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What to expect from NFTs in 2022?

2021was a hype year for the NFT industry. In 2021, according to a DappRadar report, trading volume in the NFT industry reached $25 billion.

A little over a year ago, the common man started hearing about big sales of digital artworks like Beeple’s digital collage of 5,000 paintings, which sold for $69.3 million in ETH. Then came the NFT boom in the form of collections like CryptoPunks, Bored Ape Yacht Club (BAYC) and Art Blocks, etc. Traditional art didn’t take long either: in 2021, the Hermitage sold NFT copies of paintings from its real collection for 32 million rubles. The most valuable of these was the Madonna Litta, which was bought for 10 million rubles. – The Uffizi Gallery in Florence also tokenises some of its most valuable works of art in the form of NFT and sells them. For example, a digital copy of Michelangelo’s Madonna Doni was sold for 140,000 euros. Then major brands such as Coca-Cola, Gucci, Nike and Adidas also entered the market, followed by well-known athletes. The key question now is whether a similar success will be repeated in 2022.

First quarter 2022

In the first quarter of 2022, NFT has shown decent results when compared to the overall cryptocurrency market. Blockchain research firm Nansen has developed a series of indices that can be used to evaluate the NFT market. According to the company, when evaluating the performance of the NFT-500 index from January 1 to March 9, 2022, it found that the price of assets rose by 68.5% when expressed in ETH and by 20.9% when expressed in US dollars.

In addition, another very important trend was observed: the success of the various segments of the NFT market varies greatly from one industry segment to the next. The Metaverse-20 index grew by 129.4% in the first quarter (expressed in ETH), while NFT growth declined in the gaming and digital art sectors. The Gaming-50 index, reflecting the gaming NFT market, performed worse mainly due to lower interest in games with Play-to-Earn monetisation. The decline in the Art-20 index was driven by a fall in prices for NFTs linked to generated art. Yields in the NFT market remain high, but a number of sectors are in decline.

While the NFT industry continues to grow rapidly, the digital art market and GameFi are overheating. For example, according to Dune Analytics data, the trading volume on OpenSea (one of the largest NFT marketplaces) peaked in January 2022 and then gradually declined in February and March.

COf course, this was not only due to a decline in interest in the field of digital art, but also to a number of infrastructural problems.

In January 2022, OpenSea, the largest NFT marketplace, faced numerous complaints from users about massive platform failures. The disruptions made it possible to buy NFTs at old, low prices, which was quickly taken advantage of by attackers. For example, the Etherscan platform was able to track down a user nicknamed jpegdegenlove, who was able to exploit the vulnerability and thus extract 347 ETH.

Predictions for the rest of 2022

So, the prognosis for 2022 is as follows:

The NFT market will continue to grow, but interest in digital art and GameFi will decline. The use of financial NFT, the use of interchangeable tokens to tag real assets, NFT in meta-villages, NFT as tickets, NFT as tokenised rights, etc. will grow in popularity. The GameFi industry may rise again, but if developers stop releasing raw products, eager to get into the market quickly.

Monopoly and NFT will continue to move away from the Ethereum blockchain as well – slow transactions and high fees are doing their job, and it will still be an indefinite wait before the move to Proof-of-Stake. This clears the way for blockchains like BNB Chain (formerly known as Binance Smart Chain), Polkadot, Flow, Terra, etc.

There is plenty of reason to be optimistic, as NFT technology has yet to realise its full potential. But don’t expect digital art and GameFi to be as fast money as it was in 2021, so it’s time to start understanding NFT technology as more than just pictures on a blockchain.