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The End of NFTs? NFT Sale Transaction Volume Down 95% since Early May

The End of NFTs? NFT Sale Transaction Volume Down 95% since Early May

The drop in non-fungible token sales that began in early May seems to be continuing into June.

Finance Magnates previously reported that according to data from NonFungible.com, the week-long period surrounding the NFT market peak at the beginning of May saw $170 million in transaction volume. By the end of the month, that figure had collapsed to just $19.4 million in NFT sales, which is a decrease of roughly 90%.

According to a new report from CNBC, the drop has continued. On June 15th, the seven-day average NFT transaction volume had fallen to oust $8.7 million. Compared to the market’s peak in early May, the new number represents a drop of nearly 95 per cent.

Is this the end of non-fungible tokens?

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via Protos

The Boom and Bust of Non-fungible Tokens in 2021: A History in Brief

While this may not be the end of NFTs, it’s certainly the end of an era. Riding on the tailwinds of the biggest crypto bull market in history, non-fungible tokens made a serious splash when they entered the mainstream in March of 2021. By that point, NFTs had already been around for several years.

However, they had never previously captured the public imagination in such a big way. Investors and speculators saw a new opportunity to try and win big in a rather novel financial market; artists and creators saw a new opportunity to monetize their work in the digital world.

For some, the opportunity paid off–big time. Graphic designer Mike Winkelmann, also known as “Beeple,” sold an NFT for a record $69 million at a Christie’s auction in March. Around the same time, Twitter CEO Jack Dorsey, sold a tokenized version of his first tweet for $2.9 million the same month. Grimes, Eminem, 3LAU, Lindsay Lohan, and many other celebrities also cashed in on the trend.

However, it wasn’t long before the cracks in the walls of the NFT space started to show. Critics of non-fungible tokens decried the practice of minting them, pointing to the possibility of heavy carbon footprints. Many smaller creators who were entering the space for the first time quickly discovered that someone else had already stolen and tokenized their work, much to the chagrin of the collectors who had purchased the fraudulent tokens.

Additionally, reports of “vanishing” non-fungible tokens began to hit headlines as questions about what it really means to own a non-fungible token went unanswered. Because the material that an NFT is associated with is not stored in a Web 3 environment, it is subject to the same kinds of problems that all centralized media is: if an NFT-tied photo disappears from the web, well, tough luck.

Now That the Hype is Over, What’s Next?

At first, the criticisms of non-fungible tokens didn’t seem to significantly affect the space. However, when cryptocurrency markets were hit with bearish forces in mid-May, non-fungible token markets were decimated. Analysts who operate outside of the cryptocurrency space have written the whole saga off as another crypto fad–novel, exciting, and perhaps interesting, but essentially vapid and hype-driven.

However, Gauthier Zuppinger, the chief operating officer of Nonfungible, told CNBC that the NFT market movements of the last several weeks are closely related to one another: “The thing is that, each time you’ll notice such a quick increase on any trend, you’ll see a relative decrease, which basically stands for a market stabilization,” he told CNBC.

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via CNBC

And indeed, data from Nonfungible.com show that after this 95% decrease from the NFT market peak in early May, NFT sales are basically continuing along the trend of slow and steady growth that has been trending over the past several years.

“High-profile NFTs selling for millions of dollars was a sure sign that the market was treating them as speculative assets,” said Nadya Ivanova, chief operating officer of L’Atelier, speaking to CNBC. “And by definition, markets for speculative assets are unstable and liable to dry up.”

“The bigger question for NFTs is their long-term value, which we believe is likely significant,” she continued.

In other words, now that the hype is over, non-fungible tokens can continue along their path of technological discovery.

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NFTs in Virtual Reality and Beyond

While the most commonly known use-cases of non-fungible token technology surround the concepts related to digital authenticity and ownership on the internet as we know it, some innovators are exploring an entirely new environment for NFTs: virtual reality.

Forbes recently reported that Space Force partnered with digital artist companies WorldwideXR and VueXR to release their own NFTs with augmented reality features. According to the report, the NFTs are accessible to their owners through the VueXR app, which is available on both iOS and Android.

