NFT Debrief - May 2023

GM! Welcome to our monthly coverage of NFTs and the metaverse. This month:

• Pudgy Penguins raises $9M in Seed funding, led by 1kx, as they look to expand their IP beyond static images

• Nike’s .SWOOSH platform readies its genesis collection, Our Force 1, for sale

• We highlight the ongoing BRC-20 token craze on the Bitcoin network, including infrastructure developments and traction metrics

🚨 State of the Market

In April, NFT trading volume on Ethereum experienced a decline to $989.5M, falling below the $1B threshold for the first time this year. The lack of new narratives or market participants may have contributed to the slump. During this period, Blur maintained its dominance in NFT trading volume, with a 61% share compared to OpenSea’s 19.7% share.

On May 1st, Blur announced Blend, a novel peer-to-peer lending protocol developed by Paradigm researchers and implemented by Blur. Blend enables users to borrow ETH by leveraging their NFTs, providing a unique alternative to conventional peer-to-pool lending models such as BendDAO. The protocol employs an off-chain offer mechanism that matches borrowers with lenders offering the most attractive rates. This allows borrowers to repay their loans at their convenience while enabling lenders to exit their positions by initiating a Dutch auction to find a replacement lender with a different rate. If the auction is unsuccessful, the borrower’s collateral is liquidated and the lender takes possession of the asset.

Other notable developments:

• On May 1st, Tensor surpassed Magic Eden as the primary NFT marketplace on Solana, securing a market share of 45% compared to Magic Eden’s 44%. This was spurred by their trader loyalty rewards and the Mad Lads Buyback Program (a PFP collection by the Backpack team).

• Sotheby’s has introduced its peer-to-peer secondary NFT marketplace on its Web3 platform, known as Sotheby’s Metaverse, which offers curated content and supports direct transactions along with artist royalties. The marketplace will be completely on-chain via Ethereum and Polygon. The smart contracts will ensure that creator royalties are fully honored, with the platform paying artists directly based on their selected on-chain royalty rate. Additionally, the platform will highlight the works of 13 well-known digital artists including Tyler Hobbs, Claire Silver, XCOPY, and others.

• Ethereum remains the market leader in NFT sales transactions, representing nearly 72% of all NFT sales volume. Solana maintains 2nd place with a 12% volume share while Polygon overtook ImmutableX to claim 3rd place as volumes picked up from Reddit’s Gen 3 collection launch.

• NFT activity on BNB remains vibrant, growing its volume share from 1.52% in April to 2.9% in May, a nearly 2x increase.

• Total Ordinals inscriptions have now crossed the 5M mark, driven by “Bitcoin Request for Comment” (BRC-20) tokens on the Ordinals protocol pioneered by pseudonymous user Domo in early March. BRC-20 utilizes Ordinal inscriptions to deploy token contracts, min