NonFungible.com, Cointelegraph Research

Collectibles and Art NFTs dominated the market in 2021, contributing over 90% of sales. Early NFT sales were dominated by Collectibles such as CryptoKitties and CryptoPunks. In late 2019, the number of transactions in the Game NFT category surged as games like F1 DeltaTime, Gods Unchained, and Decentraland expanded their player bases. In mid-2020, the number of transactions for Sports and Metaverse NFT projects began to climb. Around the same time, Art NFTs also attracted increasing attention, peaking with record-breaking sales for Beeple in January 2021. Although Collectibles transactions have declined in their overall share, they still dominate total sales and leading projects by a significant margin. The Art category follows Collectibles in terms of sales, reflecting the high valuations of both Art and Collectibles.

Monthly sales volume of different types of NFTs, data source: NonFungible.com, Cointelegraph Research

Monthly sales of different types of NFTs (in US dollars), data source: NonFungible.com, Cointelegraph Research

The popularity of the P2E (Play to earn) concept and making money through games have fundamentally changed the distribution of economic power among different stakeholders in the gaming ecosystem. The market expects that as the NFT market matures, GameFi will become the next NFT growth point. In March 2021, blockchain games with the GameFi concept began to rise, and in July, GameFi games represented by Axie Infinity saw explosive growth. Taking the metaverse games Decentraland and The SandBox as examples, each piece of land in the game corresponds to an NFT, and the owner of each NFT represents the ownership of the land and can create and transform it.

GameFi is a combination of DeFi+Game+NFT, mainly due to the maturity of DeFi and NFT technologies and products. NFT provides GameFi with a living soil and becomes one of the value carriers of its in-game economic system, making many GameFi projects perform well in the market and making GameFi quickly become one of the hottest fields this year.

In turn, GameFi has also promoted the continued popularity of NFTs . The characteristics of NFTs have gradually made them a widely circulated commodity and payment method in the fields of games and the metaverse. They have the attributes of collection, value preservation, and circulation, and have become a strong support for the metaverse economic system, promoting the further explosion of NFTs.

Ethereum currently processes over 80% of sales, despite transaction fees often being higher than the price of the NFT. However, alternative layer one solutions including Flow, Tezos, and Wax are becoming more popular due to lower transaction fees and energy consumption.

Blockchains that support NFTs, data source: NonFungible.com, Cointelegraph Research

Data shows that the Ethereum blockchain is more energy intensive than alternatives such as Tezos. In 2021, transactions on Tezos were over 35,000 times more energy efficient than transactions on Ethereum. To put this into perspective, a single transaction on Ethereum requires approximately 30 kWh, which is equivalent to powering a house in the United States for a whole day. In contrast, transactions on Tezos consume 0.0016 kWh or less than the energy required to charge an Apple Tablet for 10 minutes.

Monthly transaction volume (in USD) and number of transactions (in units) of the top NFT markets, data source: NonFungible.com, Cointelegraph Research

Led by Ethereum DApps (decentralized applications) OpenSea and Rarible, NFT sales in the top markets have seen an amazing growth curve. However, the growth of these platforms is limited by Ethereum's high transaction fees . The above figure shows that alternative, cheaper blockchain competitors such as Tezos and BSC are gaining more market share.

Being on the whitelist can effectively increase the ROI of investing in NFTs. OpenSea data shows that 75.7% of users who were whitelisted and subsequently sold their newly minted NFTs made a profit, while only 20.8% of users who were not whitelisted made a profit.

NFT minting purchase share by ROI multiplier (whitelisted vs. non-whitelisted buyers on Opensea), data source: The Chainalysis 2021 NFT Market Report

Large investment amounts and diversified portfolios are more effective for resale strategies. OpenSea data shows that the top 30% of addresses account for 87% of the resale share of all NFTs and 107% of all realized returns.