“As augmented and virtual reality technology matures, normal people are going to spend more and more of their time — and therefore money — in virtual environments,” Nadya Ivanova told CNBC.

Non-fungible tokens have already made a splash in the gaming world as technology that could make decentralized ownership of in-game assets into a reality. However, as gaming moves increasingly toward virtual reality, NFTs could take digital ownership to the next level.

“World-builders in VR are looking at ways to make world building a lot more profitable, but there are few companies that are willing to put down money for a virtual world,” said Dale Deacon, who is an expert on developing immersive storytelling in VR & AR. He was speaking to VRScout.

NFTs could provide a path toward real-world monetization in virtual economies. “Monetizing the job of being a VR world builder, will be a part of monetizing the role of a world builder.”

Now that the hype is being washed out of the non-fungible token space, it’s possible that VR innovators could explore their use cases in a more serious way. “I’m interested in AR and VR spaces as NFTs [because] they have a practical value,” said Dale, adding that “the hype around NFTs” made them a bit “myopic.”

While NFTs may not be the end-all, be-all for VR world builders and other creative economies, they could be part of an important shift that allows creators to have access to new kinds of economic tools.

“The shiny thing that NFTs are at the moment, is not the end goal of this whole decentralized finance – where standard banks have proper competition for once,” Deacon explained.

Now That the Hype Is Over, True Innovation Continues

Beyond virtual reality, non-fungible tokens are also finding new use cases in the music world and beyond.

“We have only seen the tiniest part of where this is going,” said Geoff Osler, CEO and co-founder of NFT app S!NG, to CNBC. “Cryptocurrency is here to stay — and NFTs mean there is now something to buy. It’s the other side of the equation. And this is going to go a long way past digital art. We think music is next.”

Other use cases for non-fungible tokens have been identified in identity, travel, live entertainment, medicine, supply chain, and many more industry verticals. Still, quite a lot of innovation will likely need to take place before the technology can take hold in any industry in a meaningful way.

Now that the NFT hype seems to be over, companies and innovators that have been working to improve non-fungible token technology will continue to build for the future. Watch this space.

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The Future of NFTs in Gaming: Yield Guild Games on Virtual Economies

The Future of NFTs in Gaming: Yield Guild Games on Virtual Economies

Non-fungible tokens are one of cryptocurrency’s hottest trends of 2021. However, at the moment, NFT markets have taken a serious downturn. Finance Magnates previously reported that NFT markets have crumbled since their peak in early May. However, some analysts say that the crash is actually a positive thing for the space, now that the hype is over, the real innovation can continue.

While NFTs are most commonly known for their use in the art world, they have also been increasingly used and developed in gaming.

Recently, Finance Magnates spoke to Beryl Li, the Co-Founder of Yield Guild Games, a Philippines-based firm that is exploring the potential of NFT marketplaces in virtual economies. Yield Guild Games describes itself as “a decentralized gaming guild of players and investors who generate yield from NFT-based games.”

YGG announced earlier this week that it raised $4 million in a Series A investment led by BITKRAFT Ventures, a venture capital firm that focuses on gaming, esports, and interactive media. This round was joined by incoming investors including A.Capital Ventures, IDEO CoLab, Mechanism Capital, and ParaFiCapital. Previous investors include Animoca Brands, Ascensive Assets, and SevenX Ventures.

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This is an excerpt of an interview with Yield Guild Games’ Beryl Li. To listen to Finance Magnates’ full interview with Beryl, visit us on SoundCloud or Youtube.

Building DeFi Services for Communities Who Need Them the Most

Beryl explained that the inspiration to create Yield Guild Games came when her and her Co-Founder, Gabby Dizon, started yield farming. Yield farming is the practice of locking capital in smart contract-based lending and liquidity platforms in exchange for interest payments.

At the same time, the COVID-19 pandemic was wreaking havoc on the most economically vulnerable people in the Philippines, where both Gabby and Beryl are based.

