NFT development in the past three years: transaction scale is not large, art and virtual space NFT transaction prices are relatively high

Benefiting from the incentive effect of yield farming, the DeFi sector has seen rapid growth in the past three months. But at the same time, the market has never stopped worrying about the unsustainable development of DeFi's prosperity. As a result, NFT (Non-Fungible Token), once known for CryptoKitties, has become the next investment target that is highly favored.

However, NFT is still in its early stages and faces challenges such as few investment targets, few users, small market, no liquidity, and difficulty in development. Although NFT is actively embracing DeFi (decentralized finance) and DAO (decentralized autonomous organization) to try to open up new market space, the innovative model remains to be tested.

Can NFT become the next hot spot? PAData will use NFT's historical transaction data to show the current market status of NFT and the development potential of NFT in different fields.

The average daily transaction volume this year is about 504 ETH, and the average unit price is 0.18 ETH

PAData converted the daily transaction volume of the NFT market counted by NonFungible according to the ETH price counted by CoinMetrics, and found that the average daily transaction volume of the NFT market has been about 504 ETH since the beginning of this year. From the trend point of view, the daily transaction volume of the NFT market has shown a mild upward trend since the beginning of this year.

On March 31 this year, the highest single-day transaction volume of the year was set, which was approximately 3,838 ETH in terms of conversion. The second highest single-day transaction volume on February 11 was also high, reaching 2,048 ETH. In addition, the market trading situation for the rest of the year was relatively stable, mostly concentrated in the range of 300 ETH to 600 ETH. From the perspective of market growth, from mid-September to late September this year, the daily trading volume showed a clear increase in volume, rising from 146 ETH on September 17 to 1,451 ETH on September 28, nearly 10 times. Although the daily trading volume fell rapidly afterwards, it was still higher than the 75% percentile (597 ETH) this year, and was in an active market period.

However, judging from the NFT market transactions since 2017, the growth trend of currency-based transactions has been very slow. Even after the NFT concept became popular in the second half of this year, its overall currency-based transaction scale has not shown a significant expansion.

On the contrary, the scale of NFT market transactions has increased significantly from December 2018 to January 2019 and from December 2017 to January 2018, with daily transaction volume exceeding 3,000 ETH. On December 21, 2018, the transaction volume reached a peak of about 23,700 ETH. However, it will take longer to observe whether the change in NFT transaction volume has a certain time cycle.

Judging from the average transaction price of NFTs this year, the average price of a single NFT in currency terms after conversion is approximately 0.18 ETH, with the highest daily average price reaching 0.77 ETH. In addition, judging from the trend, the average transaction price of NFTs this year has shown a relatively obvious upward trend, but the recent average price has fallen back to near the annual average level.

Judging from the average daily transaction price of NFTs since 2017, this year's daily transaction price is basically higher than the historical average price of 0.15 ETH, but it is still not high compared with the transaction prices in the third quarter of 2017 and from December 2018 to January 2019. If the trend of the average transaction price is taken into account, the average daily transaction price of NFTs has actually been stable and slightly declining since July 2017.

The growth rate of NFT currency-based transaction volume is lower than that of the previous two years, and the number of transactions has decreased

Judging from the average daily transaction volume and average daily transaction price of the currency standard, it seems that NFT is not as prosperous as the market feels. So how has the NFT market performed this year?

PAData compared the average daily transaction volume of NFTs in currency and US dollar terms in the past three years, as well as the increase in the average daily transaction price of a single NFT in currency terms and the average daily transaction price of a single NFT in fiat currency terms.

According to statistics, as of October 28 this year, the average daily transaction volume of the NFT market in terms of currency has increased by about 36.96%, but the daily transaction volume in terms of US dollars has increased by 309.82%. This is mainly related to the sharp rise in ETH prices this year. According to CoinMetrics statistics, ETH has risen from US$129.96 at the beginning of the year to US$386.78 on October 29, an increase of 197.61%. Therefore, judging from the increase in the average daily transaction volume of NFT in US dollars over the years, this year's NFT market is indeed prosperous, but if we look at the increase in the daily transaction volume in terms of currency, this year's increase is not as good as the previous two years.

From the perspective of asset prices, the average daily transaction price of a single NFT asset in the currency standard this year has increased by about 233.33%, higher than last year's 16.67%, but still lower than 500% in 2018. However, if we look at the average daily transaction price of a single asset denominated in US dollars, the situation is very different. According to statistics, the average daily transaction price of a single NFT in US dollars this year has increased by about 942.71%, while last year this figure was only 9.76%, and in 2018 it was even -10.52%.

Due to the large fluctuations in the crypto asset market, it is necessary to consider the premium impact of ETH when discussing whether the NFT market is booming. As far as the current market situation this year is concerned, under the currency standard measurement, the growth of the overall NFT market is relatively limited, but the asset price has risen to a certain extent.