Concentration of NFT resale shares and NFT resale revenue shares by address on OpenSea, data source: The Chainalysis 2021 NFT Market Report

DAO is booming. DAO stands for Decentralized Autonomous Organization. DAO is a form of organization that encodes the management and operating rules of an organization on the blockchain in the form of "smart contracts", so that it can operate autonomously without centralized control or third-party intervention. DAO is expected to become a new type of effective organization to deal with uncertain, diverse and complex environments. 2021 witnessed the market sensation caused by DAO, PunksDAO caused heated discussions, and witnessed the early success of DAOs such as FingerPrints, Flamingo and PleasrDAO. 2022 will be a year of explosive growth for DAO.

DAO market panorama, data source: Mirror, Coopahtroopa

More information: A look at the NFT DAOs landscape: Social DAOs, Crowdfunding DAOs, Collectibles DAOs…

NFT data analysis in 2021

NFT attention has increased significantly-Google search volume surges

We can get a glimpse of the global netizens' attention to the NFT ecosystem from the Google search volume of NFT. When using Google Trends to monitor the search volume of the keywords "NFT", "E**" and "Metaverse", we can see the trend in the figure below. From the beginning of 2021, the search volume of NFT began to increase. There was an increase in search volume in February, and then it continued to maintain its popularity. There was another increase in search volume in August. There was a large increase in search volume at the third time node from October to December, and the search volume from October to December jumped most significantly. The number 100 on the left axis represents the highest point of the relative search volume of keywords on the chart relative to a given area and time. The search popularity of NFT is higher than that of E** and Metaverse, and it peaked at the end of 2021. The search popularity of E** was relatively stable throughout 2021, and Metaverse had a significant increase around October 2021. Overall, 2021 is indeed the first year of NFT's outbreak, and the popularity continues to rise. From the trend, the popularity of NFT will continue to increase in 2022.

Relative search volume of “NFT”, “ETH” and “Metaverse” on Google – Global statistics in 2021 Data source: Google Trends, NFT Labs

Regional distribution of search popularity for “NFT”, “ETH” and “Metaverse” on Google – Global statistics in 2021

Data source: Google Trends, NFT Labs

As can be seen from the figure, NFT and ETH concepts are very popular around the world except for a few regions.

“NFT”, “ETH” and “Metaverse” top 10 search topics on Google – Global statistics in 2021

Data source: Google Trends, NFT Labs

An analysis of the top 10 topics and queries related to "NFT", "E**" and "Metaverse" shows that the most interesting topics in the related terms of NFT searches are the nature of NFTs and how to trade NFTs, which also proves that NFTs have quickly become popular in 2021, attracting many newcomers who are willing to participate in the NFT ecosystem and trade. As the largest NFT trading platform, Opensea has a huge search volume. The related terms of E** searches are more about comparisons with US dollar fiat currency, and searches about Gas fee are not very high. The most interesting topics in the related terms of Metaverese searches are the nature of Metaverse, the relationship between Metaverse and blockchain, and Facebook's name change to Meta.

Monthly traffic share of NFT market by region (2021.1.21--2021.10.21)

Data source: The Chainalysis 2021 NFT Market Report

As we can see from the chart, we see a strong mix of web visits from multiple regions, with Central and Southern Asia, North America, Western Europe, and Latin America leading the way. This number suggests that, like traditional cryptocurrencies, NFTs have achieved global popularity, with no single region accounting for more than 40% of monthly web visits since then.

As the most popular NFT marketplace, analysis of OpenSea shows overall NFT growth. There are over 6,000 NFT collections on OpenSea that have experienced at least one transaction, including purchase, sale, or minting. This activity is on the rise, as the number of active NFT collections—which we define as those that have experienced at least one transaction in any given transaction—has risen significantly since March 2021.

NFT market value exceeds 10 billion US dollars

NFT market value (2021.1.1-2021.12.29) Data source: nftgo.io

According to data from nftgo.io, as of December 29, 2021, the market value of NFT reached US$10.49 billion, a 170-fold increase from US$61.74 million on January 1, 2021. It grew steadily in the first half of 2021, and the growth rate increased in the second half of 2021.

