How Crypto Winter And NFT Market Is Redefining Itself

In 2021, NFT sales volumes were estimated to be over $24.9 billion. According to the DappRadar analytics tool, this is a significant increase from around $94.9 million in 2020. Notably, the number of wallets trading in NFTs increased significantly in 2021, rising from around 545,000 in 2020 to approximately 28.6 million in 2021. Having said that, the world of non-fungible tokens (NFTs) has plummeted this year after the early excitement that accompanied their popularity. Many NFTs saw their values nosedive, forcing some to question their long-term value and sustainability. The latest report from DappRadar shows that trade activity on the world’s biggest NFT marketplace OpenSea plummeted by more than 90% in four months between May and August 2022. The reduced activity is attributed to two main factors, one being the wider economic conditions and the second being the long term value of NFTs that are currently focused only on PFPs (profile pictures) and art.

There are quite a few variables on the economic front, the most significant of which was the recent sell-off in digital assets and start of the ‘Crypto Winter’ after the significant rise in inflation in western countries to 8% and more following geo-political tensions with the Ukraine-Russia war, the subsequent rise in interest rates not seen in over 10 years. United States Federal Reserve chair Jerome Powell warned last month that there would be “pain” ahead as the US central bank struggles to contain a surge in inflation unseen in 40 years. And the same sentiment is echoed by other central banks globally alongside the risk of recessions in many countries. High inflation and rising interest rates reduces disposable income for may including the NFT enthusiasts and crypto investors.

Some factors from within the NFT market itself include base, or floor prices, for most new NFT collections hope of upward price action not materialising, and the lack of new users being onboarded into the space. More importantly, the PFP NFTs do not provide any further value, or utility for their owners other than the ability to admire the art. But this is far from the end for the NFT space, as new innovations, concepts and adoptions are currently coming about in the space. NFTs are being incorporated into games, founders are focusing more on utility of NFTs and moving the space away from price speculation. A market report published by Verified Market Research (VMR) provides a lofty prediction for the future of the non fungible token (NFT) market, projecting its value to swell to $231 billion by 2030. According to Roshan George, founder of Xiroverse, “The NFT market and, by extension, the Web3 and the Metaverse space is about digital ownership, the next iteration to the internet, and how users will interact with the digital world in the future. And the key to it is, Utility.”

People are looking beyond PFP NFTs and wanting more value for money now that the Crypto Winter has fully arrived. In contrast to traditional PFP NFTs, Utility NFTs put a greater focus on real-world value and applications they give NFT holders rather than how collectable they are. Without a doubt, the NFT-gaming business has become a thriving space for the blockchain industry with more than 50% of all blockchain activity being attributed to gaming. Mark Cuban, billionaire investor and collector in crypto and NFT said about the crypto winter, “it lasts until there’s a catalyst and that catalyst is going to be an application, or we get so low people go ‘[might as well] I’ll buy some.’”. Utility NFTs have applications that go beyond basic, pixelated graphics and focus more on value and real-world applications. One of the better instances of an NFT collection with a utility token is the Bored Ape Yacht Club. The utility token grants access to an elite yacht club.

Start-ups like the London based Xiroverse are focused on moving the NFT space away from PFP and price speculation and focusing more on real-world applications of NFTs, by incorporating the technology into smartphones through Xiro App. They look to deliver more value to gamers and carve out a niche within the $2 trillion gaming market. By working with multiple gaming studios to onboard hundreds of thousands of games into the Web3 and NFT space, they are focused on utility NFTs and to onboard millions into the space, inspire other founders and possibly trigger the next bull market. Roshan George further added, “it is not just our capability to create ground breaking technology in the Web3 space that matters, but the ability to share the technology to onboard many more businesses as well. We work with multiple gaming studios to share our technology, provide them with a launchpad and bridge their games onto Web3 and the Metaverse.”

NFTs are the backbone of this ecosystem and the Metaverse, in general, it should come as no surprise that utility NFTs are used to simplify monetary transactions and general game-play in the gaming sector. Utility applications in the future, will also aid in ensuring safe access to exclusive social spaces and communities. Access NFTs, which are NFT utility tokens, might provide real-time content and access to their communities in both the virtual, and actual worlds. As an example, Xiroverse, a startup aspiring to be the Amazon of Web3 games, has announced the launch of their genesis collection of 10,000 utility first NFTs on the Ethereum blockchain, which provides holders the highest degree of Xiroverse membership. They claim to prioritise utility over NFTs. “Xiroverse is business-focused, which means we are well on our way to building a viable company with decade-long ambitions, and Xiro Card NFT Holders will be our earliest patrons. A strong business ensures greater rewards for our holders and community. After all, we need Web3 natives and early adopters to help onboard the next billion users and our objective is to put utility first,” added Roshan George.

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