Nansen Report: Avoid following mint, one-third of NFTs end up trading close to 0
Nansen Report: Avoid following mint, one-third of NFTs end up trading close to 0
Nansen Report: Avoid following mint, one-third of NFTs end up trading close to 0
The behavior of NFTMinter (minters) can be seen as a signal of short-term market trends, just as we observe the behavior of miners to base the price of bitcoin on. Using Nansen's data, we have identified a number of trends regarding NFT minting. data from Nansen's NFT Index and Market Trends captures the recent downward market trend, which is also reflected in the behavior of NFT Minter. Our findings shed light on a phenomenon thatOne third of the NFTs that have been minted have a floor price higher than their initial minting cost. Similarly, one-third of the NFTs ended up rotting, with little to no trading activity after casting.
Understanding the NFT market through the behavior of NFT Minter
(NFT market trends for the past 30 days: Feb. 20-March 21)
(NFT market trends based on casting volume: January 2021 to February 2022)
Over the last 30 days we have seen a small correction in the NFT market, with the Nansen NFT-500 (ETH) index down 5.23% in ETH terms and this index down 0.89% in USD terms. this trend is in line with the overall market trend: with the market expecting an increase in interest rates and the war between Russia and Ukraine. Market sentiment is mainly risk aversion. This sentiment is also reflected in the casting volume, which has declined over the past 30 days. While the Nansen NFT-500 Index reflects this market sentiment, we can also observe this trend through the behavior of NFT Minters.
(NFT Minter spends ETH on top of casting and gas)
Since 2022, the amount of ETH spent on minting NFT is gradually decreasing. Comparing this trend with Google Trends, it can be seen that searches about NFT are also declining, signaling a possible slowdown in public interest in NFT in the short term.
(Google Trends with NFT as keyword)
However, we note that NFT Minter spent more ETH on casting and gas this year compared to the previous year (2021). During this period, there were a number of well-known NFT casts, including MAYC, Pixelmon, Meebit and Lost Poets.
(The table from left to right shows the name of the NFT collection, the time of NFT casting and the ETH spent on NFT casting)
(NFT casting average cost trend)
Further research data shows that the average casting cost peaked at 0.56 ETH in May 2021, but dropped to a low of 0.06 ETH in June 2021. Since July 2021, the average casting cost of NFT has ranged between 0.07 ETH and 0.1 ETH. We hypothesize that a possible explanation for this phenomenon is that NFT casting is becoming more competitive as more projects are introduced to the market, driving down the average casting cost. From January 2021 to February 2022, we see the number of castings increase by more than 48,001 TP2T, from 39,802 to 197,886.
(Amount spent on NFT casting and number of separate collections cast)
(Independent NFT Minters and Collection Time)
The increase in total NFT casting and gas spending is likely due to the increasing number of independent NFT Minter participating over time.
(Cumulative number of NFT Minter)
We observed thatBetween 2021 and 2022, the cumulative number of NFT Minter in the NFT market grows by a factor of 2,000, from approximately 500 at the beginning of 2021 to 1.2 million at the end of February 2022.
NFT Minter User Profile
(NFT Minter's casting spend distribution)
(Amount of ETH spent on NFT casting, compiled from NFT Minter's spending)
We can see that most NFT Minter spent up to 0.5 ETH for their NFTs. These Minter who spent 0.5 ETH account for about 10.7% of the NFT casting volume.
The NFT Minter who dominate the casting volume are those who spend between 10 and 100 ETH, and they account for about one-third of the total casting volume (32.6%).
(NFT Minter's cumulative spending on casting)
When analyzing the base profile of NFT Minter per month, we find that the group of NFT Minter spending between 10 and 100 ETH has the largest share until 2022. However, since December 2021, this trend has reversed, with NFT Minters spending 1 to 5 ETH being the most represented. On the other hand, "whale" NFT Minters spending more than 100 ETH seem to have decreased slightly.
Casting does not mean guaranteed revenue
(Casting the dark side of NFT - most NFTs never get sold)
We are curious to know what percentage of NFTs are re-circulated and traded on the secondary market. Our data show that from January 2021 to February 2022, an average of 44.8% of NFTs minted each month were resold on the secondary market.
However, the percentage of NFTs sold on the secondary market appears to be gradually declining starting in July 2021.
(Percentage of NFT traded in the secondary market)
(NFTs that are profitable, losing money, or already "dead")
In analyzing the profitability of cast NFTs, the report shows that, on averageOne out of every three NFTs minted will become a "dead collection" (rotting in your hand) with little to no trading activity.On average, one-third of NFT floor prices are below the cost of casting, and another third are above the cost of casting. However, with the change of time, theWe see the percentage of profitable NFTs increasing over time, while rotten NFTs are decreasing.
What would the situation be like if the NFT being minted was in good condition? (Profit from top collections cast each month)
When we analyze the monthly profits of the top casting collections, we can see that the smallest average profit is about 4 ETH and the peak is 115 ETH. As the graph above shows, the profit trajectory of the top collections is fluctuating.
The bottom line: what kind of NFT should we be casting?
Becoming an early participant in NFT by participating in casting is something that needs to be carefully considered. One should consider their risk appetite when deciding whether to participate in NFT casting. It is critical to conduct thorough due diligence on potential projects, such as researching the community, their roadmap and the history of the founding team.
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