NFT financials falling in Q3 but on-chain metrics remain bullish

NFT Report September DappRadar
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NFT sales are estimated to grow by 6%(21.1M) by the end of Q3

The market for non-fungible tokens (NFTs) has plummeted from a financial standpoint after the market expansion around avatars, virtual worlds, domains, and other digital assets generated $35.6 billion in trades from July 2021 to February 2022.  After the initial euphoria that accompanied their rapid surge in popularity, some began to doubt the long-term sustainability of these non-financial assets (NFAs) as their prices plummeted. Unfortunately, this scenario unfolded due to several macro and micro circumstances, but principally to the recent sell-off in digital assets caused by the economic uncertainty.

As the NFT market closes in the third quarter of 2022, it still needs to face many challenges, including the emergence of alternative blockchains, the competition between marketplaces, the entrance of new buyers and sellers, the implementation of new use cases, a surge in investor funding, the need for better policing, and the threat of increased scrutiny by regulators worried about fraud, money laundering, and tax evasion.

Taking into consideration the amount of brands that are starting to implement NFTs and the number of unique traders of this quarter (2.2 million), the expansion of the NFT market will continue expanding also in 2023, but the road ahead will be rocky and full of potholes.

The purpose of this report is to analyze the current state of the NFT market after the first three quarters of 2022.

Key Takeaways 

  • Although the NFT market’s trading volume decreased by 75% ($2B) from the prior quarter, sales are estimated to grow by 6%(21.1M) by the end of Q3.
  • In Q3 the top market cap for Ethereum’s Top 100 NFT projects had a 44% ($19B) decrease in USD from the previous quarter; over the same period, the market cap in terms of ETH decreased only 27% (12.21 M).
  • The number of unique traders count has increased by 36%, compared to Q3 2021.
  • In Q3, Ethereum accounted for 91% ($1.4B) of the total NFT trading volume, but only 26.2% for the sales count.
  • ImmutableX defies the market falldown increasing its trading volume by 87% from the previous quarter.
  • As of September, Yuga Labs assets represent over 46.21% of the whole NFT market cap.
  • Azuki collection floor price has a month-to-month increase of 43.18%, reaching 11.4 ETH
  • CryptoPunks is the collection with the highest holding period, 239 days.


Industry Overview

From the macroeconomic standpoint, the war in Ukraine and the Fed’s announcements regarding the slowdown in “anti-covid” financial measures have had a major effect in the marked decrease of the entire crypto industry. Unfortunately, from a financial perspective, NFTs were not the exception.

The total NFT trading volume, at the end of the first quarter of 2022 was more than $12 billion with 28 million sales. However, in Q2, amid the collapse of the Terra ecosystemand the CeFi liquidations  that followed, the NFT market decreased by 33% ($8 billion) in terms of trading volume, and the sales count (20.23 million) dropped by 29%. 

Source: DappRadar

The high economic uncertainty and the repercussions of the crypto events experienced during the second quarter, caused a sharp decline of 75% in the total trading volume for Q3 with only $2.5 billion generated in this period. However, looking at on-chain metrics such as the sales count, and the rising adoption in billionaire industries, it is clear that the demand for NFTs is stable. In fact, Q3 is on pace to grow by 6% from the previous quarter. 

Source: DappRadar

Even with the sharp decline in the NFT trading volume, the number of unique traders is still at positive levels with more than 2.2 millions. What is more, compared to the previous year’s third quarter, it has increased by 36%.

While “whales,” or investors with big portfolios, will likely continue to drive remarkable industry sales, the increase in the number of new purchasers indicates that the NFT-curious are warming up to this innovative asset class.

Source: DappRadar

Moreover, there is a reason to believe that, similar to art, NFTs could become an asset class able to store value properly. In Q3 the value of the top 100 Ethereum USD is down 44% ($19B) from the previous quarter, due to the 31% decrease of Ethereum price, but only 27% (12.21 M ETH) in Ethereum.

However, looking at the market cap figure in terms of ETH we can see how NFTs have become assets that can store value properly. Even in a bear market, top 100 Ethereum NFT collections have lost only 50% ($5B) in USD but only 17% (3.94M) in Ethereum, since May when Terra collapsed.  

