Average Number of Wallets Trading NFTs Increased 44% YoY

NFT report August 2023 by DappRadar
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DappRadar NFT Industry Report

Amid the most prolonged bear markets ever observed, and the first one affecting NFTs, the resilience of this nascent market stands out. Dive into this report for a comprehensive overview of the past year’s noteworthy developments and trends in the NFT landscape.

Key Takeaways 

  • Despite a prolonged bear market, on-chain NFT activity surged 44% from the previous year, averaging 316,614 daily Unique Active Wallets.
  • Polygon became the NFT blockchain with the most sales, reaching 497,137 with 112,459 traders.
  • OpenSea, once commanding over 60% market dominance, faces competition from newcomers like Blur, having its dominance decrease at an all-time low of 14%. 
  • Gaming-centric NFT collections top charts in sales count and trader engagement, aligning with blockchain gaming’s massive 40% share in the Web3 industry.
  • In 2022, Yuga Labs generated over $116 million in royalties. By 2023, Blur’s no-royalty model caused them a 79% drop, resulting in a $63 million loss year-on-year.

Table of Contents

  1. NFT industry overview 
  2. Evolution of NFT blockchains: from Ethereum’s dominance to new contenders
  3. Marketplace dynamics: from OpenSea’s reign to the rise of Blur and Private Sales
  4. Spotlight on top NFT collections: gaming’s grip and the emergence of new ecosystems
  5. How Blur costs Yuga Labs $63 million in royalties in 2023
  6. The NFT landscape: five defining trends of 2023

1. NFT Industry Overview

The NFT ecosystem has navigated through a tumultuous year, witnessing its share of highs and lows. Here’s a snapshot of its performance:

NFT industry overview 1 year comparison, august 2022 vs 2023

Despite navigating one of the most prolonged bear markets in recent memory, the average daily of UAW remarkably rose by 44% compared to the previous year. This surge brings the daily Unique Active Wallets to an average of 316,614. Several factors could contribute to this uptrend.

At DappRadar, our endeavors over the past year have focused on integrating a broad spectrum of decentralized applications (dapps). As a testament to our dedication, we currently boast a comprehensive listing of 14,691 dapps. Furthermore, the evolution in the NFT dapp space has been palpable. Increasing numbers are now designed with multifunctionality, enabling users not only to trade but also to mint fresh NFTs and engage in services such as NFT lending and borrowing.

The trading volume and sales count observed a decline, which may be attributed to a shifting focus within the NFT community. Whereas the previous year was dominated by collectibles and Profile Picture (PFP) NFTs, the current trend leans heavily towards generative art, membership passes, and game items. While there’s been a 28% drop in unique NFT traders from the past year, the community remains robust with 701,560 active traders. These traders, on average, executed 4.5 transactions, underscoring their continued involvement and enthusiasm in the market.

2. Evolution of NFT blockchains: from Ethereum’s dominance to new contenders

Transitioning our gaze to the dynamics within the NFT blockchains, the terrain displays some noticeable evolutions from the previous year, as elaborated below.

While Ethereum maintains its premier position in trading volume—housing the majority of renowned collections—it’s the rise of Immutable X to second place that captures attention. This shift underscores the mounting appeal of in-game NFTs. Polygon, once predominantly recognized as a DeFi-driven blockchain, has now transitioned to a key player in the NFT sphere. Its growing influence can be seen in its adoption by several mainstream Web2 companies, including the likes of Reddit, Lufthansa and Starbucks, as they venture into the Web3 domain.

Notably, we’ve welcomed zkSync Era, a fresh addition to our platform’s blockchain roster. Surprisingly, it has quickly ascended the ranks, clinching the fifth position. This aligns with a notable trend we’ve observed: the fervor for airdrop hunting. With increasing interactions on this blockchain, many users are animated by the anticipation of a potential token airdrop in the near future.

Diving into the data on sales count, the landscape reveals more shifts from yesteryear. Polygon stands out with the highest number of sales, primarily due to its offerings of reasonably priced collections—making NFT acquisitions more feasible during the prevailing bear market. Reinforcing the trend of in-game NFT ascendancy, it’s notable that three blockchains in our compilation are chiefly renowned for hosting blockchain games.

As we refocus on blockchains boasting the most traders, zkSync-era tops the list. This dominance is largely attributed to the aforementioned airdrop enthusiasts. Ethereum, however, retains its significance, ranking second. Given its longstanding prominence in the NFT realm, it remains a familiar and trusted choice for many in the industry.

3. Marketplace dynamics: from OpenSea’s reign to the rise of Blur and Private Sales

While OpenSea had a 60% market dominance in August 2022, the situation is different now. The new marketplace Blur rose to the top spot in terms of trading volume, all thanks to its airdrop mechanics and lending protocol.

