Two Founder Spotlights in Digital Collectibles This Week + A Qualitative Comment on the NFT Market
Tuesday: Zoom with myNFT & GBM’s Hugo McDonaugh Wednesday: Zoom with SmartSeal’s Mark Shekleton
Please see Zoom dial-in details below. These founders have been building exciting software tools for the Digital Collectibles market behind the scenes. Side note - neither has issued a token to date.
Despite the crypto winter and a malaise in the markets, we have been surprised by the general attitude within NFT circles, which appears to remain as enthusiastic as ever. There could be many reasons for this - a key explanation in our view is that this new technology offers artists, creators, brands and developers (who are also creators) a potential for incremental revenues. Why wouldn’t it attract an increasing flow into the space given this potential? Second, real communities of like-minded creators are innovating within NFTs, often coordinating through Discord servers. Experimentation, learning from others, and supporting one another are all strongly encouraged, and may be a factor in keeping these groups together. Importantly, these communities are growing as they would in a game. In other words, participants are here mostly for the sake of fun, not to work. Also, brands are still circling as they realize that, if this behavior accelerates, they will be as distant from it as they were from video games, which now, as we all know, eclipse movies, TV and music combined.
Here, we planned to summarize NFT volumes 2020 - 2022, along with any important clues on how this story might unfold in the coming year. As of now, despite the transparency of blockchain technology, we are finding inconsistent data and inconsistent definitions of categories. In looking at various sources on the NFT market volume overall, Cryptoslam.io reported 1,186,618 unique monthly buyers in January 2022, dropping to 486,608 in December 2022. This Dune page uses weekly time period and looks at Ethereum only, reporting approximately 250,000 wallets trading NFTs weekly in January 2022. By the end of December 2022, there were approximately 150,000 weekly active wallets. Given Signum Growth Capital’s focus on gaming, regardless of the differences, there are ~1 million people online right now playing Minecraft (Jan. 8, 7pm EST).
In fact, large games do appear to skew the NFT numbers dramatically, further indicating to us the importance of gaming, and the idea that much of the best is yet to come. For example, DappRadar reported that 2021 NFT Market volume came in at $25 billion, with $4.5 billion, or roughly 20% attributed to “Gaming”; however, $3.5 billion was attributed to one game, Axie Infinity. Throughout 2022, interest in Axie the game dropped precipitously - its genre play-to-earn turned out to be more like play-to-work, which doesn't really fit with having fun. The game also suffered a hack in March 2022 (see Bits of Signum Chapter 2: The Axie Infinity Hack) and the DAUs (in-game battlers) dropped from 1.5M in March to 260k in August, a likely explanation for dropping the metric disclosure altogether in September 2022.
Finally, as John Linden, Founder / CEO of Mythical, discussed in our Twitter Spaces in October, the reality is that it is simply impractical for most games that are aiming for a large player base to go fully decentralized to start. This would imply that there could be a lot of activity that is occurring, and groundwork being laid, that we are simply unable to measure on chain.
Reddit is a great example of a hidden gem in the numbers, and a datapoint to watch in terms of behavior shift. The content discussion forum allowed Redditors to identify themselves with a free “digital collectible” avatar (note: they didn't use the word “NFT” but the assets were recorded as NFTs.) Claimed avatars recently hit 8 million, distributed across 5.7 million self-custodial wallets. These are numbers to get excited about. However, under 10,000 wallets own three or more avatars, suggesting that the number of Redditors who have actually ventured into OpenSea or another marketplace to buy and sell on secondary markets is low. Still, these wallets are on our radar screen.
Stay tuned for more quantitative detail in our next report, and in the meantime, please join us on Tuesday at 2pm ET and on Wednesday at 10am ET!
1) Tuesday, January 10th, at 2:00pm ET: Hugo McDonaugh, CEO & Founder of myNFT & GBM (“Auction Powered by GBM”). Other recent interviews below. Zoom: https://us02web.zoom.us/j/6465358507
2) Wednesday, January 11th, at 10:00am ET: Mark Shekleton, CEO & Founder of SmartSeal, a counter cyclical, physical-to-digital tech platform for brands and consumer goods manufacturers, built by a team of former Aerospace engineers. Zoom: https://us02web.zoom.us/j/6465358507
MyNFT & GBM: More Interesting Content:
Digitally Rare Podcast Featuring Hugo McDonaugh:
Culture Meets Crypto (Signum Growth Capital) Jesse Johnson (COO Aavegotchi), Hugo McDonaugh on their partnership
Edouard Bessire’s talk at NFT.London about price mechanisms and the GBM auction:
Hugo McDonaugh, Founder/CEO MyNFT & GBM, and Angela Dalton, Founder/CEO Signum Growth Capital, at NFT.London: