The collision of DeFi and NFTs | NFTs usher in record high transaction volume

 

The collision of DeFi and NFTs

The trend of NFT to integrate financial concepts started in 2020.

For example, the NFT trading platform Rarible has launched the decentralized insurance service yinsure.finance's NFT insurance policy, that is, yInsure NFTs . These yInsure NFTs allow users to buy and sell insurance for certain DeFi projects in the form of NFT. Although this type of insurance has limitations, this concept shows how to use NFTs to create a liquid market.

Aavegotchi is another game and digital collectible platform that tries to combine DeFi with NFT. Each Aavegotchi NFT token is not only a collectible item, but also an asset that can generate income. It is displayed as a " pixel ghost " in the game (see the picture below).

Recently, the number of daily active unique addresses on the Aavegotchi platform has soared to more than 3,000. Currently, Aavegotchi is one of the 10 most commonly used DApps in the NFT field . See below:

Above: The growth of the number of daily active unique addresses on the Aavegotchi platform. Source: DAppRadar

Finally, Uniswap recently gave a surprise for a non-functional test. Uniswap V3 will convert the LPtoken of liquidity providers (LPs) from the current ERC-20 to NFT.

The above measures are very important to the NFT industry, because they show the development path of the NFT industry , and may also change the concept of DeFi projects . We may begin to see DeFi and NFT more interconnected .

NFTs usher in record high transaction volume

So far, it can be said that the theme of Q1 in 2021 is NFT . In the first three months of this year alone, NFT transactions created more than $1.5 billion in transaction volume. Although this is only a small part compared with the DeFi ecosystem, the transaction volume of NFT in the first quarter of this year increased by 2627% compared to the previous quarter .

NFT transactions in the first quarter of this year, the largest contributors were NBA Top Shot , CryptoPunks and OpenSea , which accounted for 73% of the total NFT transaction volume . See below:

Above: Since October 2020, the monthly transaction volume comparison of major NFT applications, unit: million U.S. dollars. Source: DAppRadar

NBA Top Shots are NFTs launched by the founding team of CryptoKitties, DApper Labs, in cooperation with the NBA. These NFTs represent wonderful short videos of NBA players. In the first quarter of this year, NBA Top Shot was still the number one NFT product in the NFT field by transaction volume , attracting a large number of media and users' attention. It generated nearly $500 million in revenue in the first quarter of 2021 .

NBA Top Shots

Although the transaction volume of NBA Top Shots is impressive, its data in March was lower than in February: technical issues caused user retention and satisfaction issues. Although the NBA Top Shots NFT is still the leader in the field, but in the long run, user retention and satisfaction will be a key challenge .

In addition, in the first quarter of this year, the trading volume of the first batch of NFT collectibles CryptoPunks ( cryptopunk ) on Ethereum won the second place . CryptoPunks is a pixel avatar launched by the Larva Labs team in June 2017 (see the picture below), and each avatar represents an NFT token. In the past few months, people's overall interest in this encrypted collectible has greatly increased .

CryptoPunks pixel avatar

Finally, the third place in NFT transaction volume is OpenSea . OpenSea is an NFT creation and trading market. The increase in NFT trading volume in this market is mainly driven by new features , such as NFT casting and airdrops. In addition, after OpenSea recently announced the successful completion of a round of financing, users' interest in NFTs on the platform has greatly increased.

High prices make NFT more exciting

The prices of the top 5 NFTs are also increasing sharply . If you look at the top 5 NFTs sold in January this year, you will find that no NFT sells for more than $1 million. However, the highest NFT selling prices in February and March exceeded US$6.6 million and US$69 million, respectively, demonstrating the true potential of NFTs.

On March 11, the 5,000 art collection "Everydays: The First 5000 Days" created by artist Beeple was sold in the form of NFT tokens at Christie's for a bid of more than $69 million.

In addition, the sales of CryptoPunks have also exploded, and several punk avatars have been purchased for more than 7 million U.S. dollars.

The following chart lists the top five NFT tokens sold each month in the first three months of this year :

Source: DAppRadar NFTs page

New NFT projects in Q1 2021

A large number of new NFT projects will emerge in Q1 of 2021 .

The trend of NFT digital collectibles has been going on for a long time, but the release of the encrypted art collectible project Hashmasks (Picasso Punk) has become the beginning of a new wave. Later, there were new NFT projects such as Picasso Punks , Polkamon , Chubbies , Bullrun Babes , NFT Boxes , and old projects such as Moon Cats Rescue and CryptoCats were rediscovered.

