The world of non-fungible tokens (NFTs) has been under scrutiny lately, with several negative stories shedding light on the overall state of these once-hyped digital commodities. However, a recent study conducted by blockchain analysts Dappgambl has revealed an even grimmer picture, suggesting that as many as 95% of NFT tokens have zero market value.
The study, titled “Dead NFTs: The Evolving Landscape of the NFT Market,” was compiled by Vlad Hategan, a crypto and blockchain specialist. It provides a comprehensive overview of the current state of the NFT market, showcasing some concerning statistics. In July 2023, NFTs had a weekly trade value of approximately $80 million, which is merely 3% of the market’s peak value in August 2021. Moreover, the study highlights that the majority of NFTs are considered worthless, with 69,795 out of 73,257 collections having no market value.
One of the key findings of the study is the oversupply of NFTs compared to the demand. About 79% of the collections examined in the study had unsold assets, indicating a surplus in the market. This oversupply has turned the market into a buyer’s market, where potential investors are becoming more cautious and discerning in their purchasing decisions. Hategan explains that projects lacking clear use cases, compelling narratives, or genuine artistic value are finding it increasingly difficult to attract attention and make sales.
Even when focusing on the most popular NFT collections, the study struggled to find substantial value in the tokens. Approximately 18% of these collections had zero value, and the average price range for an individual token was between $5 and $100. Less than 1% of the tokens were listed at $6,000 or more, and the study emphasizes that these higher prices may not reflect real demand or tangible value.
Aside from the lack of value, the study also highlights the negative environmental impact of NFTs. While a worthless NFT has no value in the market, it still has significant consequences for the environment. The creation, minting, and marketing of NFTs consume a substantial amount of energy. The study uncovered 195,699 NFT collections with no apparent owners or market share. The energy required just to mint these tokens is comparable to 27,789,258 kWh, resulting in approximately 16,243 metric tons of CO2 emissions. To put it into perspective, this is equivalent to the yearly emissions of 2,048 homes, 3531 cars, or 4061 passengers flying from London, England, to Wellington, New Zealand.
In light of these findings, Hategan urges caution and a sober assessment of the NFT space. He advises those interested in participating in the NFT market to focus only on tokens with utilitarian use, such as video game assets, tokenized access to events, content, or services, or digital ID verification. By doing so, individuals can mitigate the potential risks and losses associated with investing in NFTs.
The study from Dappgambl paints a disturbing picture of the current state of the NFT market, highlighting the abundance of worthless tokens and the negative environmental impact. As the market continues to evolve, it is crucial for investors to approach the NFT space with caution and carefully evaluate the true value and utility of the tokens they consider purchasing.
