NFT trading volume is at an all-time low, but this CEO is still betting big on the technology

By Anushree Dave

The buzz and hype around non-fungible tokens is gone. But RECUR CEO Zach Bruch still believes NFTs have a future.

The buzz and hype has faded, but RECUR, a company that helps brands create and build communities around non-fungible tokens, is still building out its infrastructure and making future plans. According to a recent analysis by Dune Analytics, NFT trading volume has fallen 97% from its 2022 highs. Trading volume went from $17 billion in January to about $466 million in September, according to cumulative data from OpenSea, NFTX, LarvaLabs, LooksRare, SuperRare, Rarible and the Foundation.

RECUR, which is blockchain agnostic, launched in 2021 and raised $50 million in a Series A at a $333 million valuation last fall. Those were different times. RECUR has since worked with brands such as Nickelodeon, Hello Kitty, Paramount and Star Trek. Meanwhile, platforms like Instagram and Twitter have also launched features to allow users to display NFT art on their profiles.

But there are some real questions surrounding whether this is going to continue to work, especially as even the biggest and most hyped NFT projects have seen significant drops in their floor price in 2022. Zach Bruch, co-founder and CEO of RECUR still believes that there is a future in NFTs. MarketWatch spoke with him to ask how this is going to work, challenges in keeping NFTs relevant, and what he envisions the space to look like in the next few years.

Answers have been edited for length and clarity.

AD: How have your partnerships with brands started? Did you approach them and ask if they wanted to work with you, or did they approach you?

ZB: We started the business about 20 months ago. And the business has changed throughout this period. As you can imagine, as markets change, as education changes, and as people’s understanding [changes] in general, the industry has changed. So when we first went out to create these partnerships, almost two years ago, there was a huge education process that we had to do to show them why it’s relevant, why they made sense for their families, their communities, and so on.

But today, now that we’ve built all these tools, we see a lot of large enterprises and Fortune 500 companies come to us and say, “hey, your tool is really great […] you have a very simple onboarding flow, where our user base can do something they’re familiar with, like sign up, and under two minutes, in the same way, they can sign up for a Snapchat or an Instagram. So there is no confusing wallet setup. You can use Apple Pay, they can use credit cards, they can use crypto.” So they’re noticing and seeing a lot of these things. And now seeing these tools and recognizing that they can leverage them and use our toolset as their own creative canvas to make whatever they want So at this point we’re now just receiving a huge amount of inbound.

AD: Say I want to do an NFT collection and work with you. What are you giving me that I can’t just do myself using another NFT creation platform?

ZB: So I think the reason it’s so difficult for developers and businesses right now is because the current landscape of solutions in the web tree ecosystem is made up of countless point solution vendors that each do a very limited thing. So for example, if you were the head of Web3 in a large company or you’re a developer, your typical journey goes something along the lines of wanting to launch a Web3 product. And now you needed a smart contract entered into and saw things on chain, you need to be compliant […] you realize you need tools to engage your user base. Now you need a gamification provider, you need a custom marketplace that fits your brand aesthetic. Now you need a provider for this, your users want to play with a credit card, well, then you cash their money into a bank account, you need a provider for each and every one of these things. And then you have to recruit the entire backend engineering team and spend a year or more sewing all these vendors together, then hope and pray it works. And if you succeed, now you have to… maintain scale at all, so it’s really a disaster. So with RECUR, what we’re doing is making sure that every developer, every team has everything they need for Web3 on one platform.

AD: I recently reported that NFT trading volume has plunged 97% since January, which I’m sure you know. And in general, there seems to be less hype around buying NFTs this year than there was last year. How has this affected your business?

ZB: Things we notice is that most people look at NFTs in a very one-dimensional myopic way, when the reality is, Web3 is about unlocking consumer and social markets in a way that was never before possible. And Web3 can and will transform any consumer experience and any consumer product business. So there are all kinds of different use cases that we’re now seeing a lot of large companies and enterprises come to us with. From loyalty programs to real events, to ticket sales […] it truly is unlimited potential. And I think in the past there have been a lot of, you know, barriers to entry because the tool hasn’t existed. And now the tool is here. We’ve built a lot of it.

AD: What is a big challenge you are facing right now?

ZB: I think the biggest challenge in the space is always going to be education. There are huge amounts of noise. It’s a very beginning space, just in general. And usually things take a lot of time for any kind of adoption.

A few years ago I really started delving deeper into the NFT community, it had many similarities to the early crypto community, brilliant tinders with deep passion, huge vision for a more vibrant world. However, like the early crypto communities, there is a complete lack of infrastructure that would be required to onboard. So tools, again, I felt was a big issue, as well as, you know, as well as education. And while the first decade was about capital innovation, the next decade looks like it’s going to be about cultural innovation, and unlocking cultural culture, leveraging crypto tools, and that’s a very big shift.

AD: You have worked with large companies and brands with a lot of money. What about smaller creators and smaller businesses? Can they use these tools to enter Web3, or do they need a huge budget and a specialized team dedicated to it?

ZB: Yeah, so actually… we’re opening up our tool to creators of all sizes. So you can be a college student in your dorm, a small mom and pop shop in a city or a large enterprise and be able to take advantage of our tool and have the same firepower as a large publicly traded business, such as a parent company. But what we are also doing is that by the 1st quarter of next year we will also have a fully self-service version without code of our platform. So you don’t even need any technical experience, or engineers or any of that. So you can really get to market quickly, be compliant, have high performance.

AD: What do you envision for the NFT space in a year? Do we still want to call them NFTs? And will people still buy them?

ZB: I think NFTs will still be called NFTs in a year […] you asked another question that was quite interesting. Well, will people buy NFTs? I think it doesn’t matter. After I think most of what we do digitally will be NFTs on the back end, because it has to be, how else do you prove that you actually have digital ownership of something that will always be backed by an NFT? And who knows it might become a rule, right? If you buy something digitally, online, it’s a digital item, the user must have total ownership of it. And the way it had to happen is the NFTs. So I think there will be a lot of things that will leverage this back-end infrastructure over the next, call it five years, I think it will take longer than a year for all of this to happen, of course, but I think we will see very rapid growth.

-Anushree Dave

(END) Dow Jones Newswires

10-17-22 0953ET

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