July 2023 proved to be a bitterly cold month for the NFT market, experiencing a sharp decline in sales and trading volume, according to a recent report by DappRadar.
The NFT trading volume plummeted by 29%, and the number of sales dropped by 23% compared to the previous month. Notably, the dominant collections from Yuga Labs faced a slip in their supremacy.
The overall sales numbers paint a gloomy picture: comparing July to January 2023 reveals a staggering 49% decline in NFT sales. In January, there were 7.36 million sales of NFTs, while July witnessed a mere 3.7 million sales. Similarly, January recorded $1.1 billion in trading volume, whereas July struggled to reach $600 million, marking three consecutive months with trading volume below one billion dollars.
Despite the somber situation, there were some positive highlights amidst the dark data. The Polygon network experienced a surge in activity, boasting 772,424 traders, which accounted for 27% of all NFT trades in July. The attractiveness of the Polygon network lies in its lower gas fees compared to Ethereum, and renowned brands like Starbucks, Reddit, and Nike have chosen it to power their Web3 digital collectible endeavors. Reddit's launch of Gen 4 avatars in late July may have contributed to the network's recent surge in sales.
Although Polygon, Solana, and Cardano have shown gains against Ethereum, Ethereum continues to lead the pack in terms of trading volume, according to data from CryptoSlam. However, the once-promising Bitcoin Ordinals NFTs faced a decline in trading volume, recording only $33 million in July, a sharp 65% decrease from the previous month.
The DappRadar report also highlighted the rising popularity of "low barrier entry" NFTs, catering to a wider audience due to their smaller individual value. This shift towards more affordable and accessible NFT options has contributed to the broader transformation in the NFT market's dynamics.
Builders Gonna Build
However, while the past few months haven’t been great to the Non-fungible token (NFT) market, it seems that builders are still bullish on Web3. Alchemy's Q2 Web3 Development Report revealed that despite the staggering decline of the NFT Market’s trading volume, almost six million smart contracts were deployed across chains including Ethereum and Polygon in Q2 of 2023.
This represents a remarkable 302% increase since Q1 and a staggering 1,107% surge compared to the second quarter of 2022.
The report highlights the continued growth and enthusiasm in the development of Web3 solutions. Alongside the surge in smart contract deployment, the installation of Ethereum software developer kits (SDKs) reached 26.8 million in Q2, a notable 7% increase from the previous quarter.
While not all of these newly deployed smart contracts or installed SDKs may be solely intended for NFT development, this continued momentum bodes well for Web3's progress and its steps toward mass adoption. As the NFT market navigates through its challenging times, the robust growth in smart contracts and Web3 development serves as a testament to builders' confidence in the long-term prospects of the technology. While the immediate future of NFTs remains uncertain, the broader Web3 landscape continues to show promise, attracting developers and investors alike, and looking toward a brighter future in the blockchain space.