OpenSea turns into NFT ghost town after volume plunges 99% in 90 days
OpenSea, the world’s largest nonfungible token (NFT) marketplace, has witnessed a significant drop in daily volumes as fears of a potential market bubble grow.
OpenSea volume drops to annual lows
Notably, the marketplace processed nearly $5 million worth of NFT transactions on August 28 – about 99% lower than the record $405.75 million on May 1, according to DappRadar.
The massive declines in daily volumes coincided with equally drastic drops in OpenSea users and their transactions, suggesting that the value and interest in the blockchain-based collectibles has waned in recent months.
It is further visible in the falling floor prices – the minimum amount one is prepared to pay for an NFT – for leading digital collection projects.
For example, the floor price of Bored Ape Yacht Club has fallen by 53% to 72.5 ETH on August 28, from a peak of 153.7 ETH on May 1.
Similarly, the floor price of CryptoPunks, another top NFT collection, fell almost 20% from its July high of 83.72 ETH.
The NFT bubble is bursting
NFT prices are quoted in the native currency of the blockchain they are launched on. So a digital collectible created on Ethereum will be purchased using Ether (ETH), which also means that NFT’s prices will fall if ETH’s market value plummets.
A bearish ETH market seems to be one of the main drivers behind the poor NFT statistics. In particular, the price of one Ether has fallen from $4950 in November 2021 to below $1500 in August 2022.
BendDAO votes to improve NFT liquidity
Last week, BendDAO, a decentralized autonomous organization that enables NFT owners to pledge their digital collectibles to take loans (in ETH) worth 30-40% of the NFT’s floor price, voted to change the protocol’s code to make NFT security more liquid. .
The vote occurred after a rise in the price of Ether increased the value of ETH-denominated loans in dollars. Meanwhile, NFT prices on the other hand fell, reducing the value of the security held by BendDAO.
As a result, BendDAO is now facing its own debt crisis moment, with borrowers unable to pay their dollar-denominated loans due to falling ETH prices, and lenders finding it difficult to recover loaned amounts due to falling valuations.
Related: Prosecutors want to claim NFTs as securities, legal team of former OpenSea employee claims
BendDAO’s latest vote has changed the NFT liquidation threshold from 95% to 70%. It has also reduced the time offered to borrowers to avoid liquidation from 48 hours to 4 hours to attract more bids for their NFT securities.
In other words, the floor price of NFTs, including BAYC, risks plunging further if market liquidity continues to dry up.
agree, 2020-2021 was crazy get-rich-in-months and the DeFi-NFT-Web3 bubble is bursting now, turns out founders and VCs were just scammers for $$$.
But pipl said it was over in 2018 also after ICOs.
The next bubble will come 100%, you just need to survive.
play the long game. https://t.co/5f17JfdFfY— doncrypto (@DonCryptoDraper) 29 August 2022
The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should do your own research when making a decision.