NFT market value (2021.8.1-2021.8.31) Data source: nftgo.io

The NFT market value growth curve in August 2021 was steep, reaching nearly 4 billion US dollars on August 31, with a monthly growth rate of 400%, which shows how hot the NFT market is.

NFT market value (2018.1.1-2018.12.30) Data source: nftgo.io

According to data from nftgo.io, from January 1, 2018 to December 30, 2018, the market value of NFT increased from US$13.4 million to US$22.39 million, with an annual growth rate of 67%.

NFT market value (2019.1.1-2019.12.31) Data source: nftgo.io

According to data from nftgo.io, from January 1, 2019 to December 31, 2019, the market value of NFT increased from US$22.44 million to US$27.59 million, with an annual growth rate of 23%.

NFT market value (2020.1.1-2020.12.31) Data source: nftgo.io

According to data from nftgo.io, from January 1, 2020 to January 11, 2021, the market value of NFT increased from US$27.62 million to US$61.74 million, with an annual growth rate of 124%.

Comparing the NFT market value data from 2018 to 2021, the annual growth rates were 67%, 23% and 124% respectively. As of December 29, 2021, the NFT market value exceeded 10 billion US dollars.

NFT trading volume surges - highest daily trading volume reaches $570 million

NFT daily transaction volume (2021.1.1-2021.12.29) Data source: nftgo.io

According to data from nftgo.io, as of December 29, 2021, the daily trading volume of NFTs increased from US$270,000 on January 1, 2021 to US$52.11 million on December 29, 2021. The trading volume stabilized in the first half of 2021, and the trading volume in the second half of 2021 fluctuated significantly.

NFT daily transaction volume (2021.8.28 left picture, 2021.10.28 right picture) Data source: nftgo.io

During August, the NFT market reached its peak. According to data from OpenSea, the largest NFT trading platform, the peak of transactions was on August 29, with a transaction volume of more than US$300 million on that day. However, since then, activity has plummeted, and on September 8, the transaction volume had fallen below US$100 million, a drop of nearly 70% from the peak.

As the source of this round of NFT explosion, CryptoPunks has always been a trendsetter for avatar NFTs. On August 23, with the purchase of Visa and the entry of many big players, a FOMO craze was set off, and 16,000 ethers were traded in just 4 hours. Less than a week later, the floor price of CryptoPunks was pushed up to 140 ethers, almost doubling.

According to data from nftgo.io, the highest daily trading volume in 2021 occurred on October 28th, at $570 million, which is 2,089 times the daily trading volume on January 1, 2021. As the market value surged, the trading volume also exploded. The second highest daily trading volume of the year occurred on August 28, with a daily trading volume of $400 million. On August 28, OpenSea's transaction volume reached $235 million, a record high. Among them, Crypto Punks' transaction volume exceeded 44,500 ether, about $143 million, ranking first. On the same day, NBA star Curry changed his Twitter account avatar to an image of a monkey. And this seemingly ordinary avatar was bought by him for 55 ethers, about $180,000.

The annual growth rate of the number of NFT holders exceeds 700%

Number of NFT holders (2021.1.1-2021.12.29) Data source: nftgo.io

According to data from nftgo.io, as of December 29, 2021, the number of NFT holders increased by 713% from 194,108 addresses on January 1, 2021 to 1,384,142 addresses on December 29, 2021. The growth curve of NFT holders was smooth in the first three quarters of 2021, and the number of new NFT holders increased significantly in the fourth quarter of 2021. There were three NFT holder jump nodes in early November, late November, and mid-December respectively.

Number of NFT traders (2021.1.1-2021.12.29) Data source: nftgo.io

As of December 29, 2021, the number of NFT traders grew steadily and slowly in the first half of 2021, and showed a prosperous scene in the second half of 2021. The number of sellers and buyers increased dramatically at the same time. Overall, there were more buyers than sellers.

