The Most At Risk NFT Projects
How to spot risky projects before they crash
Welcome to this week's edition of Web 3-2-1, your source for the latest news and insights in the world of NFTs.
I’ve always prided myself on taking an analytical approach to the NFT market and I want this newsletter to reflect that.
In this issue, we'll dive into 3 charts you have to see, share 2 numbers you need to know and leave you with 1 question to make you think.
Let’s dive in!
3 - Charts You Have to See
(1) Daily Trades on the Decline
It’s no surprise that overall trades are down, but what is wild is how far NFT trades have fallen. We’re now down to about 10-12k ETH worth of daily volume.
This is not sustainable given the amount of new projects entering the space every day.
Something is going to have to give and my guess is we’re going to continue to see price bleed downwards.
(2) >50% of NFT Traders are Younger than 34
It’s not too surprising that NFT traders are young, BUT I would have expected the 18-24 band to be higher.
For more mainstream NFT adoption to grow, that 18-24 bucket has to increase.
You want to build an NFT project with long term success? Target the younger demographic. They’re underserved.
(3) Outstanding Loans Continue to Rise
This chart is kinda gross but there are 3 takeaways:
Outstanding loans are up only - more people are borrowing against NFTs (a dangerous game to play)
Beanz (big purple spike) got absolutely crushed by lending. Their FP is down 55% as a result
Azuki and Milady are the most heavily borrowed against collections.
I try to avoid NFTs that are highly leveraged. Historically, it doesn’t end well.
2- Numbers to Know
(1) 14M
Reddit continues to make waves in the NFT space.
This week, Reddit released their Gen4 Collectible Avatar series.
Avatars could be purchased for anywhere between $2.49 to $199.99.
Plus, one of the rarest avatars even sold for $7k on the secondary market.
Reddit hasn’t forced NFTs down their users throat. They’ve done it tastefully and the result is 14M Reddit NFTs minted thus far.
Huge congrats to Reddit!
(2) $628B
One of the most promising use cases for NFTs is digital collectibles.
The immediate reaction when hear that is “that’s it?”
Well, it turns out the collectibles industry is MASSIVE. And it’s growing.
The Global Collectibles Market is projected to reach 628B (with a B) by 2031. WOW!
It’s hard to think the majority of that collectibles market won’t be in a digital format.
And what’s the best way to store digital collectibles?
You know it, NFTs
1 - Thing to make you think
Do you ever think projects are trying to do too much with NFTs?
Don’t get me wrong, I think it’s an amazing technology with a LONG list of use cases, but it feels like projects are constantly trying to add new features instead of just dialing in and becoming the best at one.
Be the best PFP project. Be the best gaming project. Be the best IP project.
What do you think?
Thank You
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Disclaimer: The content covered in this newsletter is not to be considered as investment advice. I’m not a financial adviser. These are only my own opinions and ideas. You should always consult with a professional/licensed financial adviser before trading or investing in any cryptocurrency related product.