The launch of new projects has excited the NFT market . During this time, Hashmasks held their ground , and Moon Cats Rescue seemed to have declined.

Hashmask is literally translated as "Hash Mask". The platform contains 16,384 unique portraits created by more than 70 artists around the world. Each portrait is sold in the form of NFT, as shown in the figure below:

Above: Some of the portraits on the Hashmask platform.

At the same time, Picasso Punks seems to continue to grow. PicassoPunks is an Ethereum-based NFT digital art project aimed at paying tribute to Picasso. The platform will only create a total of 1,000 unique Picasso punk avatars . Some of the avatars that have been created are currently being sold in the form of NFT, as shown in the figure below. :

Above: Picasso Punks avatar for sale on the Picasso Punks platform

On the other hand, the vast majority of new NFT projects have a model, which is to usher in more transaction volume within 7 days after launch . After that, trading activities declined or even disappeared , and trading activities in the secondary market will only last for a short time. See below:

Source: Opensea.io

The reason behind this is that the creators of these NFT collections focused on initial dissemination. It can be said that the most important factor to keep NFT collections receiving people's attention and interest is the uniqueness, investment value , and most importantly, the narrative that can keep users engaged.

Inspired by existing NFT collections, new NFT collections emerge

Another trend in the market is that the NFT market is being inspired by the existing collections of NFTs , trying to introduce new NFTs, such as creating alternatives to CryptoPunks . Since the cheapest NFT punk avatar in CryptoPunks costs about $30,000, this is almost unreasonable for ordinary collectors.

And 3DPunks , Picasso Punks and Unofficial Punks these CryptoPunks inspired by the NFT project proposal for a cheaper option .

Although some Picasso Punks (Picasso punk avatars) are currently sold at a considerable price , for example, the current highest transaction price is Picasso Punk #0107, which has a transaction price of more than 92,000 US dollars.

Source: DAppRadar NFT Rankings

Currently, the lowest prices of NFT avatars on Picasso Punks and 3DPunks are currently around 1.9 ETH and 2.9 ETH. These investments are not cheap. However, they are still 8 to 10 times cheaper than CryptoPunks .

Above: Picasso Punks #0245 (left) and 3DPunks #054 (right) are not cheap. Source: OpenSea.io

"Everything can be NFT", or a lesson to be learned?

Finally, we are seeing a trend that is to turn everything into NFT, thinking that "everything can be NFT" . Currently, turning a certain tweet (for example, Twitter CEO Jack Dorsey recently sold his first tweet for a high price of US$2.9 million in the form of NFT), brand or celebrity into NFT may bring User excitement, but there may also be unhealthy hype in the industry .

We can't help asking, what will be left when the dust settles? The NFT industry needs to learn the lessons of the 2017 ICO (Initial Coin Offering) bubble, and buyers should be cautious before deciding to buy an NFT token driven only by hype .

The road to the future

Currently, several major trends are dominating the blockchain industry:

First, Ethereum's scalability issues have caused it to lose its dominant position in several key indicators . In the first quarter of this year, BSC (Binance Smart Chain) surpassed the Ethereum blockchain in terms of the number of daily active unique addresses; although the Ethereum DeFi application maintained its leading position in TVL (total value of lock-ups), with some Ethereum The Fang DeFi project has begun to expand to other blockchain platforms, and the rapid growth of DeFi DApps in the BSC ecosystem may also change this situation.

Secondly, it is clear that the blockchain industry is experiencing a wave of growth led by NFT . Sales of NFT digital collectibles and new NFT projects promote the influx of users and the growth of NFT trading activities. However, rapid growth has also brought negative effects. The concept of "NFT for everything" may trigger some hype in the early stages, but we need to be cautious about such hype.

In addition, NBA Top Shots has become the most popular NFT project on the market, but this also raises a question: Are DApps ready for mass adoption? Looking to the future, developers need to emphasize user retention and user experience , so that consumers, users, and enthusiasts can expect more on this basis.

The above is the DApps industry report for the first quarter of 2021 released by DAppRadar. How do you see the development of Q1 in 2021? Do you agree with DAppRadar's analysis of the competition between Ethereum and BSC? Welcome to express your opinion in the comment area.