Source: DappRadar

At the same time,we are witnessing a hyper-centralization of activity during the bear market. Analyzing in depth the NFT categories, most of the trading activity is concentrated on a tier also known as BlueChips, NFTs that successfully maintain their value.


There’s no doubt that the collectibles segment remains largely dominant from the financial standpoint. For collectibles we understand any type of NFT except digital parcels of land inside virtual worlds and metaverse projects, as well as 1/1 art pieces. 

In Q1 2022, the total trading volume surpassed $9 billion generated from 19.8 million NFT trades. In the second quarter, amid a challenging macro scenario and the collapse of one of crypto’s largest ecosystems, the total NFT trading volume decreased by 49.5% ($5B) . In the third quarter, the total trading volume was $713 million, an 84% decrease from the previous quarter, the lowest quarter since Q1 2021. It is worth mentioning that 52% of collectibles market is made up by avatars. 

Source: DappRadar

From over 50 blockchains tracked by DappRadar Ethereum still remains the network generating the most trading volume. In Q3, the chain accounted for 91% ($645M) of the total trading volume. Ethereum still remains the leading market as the host chain for the most valuable NFT assets and innovative marketplaces and aggregators such as OpenSea, X2Y2, Gem, and others. 

Even if the trading volume decreased by 93% comparing to the third quarter of 2021, the most expensive NFT sold this year was CryptoPunk #5822  for a record-breaking 8,000 ETH (approximately $23.7 million USD). This sale is the biggest CryptoPunks NFT purchase in history. It was acquired by Deepak Thapliyal, the CEO of Chain, who goes by the name of Deepak.eth on the Ethereum blockchain.

Flow with 2.54% and Ronin with 2.53% come next. The NBA and NFL marketplaces in the Flow chain, and Axie NFTs drive the value in these networks. Also, It is worth to note that ImmutableX has increased the total trading volume by 87% from the previous quarter, the only blockchain which had an increase this year. 

Source: DappRadar

There’s a different story looking at the sales count in Q3, where Ethereum is still the dominant chain but represents only 26.22% of the total sales count. The difference between the market share for total trades and trading volume is impressive. It is clear that Ethereum hosts the high-end collectibles contributing to millionaire sales.

On the other hand, scaling solutions rich in Web3 games and GameFi dapps such as ImmutableX with 23.12% and Ronin with 18.81% are confirmed as major markets for NFTs. 

Source: DappRadar

Blue Chip collections

Avatar NFT collections such as the BAYC and CryptoPunks were the main drivers behind the first hype cycle for these assets last year. But not all of them should be viewed as top tier projects.

We understand for blue-chip collections, those projects that not only are worth a lot, but projects led by web3 brands injecting the market with real utility and fostering a true community behind their project’s missions.

On the Ethereum blockchain, no two NFTs are identical, and each one may be held by a single individual. There are several more in this category of “club” avatars, with new ones being introduced every day.

The top 11 blue chip collections are dominated by four projects owned by Yuga Labs: CryptoPunks, Bored Ape Yacht Club (BAYC), Otherdeeds for Otherside and Mutant Ape Yacht Club (MAYC), which generated more than $237 million in second-quarter trading volume.

Source: DappRadar

The trading volume in Q3 for the top 11 blue chip collections fell by 88%, reaching more than $334 million, almost the same value as in the second quarter of 2021.

In fact, when we look at the June trading volume ($203M) dropped 83% from the levels seen in May ($1.2B). Terra’s collapse caused a liquidity crunch in the crypto markets, which was the main driver in the drop of volume. 

Even if the total trading volume is down, when we look at the floor price of the top 11 blue chips collections it hasn’t decreased, but it has maintained almost the same value as before Terra’s collapse.

Looking at the September data for floor prices of the top 11 bluechip collections, Azuki has an increase of 43.18% (11.44 ETH) from the previous month, followed by Cool Cats with a 15.83% (2.78 ETH) increase.

