NFT Weekly: After Stablecoin Collapse, Morgan Stanley Warns NFTs Could Be Next
With the entire crypto market still reeling from the $45 billion collapse of stablecoin TerraUSD, Morgan Stanley warned this week that NFTs could be next.
Saying the bank was caught off guard by the depegging of TerraUSD and ran zero from its sister coin LUNA, analyst Sheena Shah said the bank had undertaken a “broader reassessment of where many crypto prices should be trading” as a result, Fortune reported.
See also: TerraUSD Price Crash Shows Vulnerability of Dollar Pegged Cryptos
Among other things, he found that the high prices of non-fungible tokens (NFTs) were mainly due to “speculation, with limited real user demand”, which drove down the prices of top-selling collectibles like CryptoPunks. and Bored Ape Yacht Club. grave.
The same was seen in the prices of NFTs offering ownership of virtual land parcels in metaverse projects, according to the report. As this “land” is primarily usable as a location to build other things like games and branded marketing outposts in metaverse projects like Decentraland and The Sandbox, sales have largely been based on traditional real estate speculation. : This location matters. Prices are higher, for example, in areas reserved for fashion brands and related projects.
This has not deterred venture capital powerhouse Andreessen Horowitz, which announcement on Wednesday, May 18, its crypto arm, a16z, had set up a $600 million fund targeting metaverse gaming, saying, “It’s clear to us that the industry has entered a new era.”
Read more: NFT Weekly: The NFT bubble burst has been declared again, but investments keep coming
Arguing that “gaming will play a central role in defining the way we socialize, play and work in the next century,” said a16z, “there’s no better time than now to create a fund focused on supporting the next generation of game creators”.
How serious are they? The name of the new fund is GAMES FUND ONE, which suggests that a GAMES FUND TWO is at the very least expected. So it’s no exaggeration to say that Andreessen Horowitz has north of $1 billion in mind for metaverse games built from and using NFTs.
The vast majority of NFT projects have been built on Ethereum, but there are more and more signs that are changing. On Friday, May 20, DappRadar showed that Solana-based NFT Marketplace Magic Eden seen just under 300,000 transactions in 24 hours, more than six times the roughly 48,000 seen on the first NFT market, OpenSea based on Ethereum.
That said, Magic Eden’s trading volume was nearly $22 million, compared to OpenSea’s $25.7 million. It should be noted that transactions are not just sales – they also include the list of new NFTs for sale and each bid on an item.
But generally speaking, non-Ethereum NFTs are becoming increasingly popular – largely thanks to transaction fees that can range from $25 to $75 on OpenSea, compared to pennies on Solana-based Magic Eden. Dapper Labs, maker of the NBA Top Shots and OG CryptoKitties consumer NFT line, built its own blockchain, Flow, last September as a move away from Ethereum.
Beyond that, Ethereum showed its flaws as an NFT platform quite dramatically on May 5, when the frantic launch of Bored Ape Yacht Club (BAYC) developer Yuga Labs’ latest NFT project, a sale of metaverse virtual lands, nearly halted Ethereum. and briefly pushed transaction fees up to $10,000 – several orders of magnitude beyond their previous all-time highs.
See it here: Bored Apes NFT Rampage hikes transaction fees to $200M for 55,000 sells
However, Solana had its own issues, with an NFT sale crushing the Ethereum-killer blockchain on May 3.
Related: Another blockchain overwhelmed by NFT transactions as Solana crashes outright
Universal Music Group jumped into the metaverse with both feet, establishing a brand marketing outpost and striking several deals with companies such as Genies and Curio to develop NFTs for its artists — collectibles, not real ones. tokens carrying songs. On Tuesday (May 17), he announced a distribution deal with the LimeWire marketplace for these NFT artists.
Also Read: NFTs With Attitude: Rapper Ice Cube Thinks Crypto Tokens Can Disrupt Label Power
“Together, we will focus on quality content, utility and accessibility for the general public by delivering unique NFT projects for artists and fans in an environment of trust,” UMG said. It’s a pretty big turnaround for LimeWire, which reinvented itself from the dot-com-era file-sharing service that record labels sued for $75 trillion in 2011 — only to finally settle. of $105 million.
Other NFT investments this week include Japan’s largest investment bank, Nomura. On Monday, May 16, the Financial Times announced that it had announced plans to launch a new company dedicated to crypto investments, including investments in NFTs and decentralized finance (DeFi) for institutional clients.
Crypto lending platform Pine is also getting into NFTs, CoinDesk reported this week. A $1.5m funding round will be used to build a lending platform using NFTs as collateral, as well as “Pine Now, Pay Later” – a BNPL-style platform for potential buyers who need to fund NFT purchases. It has a variety of loan pools with different terms, Pine co-founder Alex Ho said.
Recalling the sale of a BAYC NFT for seven ethers – the current floor price is around 95 ETH – in order to buy another NFT collectible which has not appreciated to the same extent, Ho said: “ I decided to build Pine so that NFT owners like myself are able to unlock cash without having to sell their NFTs.
It’s not the only one, with a number of other lending platforms including Arcade, NFTfi, PawnFi and Trust NFT operational.