NFTs: Market size remains resilient despite adjustment phase, supported by strong demand

Regarding non-fungible tokens (NFTs), there are voices claiming that “it’s already over,” but the reality of the market indicates rather a shift toward a mature phase. Yatt Su, co-founder of Animoca Brands, emphasizes that NFTs are a never-disappearing asset class when asked what NFTs are, and points out that it is more important to interpret the changes in market structure.

The Basics of NFTs — Unique Digital Assets on the Blockchain

NFTs are one-of-a-kind digital tokens recorded on the blockchain. The origin of NFTs is considered to be “CryptoKitties,” which first appeared in late 2017 on Ethereum, featuring collectible cat characters. Subsequently, from 2021 to 2022, the NFT market expanded rapidly, reaching a peak with monthly sales exceeding 1 billion dollars.

Currently, the monthly NFT sales amount to about 300 million dollars, which suggests that the market has not completely disappeared but has shifted from a speculative era to a collector-driven era. The fundamental value of NFTs lies in the transparency provided by all data being recorded on the blockchain.

A New NFT Market Driven by Wealthy Collectors

The clearest indicator of the current market situation is the behavior of high-net-worth enthusiasts. Su presents the perspective that “NFTs are comparable to luxury goods like Picasso or Rolex.” Wealthy collectors have strong attachments to specific digital artworks and recognize each other as like-minded individuals seeking the same pieces.

There are also notable billionaires purchasing high-priced NFTs such as land NFTs “Otherdeed” in Yuga Labs’ blockchain-based virtual world “Otherside,” and “Bored Ape” NFTs. Although Su’s own NFT portfolio has declined by about 80%, these holdings are not for resale but are positioned as long-term assets.

Compared to five years ago when the market was worth zero dollars, the fact that it has now reached approximately 300 million dollars proves that NFTs are not just a trend but are recognized as an asset class with certain economic value.

Successful Examples of NFT Native Brands — Pudgy Penguins

A notable success story during the market adjustment phase is “Pudgy Penguins.” This project has evolved from a speculative “digital luxury item” to a multi-sector consumer IP (intellectual property) platform.

Understanding what NFTs are is greatly informed by Pudgy Penguins’ strategy. The project first acquires users through mainstream channels (toys, retail partnerships, viral media), then onboards them into Web3 via games, NFTs, and PENGU tokens.

Currently, the ecosystem has achieved the following scale: over 13 million dollars in retail sales and more than 1 million units sold through physical×digital (Fijital) products, and the game/experience “Pudgy Party” has surpassed 500,000 downloads in two weeks. Its tokens have been airdropped to over 6 million wallets. The market’s high valuation of this project compared to traditional IP companies is due to ongoing success in retail expansion, game adoption, and deeper token utility implementation.

Changes in Market Environment Seen from the Cancellation of NFT Paris

The background of the cancellation of NFT Paris, a leading industry event scheduled just one month prior, involves more than just a downturn in the NFT market; broader geopolitical and regulatory factors are at play. France has significantly shifted its stance on cryptocurrencies, with projects like the fantasy football game “Sorare” now under the scrutiny of gambling regulators.

Security concerns are also more serious. Over the past few years, France has experienced numerous kidnapping incidents targeting executives and investors in the crypto asset sector, leading many industry insiders, including Su, to refrain from activities in Paris for security reasons. This illustrates that the NFT market itself is not the only factor; changes in the surrounding environment (regulation, security) also greatly influence market structure.

While the NFT market is indeed in a correction phase, persistent demand from wealthy collectors, the multi-faceted development of native brands, and increased trust in blockchain technology continue to drive its evolution toward a new maturity stage.