The non-fungible token (NFT) sector has experienced massive growth in terms of adoption. The digital assets have been able to breach into the mainstream media and attracted the attention of millions of new users.
With the price of Bitcoin and Ethereum on a decline, the NFT sector might be taking a harder hit. However, a recent report from the data and analytics platform, Nansen, shared with Bitcoinist suggests creators, and projects have been leveraging the trend to invest in their future.
The report explored the Ethereum (ETH) flows for NFT projects with sales revenues above 20 ETH from January 1 to June 30, 2022. This data suggests that over $2.7 billion or 963,227 ETH have been flowing from market participants to mint these digital assets.
Half of these funds were kept in addresses linked to NFT projects while 45.7% were sent to non-entity wallets. This represents an important decrease from the 52.3% recorded in 2021 and a shift in priorities for the top projects in the sector.
According to the Nansen report, these digital projects and their creators might be aiming at becoming “more mature and conscientious builders” by using the ETH from their collections to improve the Ethereum ecosystem.
Louisa Choe, Research Analyst at Nansen, wrote the following about the results from this report and its implications for the NFT sector:
Reflecting on the on-chain results of this study, we maintain our conclusion that the minting sector of the NFT market remains healthy with the rise in average mints per unique wallet address. Additionally, on-chain evidence of NFT collections reinvesting primary sales revenue into NFT demonstrates that builders and creators within this marketplace are looking at the long-term impact of their projects and making decisions that will support that growth.
What Prompted The Shift In NFT Projects?
The crash in the price of Ethereum has had a powerful impact on multiple sectors. A previous report from Nansen showed a decline in activity for the NFT sector as Ethereum dropped below $1,500.
The on-chain research claims that the interest in NFTs began to dampen as soon as August 2021. At that time, this sector was “spotted by certain profit-seeking practices”, Nansen said.
Ethereum’s bearish price action could be having an impact beyond market activity. As projects need to work harder to stand out from competitors and attract new users, they have had to shift their priorities.
This trend could extend if the price of Ethereum sees future depreciation. This is the unexpected benefit of the current bearish crypto price action, as stated by relevant personalities in this ecosystem.
The investor of Ethereum, Vitalik Buterin, noted that creators and developers welcome a bear market as speculators move away from the sector, and long-term projects can focus on building their products. In an interview, Buterin said:
The people who are deep into crypto, and especially building things, a lot of them welcome a bear market. They welcome the bear market because when there are these long periods of prices moving up by huge amounts like it does — it does obviously make a lot of people happy — but it does also tend to invite a lot of very short-term speculative attention.