“When the pandemic hit in the Philippines, a number of people lost their jobs. Most of these people are factory workers and bus drivers,” Beryl explained. In other words, “they don’t have a lot of savings. They wouldn’t last like a month without work, because they normally get paid weekly, or even daily. So there’s really a need for them to make income.”

For these people, the economic consequences of COVID were dire. “Parents, for example, don’t have anything to feed their kids. Sometimes I’d hear extreme stories, that they’re forced to feed their kids instant coffee because they could not make a living.”

As a result, many of the people who were affected by COVID in extreme ways began seeking alternative streams of income. And they found them in gaming.

Specifically, a game called Axie Infinity began to ‘spread like wildfire’ in some of the Philippines’ poorest communities. Beryl explained that the goal of the game is to collect NFT-based assets called ‘Axies’ and to earn in-game rewards called ‘small love potions’ or SLP.

“This SLP can actually be converted to Philippine pesos and through localized exchanges in the Philippines,” Beryl explained. As a result, time is spent playing and collecting in-game rewards and converting them into cash: “that’s how they’re able to provide milk for their kids.”

However, as the game has grown in popularity, the barrier of entry has become higher. “The price of the NFTs required to enter a game increases over time,” Beryl explained. “Having a $100 Axie team is not possible” for many people, which prevented them from entering into the game in the first place.

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This is where Yield Guild Games steps in. YGG provides ‘scholarships’ that allow players to enter and start earning cash in virtual economies, not just for Axie Infinity, but for a growing number of other games.

“It’s about More than ‘Banking the Unbanked.’”

Beryl explained that while YGG’s strategy is heavily involved in the world of blockchain-based play-to-earn games, the company’s greater goal is to onboard new populations into the decentralized finance (DeFi) ecosystem more generally.

“It’s about more than ‘banking the unbanked,’” Beryl said, “because to be able to bank somebody, they need to already have savings so they can make deposits; they need to have income to be able to get loans, and they need to have a long credit history to have access to better rates.”

“That’s not possible for a lot of the population in the Philippines,” she continued. Very few people in certain populations have credit ratings; because of COVID, many have lost their jobs, and don’t have savings. In other words, in order to be able to provide financial services, you need to make sure that people have access to finance in the first place.

“The first step toward being able to really provide financial services to this kind of population is helping them generate yields through playing,” Beryl said. “[So we said], let’s start with a group that doesn’t have anything yet, and let’s help them produce something. And then, later on, we can provide all these other financial services.”

Building Secondary Marketplaces and Lending Platforms for In-Game Assets

What will these ‘other financial services’ look like?

Beryl explained that at the moment, YGG is acquiring and lending out the NFTs that are needed to play and earn in Axie Infinity and other blockchain-based games.

“The second stage of what we’re going to be doing is opening up that marketplace to other NFTs holders,” she said. “So, it’s not only going to be YGG’s NFT assets, but we’re opening up a platform where individuals that also hold assets in games that we’re supporting can actually lend their own NFT assets.”

“Our algorithm will match them with a ‘scholar’,” or someone who is just starting to learn how to earn in-game assets that can be traded for real-world money.

This marketplace will also act as a way for NFT holders to earn with their tokens without selling them: “[the value of] these NFTs goes up over time, and their holders don’t necessarily want to sell them because they believe the assets will appreciate.”

So, in the meantime, “they can earn yield by loaning their NFTs out on this marketplace, where players in the Philippines would be able to use them to actually play and earn rewards.”

Beryl believes that in-game NFTs could have lifespans that extend beyond individual gaming platforms.

For example, if a game is based on a centralized platform, any assets that are produced or earned within that game vanish if or when the game stops operating. However, NFTs produced in a game can continue to exist independent of any singular gaming universe.

“Ideally, these assets can actually be used in another game. It’s possible to migrate compatible assets from one game to another game, and so on and so forth. I think that is the future of gaming.”

This is an excerpt of an interview with Yield Guild Games’ Beryl Li. To listen to Finance Magnates’ full interview with Beryl, visit us on SoundCloud or Youtube.

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