On the other hand, the four projects of Yuga, besides Mutant Ape Yacht Club’s increase of 2.14% (14.30 ETH) from August, decreased their floor price. CryptoPunks decreased by 5.19% (63.95 ETH), Bored Ape Yacht Club 7.36% (73 ETH), and Otherdeed just 0.57% compared to August.. 

Source: DappRadar

As these collections represent more than a digital collectible, their upside is considerable. These avatar collections symbolize an access pass that becomes each individual’s identity.

One that becomes exclusive in the eyes of the community. People use these avatars as their profile images on social networking platforms. People use these avatars to feel as if they belong to a club.

The “members” of these groups truly support and follow one another. Membership in these clubs, reflected by the possession of these tokens, is exclusive, provides tangible value, and enhances a person’s digital identity.

Source: DappRadar

For the reasons presented above, the average holding days of these collections is very important because it shows how traders choose not to flip their NFT for short term profit. 

CryptoPunks is in first place, with 239 holding days, followed by BAYC with 129.8. Mutant Ape Yacht Club and Otherdeed for Otherside have the same average holding days. From the so-called blue-chip collections, Azuki is the one that is traded most frequently.

Perhaps due to the reputational issues surrounding its founder, Azuki are viewed more as investment vehicles rather than a loyal collection whose owners hold for a long period of time. 

Digital Art

Asides from avatars, there is a thriving market for digital art incorporating non-fungible tokens, with over 4.5 million sales since January 2021, and a total trading volume of over $3 billion.

It is said that the difficulty of art collectors to physically acquire artwork during the COVID-19 epidemic contributed in part to this market’s significant growth in 2021, which also continued in 2022. Artists like Beeple, Pak, Fewocious and several others are key contributors to take NFTs to a mainstream audience. 

Art that is created using Machine Learning algorithms creating unique designs. Collections like Art Blocks and Autoglyphs started a strong movement around randomly generated art. Collections like Ringers, Fidenza, or the Chromie Squiggles are often found among the high-end NFT trades.

Source: DappRadar

The entire trading volume for the first quarter of 2022 exceeded $300 million and $666,000 count sales. In the second quarter, the overall trade volume plummeted by 30% to $215 million, while the number of sales decreased by 32%. In the third quarter, the overall trade volume is $59 million, a 72% reduction from the previous quarter. The number of sales decreased by 43% over the previous quarter, reaching 258,000.

Even if trading volume and sales count have declined significantly since the beginning of the year, the digital art industry is expanding. This year, contemporary art institutions are beginning to acquire art produced as NFTs.

The most recent case is the New York Modern Art Museum’s recent sale of 29 artworks, which included pieces by Picasso, Bacon, and Renoir, among others. The auction is anticipated to exceed $70 million and will be used to purchase NFTs that might be used to present the museum digitally.


The blockchain gaming market (GameFi) is worth more than $8.6 billion, 847,000 daily Unique Active Wallets (UAW) registered in August, and is projected to grow exponentially in the next few years.

Numerous popular blockchain-based games, such as Axie Infinity, Gods Unchained, and Aavegotchi, use NFTs for character play. In addition, major gaming companies, such as Ubisoft, have incorporated NFTs into their more conventional game designs.

However, the conventional gaming community has not universally welcomed the arrival of NFTs. EA Games, Mojang Studios and Team are three examples of gaming firms that have retreated from using NFTs in their games in response to user backlash.

Source: DappRadar

In the first quarter of 2022, the total trading volume of gaming non-fungible tokens exceeded $1 billion. In the second quarter, the volume decreased by 53%, which is at $71 million in this Q3, a decrease of 84%. Looking at the sales count, we can observe the same pattern; in Q1 it had almost 12 million sales, then it decreased to 6 million in Q2, a 50% decrease, and in Q3 it was at 3.3 million.

Source: DappRadar

Compared to July, the average daily number of unique active wallets registered in August, for the leading protocol Wax fell by 8%. Nonetheless, 40% of all gaming activity takes place on Wax. Hive, the second largest gaming blockchain and home to Splinterlands, in August had its average daily UAWs grow by 12% month-over-month to 169,043. (MoM).

