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NFT hype dies down, despite high-profile fundraisers

2021.04.06 Robbie Liu

While major NFT-related projects are completing significant fundraisers, volumes in the hyped market are in decline.

In the past week, several large fundraisers have been completed in the NFT space

Dapper Labs, the development team behind the most popular blockchain-based game, NBA Top Shot, announced that it has closed a $305 million funding round — with Hall of Famer Michael Jordan on the investor's list. 

On March 30, crypto-art platform SuperRare closed a $9 million Series A funding round — which was led by Velvet Sea and 1confirmation, and saw participation from Mark Cuban, Chamath Palihapitiya and Marc Benioff. 

Additionally, Vogue reports that many luxury fashion brands, such as Gucci, will soon be offering NFTs.

NFT hype has significantly cooled

Despite the high-profile fundraisers, the NFT craze has started to show fatigue. 

The daily number of NFT sales plummeted from 33,954 on March 28 to the current 26,724 — according to the NFT market monitoring site NonFungible.

The daily number of sales plunged by a third in 10 days. Source: NonFungible

Moreover, the average selling price of CryptoPunks — one of the most popular collectibles in the market — has even plummeted from $93,580 to $47,070 since mid-March. The floor price of an average Punk has declined to around 16 ETH, or roughly $32,000, as per data from The Block. 

The seven-day average price of a CryptoPunk has dropped from $93,580 to $47,070. Source: The Block

Also seeing declines were the market capitalizations of the top five NFT-related altcoins. THETA, CHZ and MANA all declined by around 10%, despite the fact that the price of ETH has risen 17% in the past week.

The top five NFT-related altcoins are trending downward. Source: CoinGecko

NBA Top Shot sees user complaints mount

NBA Top Shot has a strong market presence and has created an NFT collecting frenzy among basketball fans. In the last six months, NBA Top Shot has recorded roughly $500 million in sales and registered 826,000 accounts — 338,000 of which hold at least one collectible "Moment." In the last two months, the number of users has seen a 20-fold increase, and the volume of transactions has exploded. The game generated $232 million and $221 million of sales in February and March, respectively — a more than 500% increase from January's $44 million. 

Though NBA Top Shot saw April's declines in volume and sales, it is likely a cash-generating machine. The game takes a 5% cut on each transaction, in addition to its pack sales. As a result, Dapper Labs has collected nearly $49 million in transaction fees — though it distributes proceeds to the National Basketball Association and National Basketball Players Association. 

NBA Top Shot's volume over the past seven days has declined substantially. Source: DappRadar

Moreover, according to an interview with Roham Gharegozlou, CEO of Dapper Labs, of the 3 million transactions on the platform, more than 1 million have only been between $10 to $50. Also, 90% of the Moments that have fetched six-figures sales haven’t been offered up for resale. 

However, NBA Top Shot has encountered a lot of complaints from users. First, the platform has experienced several delays and issues in pre-planned pack drops. Dapper Labs has also imposed certain restrictions, such as suspending registrations during times of congestion and limiting purchases to one Moment per minute, or longer.

More importantly, most users are met with an extensive withdrawal delay of up to four to six weeks, if not longer — including one user from the OKEx Insights team. Fighting against this delay, Twitter user @DeFi_Ted notably had a confrontation with the Dapper Labs team before uploading a screenshot of it blocking his account, despite having made hundreds of purchases using his credit card — something proponents of decentralization have not taken particularly well.

The company also announced that all Dapper account holders need to undergo security reviews and identity checks before withdrawing, but the shortage of compliance staff and the surge in registrations made the situation troublesome for users. Gharegozlou told Forbes that Top Shot has tripled the size of its compliance team in the past two weeks and plans to double it next week, in an effort to boost the withdrawal process. 

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