3rd August, 2021 — Dr. Raffael Huber



While major cryptocurrencies such as Bitcoin or Ether went through calmer periods, the hype around NFTs picked up again. An early mover in the gaming/NFT space was AXS, the governance token of Axie Infinity.

Illustration 1: AXS, the governance token of Axie Infinity, vastly outperformed Bitcoin over the past two months, returning ca. +750%.
Source: TradingView.com


Axie Infinity, a project that combines gaming with NFTs, has attracted over 500’000 members on their community Discord server and ca. 250’000 active users over the past 30 days. The native, collectible “Axies”, represented as NFTs, can be raised, traded, or used in in-game battles. Playing the game also earns SLP (small/smooth love potion) tokens, which can either be used to breed or sold on the open market. Similar to other play-to-earn in-game currencies (such as gold in the game World of Warcraft), this mechanic has attracted “SLP farmers” which play the game to earn SLP and sell them to generate an income. This has become popular, for example, in the Philippines.


Digital Art NFTs

NFTs representing digital art have also seen a resurgence of interest. The “floor prices”, meaning the cheapest piece of a collection available for purchase in the open market, for popular projects have been moving strongly upwards. Crypto funds have likely been taking an allocation, as on-chain data suggests.

Illustration 2: Floor prices (in ETH) for digital art NFTs have been rising – for example, the cheapest CryptoPunk now costs around 34 ETH.
Source: opensea.io, larvalabs.com, Bitcoin Suisse Research.


The relatively high prices and inhomogeneous distribution have also led to the creation of NFT indices. These are baskets of similar NFTs of a project that enable minting/redeeming an ERC-20 token representing a percentage share in that basket (typically 1:1 backed by NFTs) and can provide better liquidity. The recent price action in the NFT markets can be exemplified by using the “basic punk index”, a basket of cryptopunks without special attributes (such as being a zombie or an alien) that represents the cryptopunk floor price.

Illustration 3: Even the cheapest cryptopunks have more than doubled in value since the beginning of July.
Source: coingecko.com, Bitcoin Suisse Research.


Spotting NFT Drops

NFT minting events of new projects happened frequently over the past weeks. Possibly the easiest way to track that such an event is ongoing has been through ETH gas prices, which spike during periods where many people attempt to mint an NFT of a new project at the same time.

Illustration 4: Average gas prices on Ethereum (in GWei) tend to spike during the minting period of new NFT projects, similar to when new DeFi projects went live in the summer of 2020.
Source: gasnow.org


Such gas price spikes can, of course, have multiple other reasons – but at least, they can provide a hint when to look more closely at what is going on on-chain.


NFT Marketplace Activity

Increased usage was also seen in NFT marketplaces, for example on OpenSea, one of the largest NFT marketplaces on Ethereum. The daily trade volume increased throughout June and July and reached more than $50 million recently, as data collected by DuneAnalytics shows.

Illustration 5: The daily trade volume on OpenSea, a well-known NFT marketplace, rose throughout June and July and spiked above $50 million recently.
Source: DuneAnalytics.com


Similarly, more users are getting accustomed to collecting NFTs: The total number of users shows a rapid increase and recently reached 175’000 individual traders and collectors.

Illustration 6: The number of users who interacted at least once with OpenSea has exceeded 175’000 as of August 2021.
Source: DuneAnalytics.com



After a calmer period in the NFT markets, interest in NFTs related to gaming and digital art is back. Early examples show the potential and represent first use cases.

In general, however, NFTs simply represent a new medium for provable and – if well-designed – platform-independent digital ownership, and the potential applications for this are endless.

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