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Non-fungible tokens market was valued at $250 million in 2020 and is expected to grow at a booming CAGR between 2021 and 2026. NFT sales volume surged to $2.5 bln in the first half of 2021, reached $10.7 bln in Q3 of 2021 and $11.6 bln in Q4 of 2021. As of this date, a secondary NFT marketplace is the second largest gas fees consuming application, Occupying 10-20% of total gas fees consumption, right after Uniswap.
NFTs, or non-fungible tokens, are a digital currency held on a blockchain that can track ownership of an asset wherever it goes, and can offer to resell percentages to past owners. There are many use cases for NFTs—any creative activity on the internet can be tokenized as an NFT and sold to supporters. Some of the key NFT categories that represent the majority of the activity and the respective market sizes/DAUs can be understood as:
Visual art: Generating a sustainable income as a digital artist has been difficult historically. NFTs offer a fundamentally better business model for visual artists by giving them more freedom and allowing them to mint authentic, provably scarce works and sell directly to consumers. With NFTs, the easy authentication of original work enabled digital artists to sell over $2.BT worth of artwork on Ethereum in 2021 (source -[1]). The big names like Pak, Beeple, Xcopy, and Dmitri Cherniak dominate the headlines but thousands of visual artists are now thriving. To date, over 1,200 artists have sold artwork for more than $100K.
State of Visual Art Market in 2021:
$2.5B Market Cap Methodology: Total value of visual art traded on SuperRare, Opensea, Nifty Gateway, Foundation, Hic et Nunc, Art Blocks, MakersPlace, KnownOrigin, and Async Art in 2021.
66.6k Active Traders Methodology:Total unique wallets that have bought or sold visual art NFTs on SuperRare, Opensea, Foundation, Art Blocks, MakersPlace, KnownOrigin, and Async Art in 2021.
$2.5B Trading Volume Methodology: Total visual art NFT trading volume on SuperRare, Opensea, Nifty Gateway, Foundation, Hic et Nunc, Art Blocks, MakersPlace, KnownOrigin, and Async Art in 2021.
Gaming: Online games and NFTs are a natural fit as NFTs give players true ownership of their in-game items. In-game NFTs in-game allow gamers to turn their in-game accomplishments into real money. Developers are gravitating to NFTs because their open, interoperable nature allows for new gaming experiences to be built on top of original games.
Axie Infinity is considered  one of the pioneers of the gaming industry. It has more than 3 million players and its in-game items were valued at $2.26 billion according to NFT game tracker Dappradar. As mentioned in this Forbes article [2], gaming-related NFTs generated $4.8 billion of revenue in 2021, according to data from DappRadar, and represented roughly 20% of all NFT sales during the year, which includes popular items from NBA Top Shot, CryptoPunks, and Board Ape Yacht Club.
State of Gaming NFT Market in 2021 based on a few popular NFT games
$1.6B Market Cap Methodology: Total value of gaming NFTs on Axie Infinity, Aavegotchi and Zed Run in 2021.
1.5M Active Traders Methodology: Total unique wallets that have bought or sold gaming NFTs on Axie Infinity, Aavegotchi, and Zed Run in 2021.
$4.0B Trading Volume Methodology: Total gaming NFT trading volume on Axie Infinity, Aavegotchi and Zed Run in 2021.
More information on other top NFT Games and how NFTs are being incorporated in new and existing games is covered in [3]. Metaverse gaming and non-fungible tokens could represent a revenue opportunity of 50 billion euros for the luxury market by 2030, Morgan Stanley said [4]. That would be 10% of the total addressable market. Morgan Stanley notes that luxury goods companies are already exploring collaborations with gaming and metaverse platforms, with an increasing number of revenue-sharing deals. The firm said that could add $10 billion to $20 billion to the luxury sector’s total addressable market [4].
Profile-pic-projects (PFPs) : A specific type of visual NFT that exploded this year is profile-pic-projects (PFPs). These are collections of a fixed number (most commonly 10,000) of digital characters that all have a similar artistic style but variations in traits. Cryptopunks by Larva Labs, created in 2017, is the authentic PFP project that sparked it all. It had. $2.4B trading volume by the end of 2021. On February 12, 2022, CryptoPunk #5822 became the highest-selling CryptoPunk to date when it was sold for 8000 ETH, worth close to $23.7 million at the time. Bored Ape Yacht Club and Nouns are a few of the more notable but the list is long. CrypToadz, World of Women, Long Neckie Ladies, Lost Poets, and Queens + Kings are other notable recent PFPs.
PFPs are grassroots, user-owned brands that people around the world can participate in from the beginning. By owning a PFP and using it as a representation of digital identity, anyone can belong to a community and spread that community to the world. The combination of aligned incentives and shared beliefs can be an incredibly powerful force and when you compare that with the old way of building a brand top-down by a corporate controlled entity that projects a brand onto consumers, the benefits are clear. PFPs represent a new way to build a brand from the bottom up rather than top down.
State of PFPs Market in 2021:
$13.9B Market Cap Methodology: Total value of PFP collections traded on Opensea and Rarible in 2021. 376.6k Active Traders Methodology: Total unique wallets that have bought or sold PFP NFTs on Opensea and Rarible in 2021. $8.7B Trading Volume Methodology: Total PFP NFT trading volume on Opensea and Rarible in 2021.
Other NFs have been used to represent ownership of land in virtual worlds, represent financial assets such as custom liquidity provisions on AMMs, grant access to experiences, serve as tickets redeemable for physical goods and much more. Every aspect of internet culture can be tokenized and sold as an NFT. Music, photography, video, and sports, are just a few sub-categories in the cultural collectible bucket that will likely grow into their own massive stand-alone categories in the coming years. Few stats for cultural collectibles from 2021:
$13.4B Market Cap Methodology: Total value of cultural collectibles traded on Opensea and Rarible in 2021.
482.1k Active Traders Methodology: Total unique wallets that have bought or sold cultural collectible NFTs on Opensea and Rarible in 2021.
$4.4B Trading Volume Methodology: Total cultural collectibles NFT trading volume on Opensea, Rarible, and the NBA Topshot marketplace in 2021.
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