Bored Apes Are Big. Other NFTs, Not so Much.

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Bored Apes may be carrying the NFT market on its shoulders.

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NFTs, or nonfungible tokens, are digital files that grant holders some rights to a unique digital asset–such as a video clip, image, audio file, or deed to online real estate. Most NFTs are minted and trade on the Ethereum blockchain, priced in Ether tokens. Bored Apes is a collection of NFTs images that has become like an exclusive membership club.

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The NFT market exploded in 2021, reaching $44.2 billion in sales, up from $106 million in 2020, according to analytics firm Chainalysis. Sales activity this year has hit $37 billion so far, according to a report issued Thursday by Chainalysis.

That looks like a big market, on the surface, and it’s one reason that companies like Coinbase Global (ticker: COIN) are racing to establish revenue in the arena. Coinbase recently launched a beta site for trading NFTs with plans for a broader rollout.

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Yet the NFT market may not be as large or deep as those numbers would imply. And while a few high profile NFT sales capture headlines, there are signs of cracking in the broader marketplace.

Much of the activity in NFTs centers around a few big collections like Bored Apes, CryptoPunks, and other highly priced creations. “Both from the collection standpoint and investor standpoint, the majority of value is very concentrated,” said Ethan McMahon, economist at Chainalysis. “That’s not anything that’s changed and if anything, it’s getting a bit more exacerbated.”

Since late summer 2021, NFT transaction growth has come in “fits and starts, with activity largely remaining flat except for two big spikes,” Chainalysis said. One spike was last August with the release of the Mutant Ape Yacht Club collection, a spinoff of Bored Apes; the other stretched from late January to early February 2022, fueled by the launch of the LooksRare NFT marketplace.

Since the latest spike, transaction activity plunged from $3.9 billion the week of Feb. 13 down to $964 million the week of March 13, Chainalysis reports.

The market revived with the recent launch of another Bored Ape spinoff called Otherside. It is an online realm that features the sale of digital land NFTs, or virtual real estate, initially priced in a new token called ApeCoin.

That sale alone brought in an estimated $300 million in revenue to Yuga Labs, the company behind Bored Apes. It also briefly clogged the Ethereum blockchain and sent transaction fees soaring to over $100 million for the NFT deed sales.

Some buyers paid fees without receiving their NFTs. Yuga said in a tweet on Wednesday that it had refunded fees to everyone “who made a transaction that failed due to network conditions caused by the mint.”

The episode highlights a few inconvenient truths about NFTs.

One is that the market is dominated by a handful of megacaps. On Opensea, the largest marketplace, CryptoPunks account for $2.6 billion in total volume, based on recent prices for Ether of $2,800 per token. Bored Apes and related assets account for another $3.2 billion.

The market also shows signs of cracking. Some high priced NFTs that were recently put up for auction received meager bids–notably Jack Dorsey’s first tweet that initially sold for $2.9 million failed to receive bids above $14,000.

Also problematic is the reliability of data on NFTs. The number of active NFT digital wallets slumped to 1.5 million in the second quarter, from 1.9 million in the first quarter, according to, which tracks sales on Ethereum. Sales of individual NFTs fell from 14 million in the first quarter to 7.8 million in the second quarter, down 47%.

Those numbers don’t square with Chainalysis, which reports that 950,000 unique addresses bought or sold an NFT in the first quarter, and says the number of active NFT buyers and sellers has increased consistently since the second quarter of 2020.

Volume statistics, moreover, may grossly overstate the breadth of the market due to high amounts of “wash trading”–round-trip transactions in addresses that are self-financed, potentially inflating values. Other trading activity may also be fueled by trading “bots,” or NFTs that are simply test projects.

“Of all the NFT transfers, a substantial part is not…an integral part of the market (tests, robots, wash-trading, etc.),” Nonfungible said in a report. How much wash trading occurs isn’t precisely known, but it’s in the order of “several billion” dollars worth, according to Nonfungible.

Some NFT pioneers say the market remains a haven for fakes, scams, and bogus trading.

“One of the barriers to mainstream adoption is the number of scams,” said Shaban Shaame, CEO of EverDreamSoft, an NFT company, in an interview with Nonfungible. “On OpenSea, there are a lot of fakes and it can be very easy to lose money by buying one.”

A program for OpenSea says the company deploys a number of measures, including wallet screening and blockchain analysis, to prevent fraudulent activity. The company also has measures in place against wash trading, with a team trying to stop it, he added.

Asked about the number of scams on NFT platforms, McMahon said, “I don’t know if I have a good answer for that.”

Write to Daren Fonda at [email protected]


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