The trading volume of non-fungible tokens (NFTs) on Ethereum plummeted to $407 million in August, a 32% drop from July and the lowest level since June 2021, according to data from Dune Analytics.
NFTs are unique digital assets that represent anything from art and music to gaming items and collectibles. They are powered by smart contracts on blockchains like Ethereum, which ensure their authenticity and ownership.
The NFT Market is Also in a Downtrend Lately
The decline in NFT trading volume was driven by a slowdown in activity on major marketplaces like OpenSea, Blur, LooksRare, and X2Y2. OpenSea, which once dominated the NFT space and reportedly received a $10 billion valuation offer, saw its active users fall 12% to 126,000 in August the lowest since July 2021.
The interest in blue-chip NFT collections, such as CryptoPunks, Bored Ape Yacht Club, Azuki, and DeGods, also waned. The Bitwise Blue-Chip NFT Collections Index, which tracks the performance of these NFTs, is down 37% year-to-date, while ether, the native cryptocurrency of Ethereum, is up 37%.
Ethereum is not the only blockchain that suffered from the NFT slump. Solana, another popular platform for minting and trading NFTs, saw its daily trading volumes on Solana-based NFT marketplaces fall below $1 million for the first time since September 2021.
The NFT sector is facing several challenges, such as regulatory uncertainty, security risks, and royalty disputes. On Monday, the U.S. Securities and Exchange Commission brought its first NFT enforcement action against a podcast studio that sold NFTs without registering them as securities.
Last week, NFT platform Recur announced it was shutting down less than two years after raising $50 million in a Series A funding round. Rarible also said it would stop aggregating NFT orders from other platforms amid the ongoing debate over creator royalties.
However, some experts believe that the NFT market could revive with the help of gaming. Loopify, the founder of Metaverse and NFT studio Endless Clouds, said earlier this month that the market needs to shift from profile pictures to in-game items that have more utility and value.