If we ignore the price and only look at the number of transactions, the daily number of NFT transactions this year has shown a clear downward trend as a whole, with the average daily number of transactions for the whole year being approximately 3,921.

From the perspective of annual distribution, the first quarter of this year was a relatively active period for NFT transactions, with an average daily transaction volume of about 6,958, far higher than the annual average. Although the daily transaction volume of NFTs has rebounded since mid-September, it is still basically lower than the annual average.

The small number of NFT transactions may be affected by the small number of tradable asset targets. At the "NFT Debuts in the C Position, Not Just Crypto Art" event co-organized by PANews and Cocos-BCX, Cao Yin, Managing Director of the Digital Renaissance Foundation, mentioned, "Currently, there is a severe lack of investment targets for NFT, and it has not yet found real rigid demand." Noah Huo, Community Operations Director of Vechain, said, "In terms of development difficulty, common Ethereum protocols include ERC-721 and ERC-1155. These standard protocols have relatively high development and access difficulties." These may be factors that restrict the further development of NFT.

Art and virtual space NFTs have higher transaction prices

In addition to NFT exchanges, what other platforms have relatively large trading volumes in the market? According to NonFungible's ranking of transaction amounts in the past week, the game Axie Infinity has the largest transaction volume, about $651,300, but it is only about 1/16,659 of ETH's daily transaction volume (CoinGecko's daily transaction amount of ETH on November 2 was $10.849 billion). Secondly, there were no platforms with a million-level transaction volume in the past week, and there were only three platforms with a transaction volume of 100,000, namely the art platform SuperRare, the sports platform Sorare, and the virtual space platform Decentraland, with transaction amounts of $261,300, $176,400, and $119,900, respectively. From the overall situation, there are only 19 platforms with weekly transaction amounts reaching the 10,000 level.

From the perspective of categories, among the 20 NFT platforms with the largest trading volume in the past week, art accounts for 5, games and virtual space accounts for 4 each, and these three categories of NFTs account for about 65% in total. In addition, the average transaction price of NFTs of different categories is also quite different.

The average transaction price of NFTs in the art and virtual space categories is relatively high. The art platform JOYWORLD has the highest average transaction price of about 6.72 ETH, which is equivalent to about 2,688 US dollars based on the average price of ETH in the past week of 400 US dollars. Secondly, the prices of NFTs on Decentraland and Somnium Space in the virtual space category, and Async Art in the art category are also relatively high, with an average price of more than 3.5 ETH, equivalent to more than 1,400 US dollars.

The transaction prices of gaming NFTs are not high. Axie Infinity has the largest transaction volume, and the average transaction price of a single NFT is only 0.18 ETH, equivalent to 72 US dollars.

In terms of the number of assets and the number of asset owners (regarded as users), gaming NFTs have shown good momentum again. The gaming platform with the largest number of NFT assets is Gods Unchained, with a total of 6.9476 million NFTs and 14,600 users. Axie Infinity and Mega Crypto Polls also performed well in these two basic indicators, especially the number of users, which reached 13,000 and 24,800 respectively. In addition, the collection-based Crypto Kitties is still the platform with the most users, with a total of 89,700 users, and the number of NFTs on it is also high, reaching 1.9793 million.

In contrast, art NFTs, which have relatively high transaction amounts and average transaction prices, have a small number of tradable assets and users. For example, SuperRare has only 14,300 NFTs and 1,900 users.

The differentiated performance of different types of NFTs in terms of total transaction amount, average transaction price, number of assets, and number of users is essentially related to the investment logic of different types of NFTs. The cost and supply of NFTs may affect their transaction prices. It is also worth noting that from the perspective of the 20 platforms with larger transaction volumes, there is no correlation between the number of assets and the number of users.

From the perspective of per capita ownership of various NFTs, the per capita asset ownership in the game Gods Unchained reached 475.9, which is much higher than other platforms. When this extreme value is not taken into account, the per capita asset ownership of sports NFTs is the highest, about 27.14 per person, followed by collection and virtual space NFTs, with per capita asset ownership of about 16.55 per person and 15.63 per person respectively. The per capita asset ownership of art NFTs is only 6.74 per person.

Per capita asset ownership is a reference indicator of market size and market concentration. Per capita asset ownership that is too high or too low is not a healthy ecological form. Since NFT transactions and storage require wallets, and the private keys, mnemonics, account interactions, etc. in the wallets have high technical barriers for most ordinary people. NFT has a certain dependence on the development of other ecosystems such as wallets, and is a relatively high-level application form. Therefore, the problem of how to expand the user scale it faces may be more difficult to solve than other ecosystems such as DeFi.