The number of buyers and sellers represents the changing trend within the NFT ecosystem. If there are more buyers than sellers, it proves that there are more new people who want to enter this NFT ecosystem than new people who want to liquidate their assets; on the contrary, if there are more sellers than buyers, it means that people are selling their assets. Therefore, a continuous gap between the number of buyers and sellers is a good indicator of positive development of the ecosystem.

The above figure also confirms the prosperous development of the NFT ecosystem. As more people enter the NFT ecosystem, the "network effect" allows more people to enter the NFT ecosystem, thereby generating higher value, thereby attracting more new people to enter, forming a positive cycle. (Network Effect: Network effect is also called network externalities or demand-side economies of scale, demand-side economies of scope (corresponding to economies of scale in production), which means that the value of a product increases with the number of consumers who purchase this product and its compatible products)

NFT investment and financing is booming

NFT-related industry financing quantity and amount trends (January-September 2021) Data source: 01 Blockchain

The booming NFT market has attracted capital, and in 2021, major NFT platforms rapidly completed their A round of financing of more than tens of millions of dollars: in March, OpenSea and SuperRare announced the completion of US$23 million and US$9 million in A rounds of financing, respectively; Subsequently, NFT platforms Bitski and Rarible also quickly followed up with US$19 million and US$14.2 million in A rounds of financing.

Judging from the global NFT industry investment and financing data, from January to September 2021, the number of NFT investment and financing has maintained an upward trend except for a significant decline in June this year. The number of financings in September reached a peak of 38. In terms of financing amount, the amount of NFT financing has fluctuated greatly, and reached a peak in September, close to US$1.35 billion.

Trends in average financing amount per transaction per month (January to September 2021) Data source: 01 Blockchain

According to the projects with publicly disclosed financing amounts, from the perspective of the average financing amount of a single project in a single month, the average monthly financing amounts in March, July and September were higher than those in other months. Among them, in September, with the highest number of financings, the average single financing amount was still close to 35.5 million, the highest monthly average financing amount so far this year.

NFT-related industry financing round distribution chart (left) and amount range distribution chart (right) (January-September 2021) Data source: 01 Blockchain

From the perspective of financing rounds, strategic investment, seed/angel, and A rounds are the main financing methods for NFT-related industries, with 81, 74, and 20 cases, accounting for 41%, 38%, and 10%, respectively. In addition, there were 7 cases in the B round, 2 cases in the C round and mergers and acquisitions, and 1 case in the D round, ICO, and equity crowdfunding. 51% of the projects received financing in the range of US$1 million to US$10 million, and 30 and 9 financing events of tens of millions and hundreds of millions of dollars respectively, accounting for 15% and 4%.

NFT application scenarios in 2021

The initial main application scenario of NFT is virtual collection. Since each NFT is unique and irreplaceable, using NFT to encode artworks meets the scarcity characteristics of artworks, making them very valuable to collectors, artists and other sellers.

The new NFT project is not only the future of merchandising, but also provides musicians with a new way to protect copyright in the era of streaming and digital content sharing, and creates new economic profit methods for game developers. Although NFT was originally applied to art collections, due to its uniqueness and value, NFT has developed into a way for some people to show their wealth and identity by owning NFTs. In the future, NFT as a digital collection will also be more widely used in the DeFi field, gradually expanding from art investment to a wider range of rare collectibles, real estate, loan collateral and other fields.

Weekly transaction volume of the most popular NFT series (March 2021 - October 2021)

Data source: The Chainalysis 2021 NFT Market Report

CryptoPunks, the most popular NFT Collectibles in the time period shown, was founded in 2017, long before the current NFT craze, but it has continued to maintain its leading position in popularity.

We can also see from the chart that some new projects such as Hashmasks had a trading volume of 380 million US dollars in the week of July 4, 2021, but the popularity only lasted for a short period of time. A similar pattern can be seen in the weekly trading volume of Mutant Ape Yacht Club. The huge exposure and popularity at the beginning also cooled down very quickly.

