The Year Ahead For NFTs 2024 (Executive Summary)

“We are seeing green shoots in the NFT markets, which could foreshadow a good coming year for NFTs. In this Year Ahead report, we dive into 4 big NFT themes for 2024, outline our key predictions, and highlight several trends to pay close attention to.”

Top 3 Key Takeaways

The stage is set for a potential resurgence of NFTs in 2024. As crypto wealth increases, spending on NFTs for “flexing”, identity, and entertainment will rise.
A few NFT Character Brands could explode into mainstream consciousness and grow exponentially. Others will remain as niche communities.
Ethereum will lose market share in NFTs, and Solana could catch up.
Physical Collectibles will come on chain quickly. New token standards will give NFTs superpowers

Key Takeaways

Throughout most of 2023, NFT trading volumes were on a downtrend. But we’re finally starting to see an uptick in volumes coming into the end of the year. Could this be the proverbial green shoots and foreshadow a good year ahead for NFT markets? Time will tell, but our intuition tells us yes.
Theme #1: A few NFT Character Brands explode into mainstream consciousness and grow exponentially.
- Successful teams understand the big picture: it’s not about bringing the masses into NFTs but instead bringing the brand to the masses. They will trailblaze and prove the thesis that NFT-native brands can shorten the time and increase the odds of success
- Most other NFT character brands struggle to break out of their niche communities. The battle for consumer attention is intense; only a few will successfully navigate this competitive landscape.
- Pudgy Penguins, Doodles & Claynosaurz are a few character IP brands to watch for. We can measure their success by examining revenue, brand awareness, and community.
- We expect an influx of seasoned creatives from the traditional entertainment industry, such as veterans from Disney and Hollywood. The projects of 2024-2025 will have a much stronger pedigree.
Theme #2: Ethereum loses its NFT dominance, and Solana catches up
- We could witness Ethereum’s NFT dominance fall below 50% as early as next year because (1) NFTs are becoming more sophisticated, (2) gas fees on Ethereum are high, and (3) other NFT ecosystems are gaining momentum.
- Solana is the prime contender to narrow the gap with Ethereum. Today, the market cap for Solana NFTs is a modest 5% of Ethereum NFTs.
- Several things are unique to Solana NFTs: compressed NFTs, xNFTs, and enforced royalties by default.
- Bitcoin Ordinals is another ecosystem to watch. It is poised to emerge as a pivotal protocol layer for fully on-chain, immutable, censorship-resistant digital artifacts
Theme #3: Physical Collectibles will come on-chain quickly
- The market size for collectibles (rare sneakers, trading cards, sports cards, luxury watches, etc) is large and expected to grow to $100B by 2030.
- The lack of traditional financial infrastructure, growing investor demand for collectibles, and the ability to create new consumer experiences are the main drivers for collectibles to come on-chain.
- Speculative trading on tokenized collectibles could become a new narrative, and some (like rare Pokemon cards) could reach wild prices.
Theme #4: New token standards give NFTs superpowers
- ERC-6551 (or Token Bound Accounts/TBAs) enable NFTs to possess their own personal wallet and do anything on-chain, transcending beyond just “useless JPEGs”
- Use cases for TBAs include NFTs that can change their appearance, membership NFTs with transferrable reputation, web3 game avatars, social networks, and autonomous AI agents.
- We expect existing and new NFT projects to activate TBA for holders. NFTs existing as static images could become a thing of the past.
Other themes to pay attention to in 2024
- Blur is set to Blast off in 2024. We anticipate a growth period for Blur, marked by new product launches (such as NFT perps), the activation of Blast, and a possible NFT market boom.
- Major consumer brands FOMO into NFTs. NFTs have the potential to reinvigorate existing loyalty programs with new experiences and utility. These include special offers, early product access, discounts, and priority access to stores or events. On-chain activity will be a treasure trove for understanding customer behaviors deeply.
- NFT Finance expands in tandem with the growth of the NFT market
In summary, the year ahead looks incredibly promising for NFTs.As we mentioned in last year’s report and still strongly believe today, NFTs are crypto’s first major mainstream opportunity.