From GameStop to Coinbase, crypto routing brings NFT play

Sales of non-fungible tokens soared to record highs in January, as the assets gained popularity among crypto investors, mainstream consumers and even celebrities. But as 2022 draws to a close, it’s a completely different story.

Global monthly NFT sales fell 89% in November compared to their record high of more than $4.9 billion in January, according to blockchain data tracker CryptoSlam. The slowdown threatens marketplaces, including those launched by GameStop and Coinbase Global, that sell the once white-hot digital assets. It also reflects a broader crypto rout sharpened by the implosion of hedge fund Three Arrows Capital, the bankruptcy of crypto lender Celsius and the spectacular demise of digital asset exchange FTX.

“Confidence has been shaken dramatically,” said Ian McMilan, chief growth officer at Mojito, a software startup that helps mainstream brands build NFT platforms.

While GameStop’s NFT marketplace posted a record of more than $2.1 million in daily volume on July 12, sales have been rocky since the video game retailer launched the platform five months ago, according to data provided by DappRadar. The blockchain analytics firm, which tracked GameStop NFTs blockchain transactions on the Loopring protocol, reported transactions worth just over $4,820 on October 30, the day before GameStop began selling NFTs based on the ImmutableX protocol.

It is unclear how the platform is currently doing since DappRadar stopped reporting GameStop NFT sales on November 9th. A DappRadar spokesperson said the company and GameStop decided to disable tracking because without the ImmutableX volume the data would be misleading, but the company hopes to resume tracking “in the foreseeable future.”

Meanwhile, GameStop ended its two-month pilot partnership with FTX US selling the crypto exchange’s gift cards on Nov. 11, the same day FTX filed for bankruptcy, according to a chirping, which said it “will provide full refunds to affected customers.” GameStop did not respond to a request for further comment.

The NFT marketplace for FTX US, the American subsidiary of FTX, directs visitors to the crypto exchange’s bankruptcy proceedings. NFTs created or “minted” using the platform also link to the same bankruptcy website or display an error message when displayed on other NFT marketplaces such as Magic Eden.

Declining interest in NFTs is also affecting Coinbase’s platform, which had a slow start when it launched in May. Trading volume has fallen significantly since the marketplace’s best day of sales in September, according to blockchain tracker Dune Analytics. While Coinbase NFT had more than $533,500 in sales on September 9, it recorded just over $5,000 worth of volume on December 26, a 99% decline.

The platform has posted $7.2 million in all-time sales volume since its inception, according to Dune Analytics. That’s less than the $8.2 million OpenSea — the No. 1 NFT marketplace based on trading volume — recorded in the last 24 hours, according to DappRadar. But even OpenSea has seen sales remain flat at $186 million over the past 30 days.

When asked what Coinbase NFT did to boost sales, Max Branzburg, head of consumer products group at Coinbase, said in a statement that the company had redesigned its Drops program for NFT launches and added a way for NFT collectors to avoid paying high fees from blockchain network congestion.

“In the third quarter of this year, over 92% of our Drops on Coinbase NFT sold out in less than 24 hours,” he said.

But with new scandals besieging the industry, an NFT recovery may be harder to come by, according to Catherine Flick, a reader at De Montfort University in the UK who studies the ethical implications of NFTs.

“Now that we’ve seen more crypto crashes, the pure monetary value of NFTs is no longer a selling point — most people have lost money on them,” she said in an email to Bloomberg.

Mojito, which has worked with brands such as Sotheby’s and the Milwaukee Bucks professional basketball team to develop NFT offerings, has seen some of its clients pull back from the assets during market downturns, especially if they are used for marketing campaigns for new products, according to McMilan. He said other companies are still interested in using NFTs in the long term, especially if they are paired with more traditional products such as physical goods.

“People will just sit and wait a little bit and let the storm pass,” he said.