A brief analysis of the phenomenal NFT projects in 2021

Bored Ape Yacht Club

In early May 2021, Bored Ape Yacht Club (BAYC) was born. BYAC stands for Bored Ape Yacht Club, a collection of 10,000 monkey NFTs, including 170 attributes of varying rarity, such as hats, eyes, expressions, clothing, and backgrounds. 10,000 unique monkeys were randomly generated through programmatic combinations, each with a different expression and attire. BAYC can definitely be said to be the best performing NFT series in 2021. Whether in terms of price increase, popularity, or social capital, BAYC has led a type of NFT avatar collection to previously unimaginable heights.

Bored Ape Yacht Club (BAYC) market capitalization, number of holders, 24-hour trading volume and floor price data, data source: nftgo.io

Bored Ape Yacht Club (BAYC) market value change curve (2021.4.23--2021.12.30), data source: nftgo.io

BAYC's trading volume & liquidity (left picture) BAYC's holder & trader change curve (right picture) (2021.4.23-2021.12.30), data source: nftgo.io

As of December 29, 2021, the total market value of Bored Ape Yacht Club (BAYC) is close to 600 million US dollars, with a total of 6,002 holders, a trading volume of 9.8 million US dollars in the past 24 hours, and a floor price of 58.5 ETH. Unlike Hashmasks, which was popular for a while but quickly fell from grace, BAYC's popularity continues to set new highs, and both its market value and trading volume are on an upward trend. The liquidity since its release is 232.47%, (liquidity is an indicator used to reflect the relative liquidity of an asset. Liquidity = trading volume/total supply of NFT*100%), which is much higher than Hashmasks, and the number of holders and Hashmasks are both in the range of 5,000-6,000.

Bored Ape Yacht Club (BAYC) top ten transaction records (2021.4.23--2021.12.30), data source: nftgo.io

As of December 30, 2021, the NFT work with the highest transaction price of Bored Ape Yacht Club (BAYC) is "Bored Ape Yacht Club #3749", which was last sold for 740 ETH on September 7, 2021 (approximately US$2,924,442).

Loot (for Adventurers)

Loot (for Adventurers) is an NFT launched on the Ethereum blockchain on August 27, 2021. Loot is randomly generated adventurer equipment and stored on the blockchain. Statistics, images, and other features are intentionally omitted for collectors to interpret. In layman's terms, Loot is an on-chain NFT with a black background and only text. Anyone can participate in the casting and will randomly obtain a set of fantasy adventurer equipment in the form of text, which has the characteristics of randomly distributed scarcity. Each Loot contains 8 types of equipment, so there are 8 lines of text, each representing a type of equipment. Each equipment is related to the following: Weapons, Chest Armor, Head Armor, Waist Armor, Foot Armor, Hand Armor, Necklaces, Rings. However, the interpretation of the various combinations is entirely up to the community.

The reason why Loot has gained huge attention is that it has changed the way NFT digital avatars are created. People have changed from passively accepting digital avatars created by the project party to co-creating new digital avatars by the community. In other words, NFTs used to have communities only for existing products, but now Loot proposes a new paradigm of existing communities co-creating NFT products, which is more in line with the decentralized core of blockchain.

Loot (for Adventurers) market value, number of holders, 24-hour trading volume and floor price data, data source: nftgo.io

Loot (for Adventurers) market value change curve (2021.8.27--2021.12.30), data source: nftgo.io

Loot (for Adventurers) trading volume & liquidity (left picture) Loot (for Adventurers) holder & trader change curve (right picture) (2021.8.27--2021.12.30), data source: nftgo.io

As of December 30, 2021, the total market value of Loot (for Adventurers) is close to US$160 million, with a total of 2,521 holders. The trading volume in the past 24 hours is close to US$80,000, and the floor price is 1.88 ETH.

The overall liquidity is good, and the trading volume reached its peak when the project was first launched. Since Loot lacks a way to capture subsequent value, the current performance of the secondary market is not as good as expected, and the trading volume has been sluggish.

Loot (for Adventurers) top ten transaction records (2021.8.27--2021.12.30), data source: nftgo.io

As of December 30, 2021, the NFT work with the highest transaction price for Loot (for Adventurers) is "Bag #748", which was last sold for 420.69 ETH on October 3, 2021 (approximately US$1,437,597).