Simultaneously, the emergence of what we term ‘Private sales’ has added another layer of complexity to the market dynamics. These are NFT transactions facilitated directly between two contracts, bypassing the traditional avenues of NFT marketplaces or aggregators. This trend aligns seamlessly with the Web3 ethos of decentralization, further embedding NFTs in its core mission.

However, pivoting to analyze trader engagement, OpenSea hasn’t relinquished its crown. It continues to be the marketplace of choice for the highest number of traders. This suggests that while OpenSea’s allure for high-end, blue-chip NFT collections may have waned—with Blur emerging as the preferred platform for such trades—it remains a trusted hub for more affordable NFT collections.

4. Spotlight on top NFT collections: gaming’s grip and the emergence of new ecosystems

Diving deeper into the multifaceted NFT industry, our focus now turns to the elite NFT collections, measured by trading volume, sales count, and trader engagement.

Surveying the premier NFT collections in terms of trading volume, Yuga Labs consistently stands out, having been the predominant force both a year ago and in the present landscape. Nevertheless, the scene hasn’t remained static. Innovative ecosystems have sprouted, introducing captivating developments to the sector.

Take, for instance, the dynamic ecosystems of DeGods, Azuki, The Captainz, and Milady Maker. Over the past year, each has carved a distinct niche through intriguing partnerships, comprehensive roadmaps unveiling expansive ecosystems, and fresh mint launches. While DeGods and The Captainz have experienced resounding success, others like Azuki have navigated challenges.

Shifting our gaze to metrics like sales count and trader engagement, it’s evident that gaming-centric NFT collections have clinched the top spots in both categories. This dominance aligns with the broader Web3 trends, where blockchain gaming represents a substantial 40% of the entire ecosystem. Furthermore, one of the primary utilities of NFTs lies in their integration into gaming, solidifying their relevance.

It’s also worth highlighting the enduring appeal of gaming NFT collections from 2022. Many of the frontrunners from that year continue to resonate with audiences in 2023, emphasizing the enduring nature of quality content in the ever-evolving NFT space.

5. How Blur costs Yuga Labs $63 million in royalties in 2023

Royalties have been the talk of the town in the NFT space this year, drawing both attention and contention. Given their profound influence on NFT collections and their creators, we deemed it critical to delve deeper, particularly focusing on some of the most widely recognized and transacted collections. Our focus here lies with Yuga Labs’ NFT collections.

According to Helika, in 2022, a remarkable 87% of royalties earned were credited to the heavy trading activity of Yuga Labs’ collections on OpenSea. This trading dynamism earned Yuga Labs over $116 million in royalties, highlighting the ingenuity of their business model.

Royalties earned and lost in 2022 by all Yuga Labs NFT Collections

Royalties earned and lost in 2022 by all Yuga Labs NFT Collections
Source: Helika

However, as 2023 unfurled, the discourse around royalties swelled, bringing with it a shift in the industry’s landscape. New marketplaces, like Blur, steered away from the traditional royalty model. This development dealt a blow to Yuga Labs’ financials. With a significant portion of their NFT collections now trading on Blur, Yuga Labs has encountered a financial dip, losing more in potential royalties than they’ve earned. To be exact, 81% of royalty losses can be attributed directly to Blur. 

Royalties earned and lost in 2023 by all Yuga Labs NFT Collections

Royalties earned and lost in 2023 by all Yuga Labs NFT Collections
Source: Helika

6. Five defining NFT trends of 2023

After a comprehensive analysis of the NFT industry across various metrics and sectors, certain patterns and shifts have become strikingly evident. These developments have not only defined the course of the past year but also hint at the trajectory the NFT world might take in the future. In conclusion, here are the five standout trends we’ve identified based on the data:

  • New Market Players and Shifting Dominance: As new players enter, the market dominance for NFT marketplaces will shift accordingly. As the community follows the Web3 ethos of ownership and decentralization, we can expect new marketplaces to pop up.
  • Private Sales and Decentralization: The rise of private sales leaves marketplaces and aggregators on the sideline. This development reaffirms the need for user sovereignty but also highlights how users adapt and developers need to push boundaries to attract them.
  • Gaming NFTs: Gaming has been leading the NFT market in terms of sales count and trader engagement, and we don’t expect this to change any time soon. As more games hit the market through mainstream channels such as Steam and Epic Games Store, gaming assets will remain relevant for years to come.
  • Emergence of Diverse Ecosystems: The rise of DeGods, Azuki, The Captainz and Milady Maker highlights the strong diversity in the market, but also underlines the need for innovation. This innovation can happen by pushing the creative envelope through products, branding and partnerships.
  • Enduring Appeal of Established Collections: In the past year we’ve seen many NFT collections vaporize, but those who kept building are still there. While Web3 has seen a loss in valuation, established brands built strong foundations through trust, recognition and community. Expect established NFT collection to enter the mainstream realms, as Pudgy Penguins made plush toys, Doodles partnered with Crocs and Cool Cats has a parade balloon in NYC.

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