NFT Market Sees Slight Uptick in Trading Activity as 2022 Ends

🌅 Welcome!

Genesis considers filing for bankruptcy after firing 30% of its staff. Elsewhere, Kyle Davies of the infamous Three Arrows Capital was subpoenaed on Twitter.

Today, we take a look into the NFT market’s recent performance while our Research team explores the state of web3 gaming as 2022 ends.

This is the Delphi Daily. Let’s dive in.

🚨 In Case You Missed It

Crypto lender Genesis considers filing for bankruptcy as the company fires 30% of its staff.
Kyle Davies of the infamous Three Arrows Capital was subpoenaed on Twitter.
Alex Mashinsky, the former CEO of Celsius, is being sued by New York Attorney General Letitia James.
Silvergate Capital was forced to cover $8.1B in withdrawals by selling assets at a loss.

📊 NFT Market Sees Slight Uptick in Trading Activity as 2022 Ends

NFT volume on Ethereum saw an uptick in December 2022, owing primarily to increased activity on Blur, a new marketplace for NFT power users. In December, Blur reported total volume of $484M, nearly twice the $263M volume reported by OpenSea .
This follows Blur’s airdrop announcement, which rewards traders that place bids on the platform. This allows traders to earn points and potentially acquire a larger airdrop. The BLUR token is expected to launch by the end of January 2023.
NFT trader count on Ethereum also saw an uptick in December as the number of wallet addresses trading NFTs increased by 7.7% month-over-month from ~540K to ~582K.
One possible explanation could be that NFT traders are harvesting tax losses before the end of the year. Tax loss harvesting is the timely sale of assets (such as NFTs) at a loss to offset the amount of capital gains tax due on the profitable sale of other assets.

⚡ December Gaming Roundup

The total market cap for all gaming-related tokens dropped 14% to $6.34B in December. When we look at changes over the past month, all of the top 10 tokens (by market cap) ended on a low, with most dropping more than 50% in price.
ImmutableX saw the market cap for the IMX token increasing by more than 60% this quarter. However, this was primarily due to a sizable unlock of tokens on Nov. 5, 2022 that were allocated to private investors and ecosystem development.
Some estimates state the unlock to be more than 200M tokens, or roughly 12% of the total supply. It is worth noting that the ImmutableX team has expressed that many of these freshly unlocked tokens will not be sold.

Upon closer inspection, we can see that the FTX collapse that occurred in early November has had a significant impact on token prices across the board.
ApeCoin and Axie Infinity’s SLP token were the least affected, but still saw their prices decrease by 34% and 37% respectively. ApeCoin managed somewhat of a comeback from late-November to early-December.

Although not a perfect representation of the web3 gaming market, the chart above illustrates the changes in total volume and total market cap of the top 10 gaming projects combined.
Again, in large part thanks to the FTX collapse, the total market cap dropped by 41% and total trading volume dropped by 85% (from Nov. 6th).
It should be noted that trading volume for both WAXP and SAND increased 33% and 5% respectively, throughout December (although volume dropped 31% and 20% respectively across Q4).

Despite all this doom and gloom, the weekly number of unique active wallets (UAW) interacting with gaming dApps over the past quarter has consistently remained 2x+ above the second most active sector, DeFi.
December did see a slight drop-off, but the number of daily UAW has largely remained between 800k and 900k.
UAW is not a great representation of actual users, as many of the most popular gaming protocols are heavily botted and some others require very few on-chain interactions.
However, with a number of highly anticipated blockchain games releasing in 2023, this does demonstrate an exciting future for the sector.
For more on the state of web3 gaming in December, Delphi members can read our Delphi Pro report here.

🐣 Notable Tweets

Year Ahead for Crypto

1/ 2022 was The Great Reset for crypto. Overly hyped trends & mass speculation pushed the crypto market far out over its skis, so last year’s washout was a necessary reset. Today, we present our Year Ahead for Crypto report. Unlocked for the public: ➡️ https://delphi.link/year-ahead

– Delphi Digital (@Delphi_Digital) Jan 5, 2023

Overview of Genesis Episode

DCG Situation:

– DCG Owes $2.025B
– Genesis can call their $1.675B loan
– Genesis owes $900M to Gemini

DCG Liq

– Grayscale $10B AUM x 2% = $200M x 3x multiple = $600M
– GBTC/ETHE Holdings = 9.7%/3.8% = $629M with discount, $1.17B at Par
– VC book = Firesale values in a bear

– Tommy Shaughnessy (@Shaughnessy119) Jan 5, 2022