CryptoPunks

CryptoPunks market value, number of holders, 24-hour trading volume and floor price data, data source: nftgo.io

CryptoPunks’ market value change curve (2017.6.12--2021.12.28), data source: nftgo.io

CryptoPunks' trading volume and liquidity (left picture) CryptoPunks' holders and traders' change curve (right picture) (2021.1.1--2021.12.28), data source: nftgo.io

CryptoPunks is a collection of 10,000 irregular pixel images in 24x24, 8-bit style, released by Larva labs, a software company in New York, in June 2017. These pixel avatars are stored on the Ethereum blockchain after they are created, and each avatar has its own proof of ownership. CryptoPunks can be considered one of the earliest NFTs on Ethereum. CryptoPunks has inspired many digital currency artists and even promoted the development of the ERC-721 token standard for digital collectibles.

As of December 30, 2021, the total market value of CryptoPunks is close to 1.58 billion US dollars, with a total of 3,301 holders and a transaction volume of 4.66 million US dollars in the past 24 hours. The popularity of CryptoPunks can be seen from the actual change curve. 2021 is the year of CryptoPunks' explosion, and the popularity has not diminished throughout 2021. Nowadays, the entry threshold of CryptoPunks is high, but the speculation in the market is not serious, the liquidity is good, and the willingness to hold for the long term is strong.

Market capitalization share of different types of NFTs (as of December 29, 2021) Data source: nftgo.io

According to nftgo.io, NFT is divided into ten categories, namely Avatar, Collectibles, Art, Game, Metaverse, Utility, IP, Social, Music and Defi (decentralized finance). As of December 29, 2021, the above ten categories accounted for 48.53%, 23.76%, 11.54%, 6.43%, 4.22%, 2.5%, 1.42%, 1.28%, 0.26% and 0.05% respectively.

Avatars are the most popular, accounting for about half of the NFT market, totaling nearly $6 billion. Collectibles follow closely behind, with the top three categories accounting for more than 80% of the NFT market value.

The proportion of NFT transactions of different types (as of December 29, 2021) Data source: nftgo.io

The transaction volume distribution data of different types of NFTs and the market value distribution confirm each other. The larger the market value, the larger the transaction volume. However, from the 24H/7D/30D data, the transaction volume of Avatar is decreasing, while the transaction volume of Collectibles and Metaverse is increasing. The types of NFTs participating in the market are constantly enriching, from only Avatar at the beginning to ten categories today. While expanding the categories, the market cake is also expanding rapidly.

Market capitalization of NFTs of different series (as of December 29, 2021) Data source: nftgo.io

According to data from nftgo.io, as of December 29, 2021, the NFT series with the highest market value is CryptoPunks, accounting for 15.7%; followed by Art Blocks, Bored Ape Yacht Club, Mutant Ape Yacht Club and The Sandbox, accounting for 8.08%, 5.94%, 3.15% and 2.07% respectively.

The proportion of NFT transaction volume in different series (Figure 1: all historical data as of December 29, 2021, Figure 2: data in December 2021, Figure 3: data in the last week of December 2021, Figure 4: data on December 29, 2021) Data source: nftgo.io

From the historical data of all NFT transaction volumes as of December 29, 2021, it is consistent with the data of NFT market value share. However, from the data of 24H/7D/30D, there are some interesting findings. The series that top the list in terms of transaction volume take turns to appear. On December 29, 2021, the top of the 24H list was Mutant Ape Yacht Club with 10.78%. In the last week of December 2021, the top of the list was still Mutant Ape Yacht Club with 13.38%, and the popularity continued. From the data of December 2021, RTFKT CLONE X + Murakami jumped to the top of the list, accounting for 8.1% of the monthly transaction volume. The data of 24H/7D/30D is inconsistent with the historical top of the list . New hot projects are constantly emerging in the NFT market, and the future is promising.