Similarly, the average number of daily UAW transactions on the BNB Chain increased by 8% from one month to the next, surpassing 92,000. Solana continues to expand, with a 21% month-over-month increase.

Even if the total trading volume and the sales count decreased drastically this year, we still have to consider that the sum of investments towards blockchain games was more than $4 billion, as analyzed in our latest BGA gaming report.

Fashion and Luxury 

The technologies of non-fungible tokens are being implemented into fashion items to enrich collections and promote consumer interaction. One of the first NFT experiments in the fashion sector happened in the shoe market, when RTFKT Studios pitched their own pair of branded virtual sneakers.

The Studios initiated a partnership with digital artist Fewocious to create a limited set of 600 NFT-based shoes accompanied by two separate merchandise capsules. Months later, the web3 brand shocked the world when a partnership with Nike was announced. The joint venture immediately became a metaverse brand to follow.

This example illustrates how the dissemination of NFTs might revitalize the notion of “exclusivity” in the design and fashion industry. In fact, as suggested by the NFTs’ description (“Non-Fungible” meaning “irreplaceable”), an NFT is a unique digital element that reflects only the thing it is linked with.

The blockchain tracking mechanism safeguards its uniqueness, and as a result, each NFT is the only artifact of its type. Even if digital files NFTs may be replicated and copied, the “signature” of an NFT always identifies it as the original artifact and, thus, as having been created by a single “registered” author.

Even firms that traditionally embrace technology slowly are coming to value this innovation: In March 2021, Gucci released a version of virtual shoes dubbed “Gucci Virtual 22.”, and earlier this year, it launched its SuperGucci collection and partnered with web3 brand 10ktf. 

This tendency has even migrated to gaming platforms, such as the cooperation between League of Legends and Louis Vuitton. Burberry is another example. The British fashion giant features in-game wearable NFTs for the web3 gaming platform Blankos. Also, the rise of move-to-earn put shoe brands like Asics and New Balance in interesting positions. 

The first quarter of the year saw more than $16 million in total trading volume for fashion-related NFTs. In Q2 more than $15 million but in May, the total trading volume declined drastically and August was the first month with a total trading volume of less than half of a million. As of now, Q3 had an 89% decrease from the previous quarter. 

Even if trading volume and sales have declined, demand for fashion and luxury NFTs remain one of the strongest use cases, as recently shown by the NFTiff collection.

The collection was created by Tiffany & Co, and is composed of 250 NFTs that will be turned into wearable luxury jewelry with a CryptoPunks theme. The mint price was 30 ETH ($50,000), and it got sold out in 20 minutes, creating $12.5 million in revenue for the firm.


The combination of sport, gaming, and technology has proven fruitful. In fact, if the rules against the spread of Covid-19 have affected the community dimension of fans, radically altering their experience and making it more individualistic, the concept of participating in the game – which is inseparable from the technology that makes it possible – restores the communal aspect of the relationship with sport.

With NFT’s optics takes on a whole new meaning and ideas proliferate. Sports organizations can use NFTs to establish communities – simply think beyond the lines of what we have previously understood.

Numerous football leagues and other sports reality have already considered this and are moving in this direction: not just football, but also baseball and basketball, are joining the realm of NFT, bringing with them enormous fan populations that were simply waiting for new forms of interaction. 

With Sorare and NBA Top Shot leading the way, sports NFTs generated $128 million in trades during Q1 from more than 4 million trades. However, following the industry trend, the volume decreased 63% in Q2 while the number of sales crashed by 54%. In Q3 the total trading volume is more than $18 million, an additional 61% decrease from the previous quarter, and the sales count is 1 million, a 47% from Q2. 

Still, the sports world is poised to become one of the most active markets for NFTs. Sorare will benefit from the World Cup hype. Flow’s NBA and NFL marketplaces have shown signs of steady development.

Meanwhile, Chiliz is soon to launch its mainet, looking to boost the utility and distribution of its fan tokens. And platforms like Autograph by Tom Brady could also attract millions of real life sports collectors.  

BONUS: The impact of the Ethereum’s Merge on NFTs

Ethereum underwent one of the most critical events in the history of crypto. Fortu, it looks like everything went according to plan at this stage, and Ethereum-based NFTs are operating normally.

