1 in 3 minted NFTs become a dead collection, says research

By Raffaele Redi

Nansen analysis suggests ‘risk-off’ sentiment has cooled NFT market in last 30 days

Representation of a virtual non-fungible token gallery                                 
New research by Nansen has revealed the trading floor price of one in three NFTs is below their minting costs – Photo: Shutterstock
                                

Data from blockchain analytics platform Nansen has found that one in three NFT drops have had little or no trade activity – while another third of NFTs have a trading floor price that is below their minting costs.

The insight – based on Nansen’s NFT indexes and market trends dashboards – also revealed the NFT market has cooled down over the past 30 days. This is due to a ‘risk-off’ sentiment driven by the anticipation of interest rate hikes and Russia’s invasion of Ukraine, suggests Nansen. 

It also found the proportion of minted NFTs that are in profit are increasing over time, while the proportion of NFTs that form dead collections are gradually decreasing.

The Nansen analysis also showed that from January 2021 to February 2022, an average of 44.8% of the minted NFTs are re-sold on the secondary market every month. But the proportion of minted NFTs are sold on the secondary market has been declining gradually since July 2021.

NFT minters growing, but NFT interest slowing down

Nansen observed the number of NFT minters grew from 500 at the start of 2021 to 1.2 million by the end of February 2022 – representing a growth of 2,000 times.

When analysing profit per month of the top minted collections, Nansen found the minimum average profit was approximately ETH4 with the peak being ETH115.

“NFT minting is increasingly competitive with more projects being introduced to the market, thereby pushing the average mint cost down,” said Nansen. “Between January 2021 [and] February 2022, we saw the number of minted collections increased by over 4,800% – from 39,802 collections to 1,970,886.”

On the flip side, the amount of ETH spent on minting has gradually declined since the start of 2022, which Nansen found corresponds with a Google Trends decline in online searches about NFTs, suggesting interest in NFTs may have also slowed in the short term.

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