2022 has been an eventful year for the crypto market, with its share of unexpected catastrophes. But despite the turmoil, certain segments of Web3, such as the NFT market and Web3 gaming, have remained surprisingly resilient. To gain more insight into this curious phenomenon, we hosted a Twitter Spaces conversation with our friends at Nekoverse and Delphi Digital. If you weren't able to join us, don't worry - we've got a full recap right here!
But first, introductions:
Teng is a researcher at Delphi Digital, specializing in NFTs and Web 3's Metaverse.. He tells us that he first heard about bitcoin in 2017, when he was working on an AI healthcare startup. Because he was working with technology, cryptography was intuitively attractive to him. At the time, the market was going down, but he started learning about blockchain technology and became convinced that it has the potential to change many major industries. ,
Bim is the community lead for Nekoverse. He started as a guy who loved to socialize and make friends; before crypto, his career was not adjacent to the tech world. He became familiar with BTC and the crypto world back in 2019, and he was immediately amazed by the power of communities in the web3 world.
Why the market is down
Let’s start by listing some reasons why the financial markets (including Web3) are down this year:
Economic uncertainty: Financial markets across the globe are down due to uncertainty about the state of the economy. There are concerns about a global recession in light of supply chain breakdowns from the COVID-19 pandemic and the Russia-Ukraine conflict. Hence, investors are more hesitant to invest in speculative financial instruments.
Negative news and events: The entire news cycle is full of doom and gloom. In 2022, there wasn't a month that went by without some negative news happening somewhere. The war in Europe hasn't even calmed down yet, and we’re now learning about massive internal protests in China due to ongoing COVID lockdowns. Again, events like these make people anxious about the future of the market and force them to make more prudent, sometimes rash, decisions.
Collapse of Industry Giants (Web 3): This is marked by some of the biggest collapses in the history of crypto. In May 2022, Do Kwon’s much-loved blockchain project collapsed to the tune of $35 billion. If that wasn't enough, in November 2022, SBF, a well-known entrepreneur in the crypto world, was exposed as a fraudster, and his firm, FTX, the world's second largest crypto exchange, went bankrupt in a matter of weeks.
To say that things are not going well in the crypto market would be an understatement. That’s why you can imagine our surprise upon seeing markets like NFT space and Web3 gaming unaffected.
How NFTs and Web3 Gaming are Unaffected
Let’s explore why.
The NFT market has its own unique demographic, which was largely unaffected by the collapse of FTX. Many NFT collectors and Web3 gamers are passionate believers in blockchain technology and have a strong understanding of the events surrounding the FTX collapse. They understand that this event and other macroeconomic events have little to no impact on the NFT and Web3 gaming markets, and thus the NFT collections have not experienced a major downturn. This is a testament to the strength and potential of the NFT market and its community.
Top collections such as BAYC and CryptoPunks continue to maintain their floor price (apparently in the hundreds of thousands of dollars).However, it's important to acknowledge that scammy projects and other grifts are now going down by the minute. What lessons can we learn from this?
How to Ensure the longevity of your project
Make your project unique and interesting.
Azuki is one of the most recognizable NFT projects in the web3 space. The art style of the collection is also quite distinct from other top projects such as BAYC, MAYC, etc. The project endured some hardships after its founder was doxxed. However, despite the setbacks, Azuki retained its value in the bear market. They are also doing some innovative stuff, such as physical asset-backed NFTs. The thing is, once BAYC achieved success with its ape NFTs, we saw an explosion of animal-themed NFTs. But unlike BAYC, most of these projects are dead now. This is because a pioneer often captures the majority of the market share, and if you want to surpass them, you’ll need to do something different. This is exactly what Azuki did with its anime-styled NFTs, which allowed the collection to craft its own niche in the market.
Partner with winners
If you’ve successfully created an authentic project and managed to garner a strong community, The next obvious step would be to partner as much as you can with other industry leaders. Again, taking the example of BAYC, which partnered with firms like Adidas, the Sandbox, Animoca Brands, and many others Collaborating with other major firms is great for increasing brand awareness and should definitely be a priority for an NFT collection.
introduce real utility
Speculation rarely carries the day; you need real utility for your NFTs to ensure the longevity of the project. Here are some suggestions: • Create multiverse experiences; • organize IRL events or gaming streams that only holders can access.
Shout out to two projects that showed that NFTs have not lost momentum yet.
The folks at Valhalla are creating a web-native community at the intersection of community and culture. The team is studded with all-stars, and their initial presentations (website, NFTs, and social appearances) have been sick. That’s probably the reason that the project successfully raised a whopping $6 million in its Genesis Mint last month.
Tim Ferris' latest NFT project, CockPunch, has become an instant hit in the market. This sudden rise can be attributed to the founder's popularity, but there are also projects that aim to give back by donating 100% of revenue to charities.
It’s reassuring to see that despite all that has happened, NFT projects are doing quite well. However, Teng believes that the coming year is also going to be a difficult one due to the global recession and other macro factors. Despite this, we believe the rate of innovation is going to accelerate in space. There has been a lot of experimentation in the NFT market over the last three years, and builders have collected a lot of data. which would allow them to create increasingly innovative projects that won't have to rely on speculation to be successful. Let’s put the doom and gloom behind us, folks, and focus on what’s coming next.
Until next time!