The world of Non-Fungible Tokens (NFTs) has undergone a dramatic shift from the heady days of 2021-22 when celebrities and collectors were paying millions for these unique digital assets. Recent findings reveal that a vast majority of NFTs are now deemed worthless.
In an analysis conducted by crypto gambling website dappGambl, which examined 73,257 NFT collections based on data from CoinMarketCap and NFTScan, it was determined that a staggering 69,795 of these collections have a market capitalization of 0 Ether (ETH).
This startling statistic translates to approximately 95% of NFT collectors holding assets with no current market value. The report suggests that over 23 million individuals may have invested in NFT collections that have lost their value.
Challenges Facing the NFT Market
The NFT market faces multiple challenges. First, a significant number of NFTs remain unsold, with only 21% of the collections examined by dappGambl having found buyers. This means that four out of every five NFTs are still awaiting purchase.
Furthermore, value remains a concern. Eighteen percent of the top NFT collections identified by CoinMarketCap have a floor price of zero, indicating that even well-known collections struggle to maintain demand. Additionally, 41% of NFTs are priced between $5 and $100, with less than 1% valued above $6,000. This suggests that genuine value within the NFT market is challenging to find.
Some projects have floor prices that seem disconnected from their trading history, with one project having a floor price of over $13 million but total sales of just $18.
Environmental Impact of NFTs
NFTs, while not mined like cryptocurrencies, do have an environmental impact due to the energy required to mint them onto blockchains and power their continued existence. According to dappGambl, the energy required to mint the NFTs in the collections it examined is equivalent to 27,789,258 kWh of energy or approximately 16,243 metric tons of CO2. This is equivalent to the yearly energy emissions of thousands of homes, cars, or flights.
A Call for Utility in NFTs
One proposed solution to address the NFT market’s challenges is to mint NFTs with utility, such as in-game assets, token-gated access to events, or links to physical products. This approach aims to provide tangible benefits to NFT holders and move away from speculative pricing strategies.
These findings underscore the volatility and speculative nature of the NFT market, prompting discussions about the sustainability and long-term viability of digital assets in this space.
