Last week, market research group NonFungible.com released its 2019 report on non-fungible tokens (NFTs), detailing the yearly market and on-chain activity for all projects in the NFT sector. The report shows that gross metrics like market capitalization and the number of users experienced modest growth year-over-year (17% and 1% respectively), while the volume of tokens transferred as measured in USD terms decreased by 4% compared to 2018. One should note, however, the Jan. 2018 peak in the overall crypto markets may have inflated 2018 NFT USD transfer volumes.
Looking at the different NFT sectors, interest in collectibles (games like CryptoKitties) waned in 2019. But this decline was counterbalanced by an increase in activity for RPG and Strategy NFT games like My Crypto Heroes and 0xUniverse. While collectibles were an easy-to-implement application of NFTs (thanks to the ERC-721 standard), users are starting to gravitate towards more complex games, perhaps as these applications expand on their capabilities.
NonFungible.com also explored the retention rates (how long a user connects with a project) at the individual application level. Most projects managed a high retention rate within the first three months. But this metric plummets after that three-month mark and continues to trend down as time progresses.
Why it matters:
Despite being widely hyped when they first launched, it is not surprising to see only a modest level of growth in NFT activity and the sector’s user base. These one-of-a-kind tokens and their related applications are still an early stage and often cannot compete with their traditional alternatives. NFT apps, especially those focused on gaming, could start to see more activity once there is some willingness for gaming companies to allow assets to trade freely across ecosystems.
NonFungible.com also projected the NFT sector would see significant growth in market cap,