OpenSea Turns Into NFT Ghost-Town
OpenSea, one of the most famous NFT marketplaces has experienced a 99% plunge in daily volume within 90 days! Read on to learn more.
An ongoing debt issue at lending platform BendDAO raises the risk the NFT bubble will burst.
OpenSea, the world’s most significant nonfungible token (NFT) marketplace, has seen a substantial drop in daily volume due to fears of a potential market bubble escalating.
OpenSea Volume Plummets to Yearly Lows
Notably, the marketplace executed nearly $5 million worth of NFT transactions on August 28 — roughly 99% less than its record high of $405.75 million on May 1, according to DappRadar.
OpenSea users, volume and transactions statistics. Source: DappRadar
Meanwhile, on a monthly timeframe, OpenSea’s volume has dropped 90% from its January 2022’s peak of approximately $4.85 billion. In Ether (ETH) terms, the monthly drop in the same period is around 82%, according to Dune.
OpenSea monthly volumes (in USD and ETH). Source: Dune
The precipitous decreases in daily quantities coincided with equally sharp drops in OpenSea users and transactions, implying that the value and interest in blockchain-based collectibles have diminished in recent months.
This is also visible in the leading digital collectible projects’ lowering floor pricing — the minimal amount one is willing to pay for an NFT. For example, the floor price of the Bored Ape Yacht Club fell 53% to 72.5 ETH on August 28 from a peak of 153.7 ETH on May 1.
BAYC floor price history. Source: CoinGecko
In addition, the floor price of CryptoPunks, another top NFT collection, dropped almost 20% from its July high of 83.72 ETH.
NFT Bubble is About to Burst
NFT prices are expressed in the native currency of the blockchain on which they are launched. So, a digital collectible developed on Ethereum is purchased using Ether, implying that NFT prices will decline if the market valuation of ETH falls.
A bearish ETH market appears to be one of the fundamental causes behind the poor NFT statistics. Notably, the price of 1 ETH has dropped from $4,950 in November 2021 to below $1,500 in August 2022.
ETH/USD 3-day price chart. Source: TradingView
BendDAO Votes to Improve NFT Liquidity
Last week, BendDAO, a decentralized autonomous organization that allows NFT owners to collateralize their digital collectibles to take loans (in ETH) worth 30% to 40% of the NFT’s floor price, voted to change its protocol’s code to make its NFT collateral more liquid.
The vote took place after an increase in the value of ETH-denominated loans in dollar terms. Meanwhile, on the other hand, NFT prices plummeted, lowering the value of the collateral held by BendDAO.
As a result, BendDAO is now facing its financial crisis, where borrowers cannot pay their dollar-denominated loans due to falling ETH prices. And lenders are unable to reclaim their borrowed sums due to falling collateral valuations.
BendDAO’s latest vote has changed its NFT liquidation thresold from 95% to 70%. It has also reduced the time offered to borrowers to avoid liquidation from 48 hours to fo hours to attract more bids for their NFT collaterals.
In other words, if market liquidity continues to dry up, the floor price of NFTs, including BAYC, risks plunging further.
Agreed, 2020-2021 had gotten rich in months and the DeFi-NFT-Web3 bubble is now coming to an end, revealed that the founders and VCs were just scammers for $$$.
But PIPL said that it also ended in 2018 after the ICO.
The next bubble will come 100%, you just need to survive.
play the long game. https://t.co/5f17JfdFfY
— DonCrypto (@DonCryptoDraper) 29 August 2022
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