They’ll continue to reside in your wallet(s) and function normally on markets, and you won’t need to take any action following the merging. All of this is being handled by the developers to hopefully facilitate a smooth transition.

The Ethereum Foundation predicts that the proof-of-stake consensus mechanism will consume over 99% less energy than the present proof-of-work consensus method. This is a significant advancement for Ethereum and particularly for NFTs, successfully rebutting one of the most common NFT objections.

The first NFT mint on POS was done after 26 minutes the merge completed, and it was a time capsule of the moment bearing the iconic panda face. It was quickly purchased at the price of 36 Ethereum. 

After the news of the first NFT minting and sale surfaced, the new blockchain operating system saw an avalanche of firsts collections. Bloom’s creator, Sheldon Evans, tweeted that the company has developed the first official NFT collection to be minted on the PoS network.

While the majority of the Ethereum community seems to support the merging and its potential advantages, noteworthy opponents exist. Some Ethereum advocates do not want the network to abandon proof-of-work mining, either because of the energy-intensive process’s security advantages or because of the incentives obtained by miners who operate computer rigs.

As a consequence, some developers in the Ethereum community split the blockchain and created a new chain that continues to use the existing proof-of-work mechanism. The most notable example so far is ETHPOW, which is headed by the renowned Chinese miner Chandler Guo.

ETHPOW will not be identical to the combined mainnet of Ethereum. It will be comparable to how Ethereum itself split from its original chain in 2016 to cope with the aftermath of The DAO breach, with some users continuing to support the old chain under the moniker Ethereum Classic. Since then, however, a great deal has changed, and there are many more assets, including NFTs.

As ETHPOW and other forks diverge from the Ethereum mainnet, they produce duplicate copies of Ethereum’s NFTs. An NFT is only a blockchain token that may serve as proof of ownership for digital assets like artwork and collectibles. Therefore, a branched Ethereum chain will contain multiple deeds pointing to the same piece of art or media.

In the lead-up to the merging, there was discussion of the possibility of a “replay attack”; that is, that a transaction performed on the proof-of-work Ethereum split may be “replayed” on the proof-of-stake Ethereum mainnet.

In this hypothetical instance, a Bored Ape Yacht Club NFT owner may sell the duplicated version on the proof-of-work chain, but if the same transaction is “replayed” by a malicious actor on the merged proof-of-stake chain, the seller may also lose the original version on that chain. For some NFT collectors, this might be a very expensive lesson.

With ETHPOW, the most significant proof-of-work split on the horizon, none of these things are likely to occur. Replay attacks are only viable if the blockchains share the same chain ID, and ETHPOW has verified that they would use a unique chain ID.

This may not be the true for other proof-of-work chains that fork off Ethereum, which leaves the door open to the possibility of cross-chain anarchy.


While no one can accurately predict the future of the global cryptocurrency market and its components, such as non-fungible tokens, it is expected that NFT markets will continue to be expanded by the many market players. Blockchains such as Solana, Flow, and Tezos are often cited as premier networks that are tirelessly advancing the deployment of NFTs in the gaming, entertainment, and tokenization industries.

It is worth mentioning that many brands are adopting the NFT technology, Ticketmaster just made a partnership with Flow, to issue NFTs attached to their tickets, and Starbuck just launched the “Starbucks Odyssey” experience, which offer members the ability to earn and buy digital collectible stamps (NFTs) that will unlock access to new, immersive coffee experiences.

The NFT regulatory environment is an oasis of new prospects that often accompany new technologies. However, policymakers are growing more conscious of the concerns associated with these possibilities, such as intellectual property, consumer protection, and money laundering. Businesses that plan to explore this new environment should be cognizant of the growing demand on governing bodies to control their activities inside it.

The forecast for NFT markets, which generated about $25 billion in sales in 2021, seems favorable. Despite the fact that all markets are experiencing heightened volatility in times when interest rates and inflationary factors are uncertain, wars and global conflict continue, and other factors influence the markets, NFTs and their underlying marketplaces are exhibiting strong indications of enduring regardless of the ebbs and flows that occur.

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