NFT Outlook For 2022: Trends We Can See This Year

2022/01/17 07:40:21

Heading into 2022, you’ve probably gone through your fair share of NFT craze. NFTs, short for Non-Fungible Tokens, have taken the world by storm, emerging as an exciting asset class the world has never seen before. After receiving paramount support from various industries, sectors, businesses, celebrities, and people, NFTs are revolutionizing how we express digital ownership.

The interest in NFTs among crypto investors continues to grow and remain strong as we enter a brand new year. Analysis on Google Trends reveals that more people are searching for information on ‘how to buy NFTs’ and how to invest in these digital assets. Here’s a snapshot showing the growth in interest in online searches for the two phrases worldwide:

How to buy NFTs vs. How to invest in NFTs, Image source: trends.google.com

Summary and Recap of 2021

NFTs have ushered in a new era of digital ownership, mainly in areas like digital art, fashion, and most successfully, gaming, where virtual ownership is highly regarded. We’ve seen some crazy numbers in 2021 - from Beeple’s legendary Everydays collection selling for $69 million to Crypto Punks selling for almost $8 million. Although a majority of the hype has been surrounding digital art projects like Crypto Punks, Bored Ape Yacht Club, and NBA Topshot, games like Axie Infinity have also been surging up the charts to new highs every day.

According to a report by Chainalysis, 2021 saw transactions of over $44 billion related to ERC-721 and ERC-1155 contracts - the most popular standard for NFTs at present. However, these figures do not include the value of transactions beyond the Ethereum blockchain and on other popular ecosystems, especially Solana and Polygon.

Image source: Chainalysis.com

While NFTs in the area of digital art made headlines repeatedly through 2021, the phenomenon also made quite an impact in other upcoming areas of interest within the crypto market - that of blockchain gaming, with the concept of GameFi. Games like Axie Infinity and Crypto Blades gave players an exciting opportunity to monetize the time they spend gaming by letting them purchase and trade in-game collectibles and pieces to add value to their experiences.

2021 also saw the concept of the metaverse really take off, although it had been around in the market for quite some time even before that. Facebook's announcement to rebrand its company to Meta and commit to developing its own metaverse saw mainstream brands rush to grab a piece of the action, putting the spotlight on NFTs in the form of virtual real estate on ecosystems like The Sandbox and Decentraland.

But beyond the crypto sector and the virtual world, we saw NFTs make an impact on the real world as well, giving enterprising developers the opportunity to discover valuable use cases to bring about digital transformation in several conventional and mainstream industries. From music to real estate, from fashion to capital markets, NFTs have the power to tokenize just about any kind of asset, put them up in the blockchain and assign unique value to them.

Let's take a look at some of the highlights from 2021 in these respective areas and more:

Big Brands Entered The NFT Space

Some of the biggest and most established brands in the world joined the NFT bandwagon for new ways to drive engagement with their users. Big brands dabbling in NFTs include Coca Cola, NIKE, Microsoft, Burger King, Campbell's, Taco Bell and Pizza Hut, to name a few.

Luxury Brands Didn’t Want to be Left Behind

NFTs also became quite the craze among leading fashion brands, including luxury ones such as Dolce & Gabbana, Bulgari, Cartier, Hublot, Louis Vuitton, Prada, Gucci and Balenciaga.

Celebrities Hopped on the NFT Bandwagon Too

You know it's a trend worth the hype when major celebrities also get behind the concept, and this holds especially true in the world of NFTs. Major celebrity icons found NFTs to be the perfect way to drive fan engagement and popularize their personal branding efforts even further while some others splurged big sums of money to buy up popular NFTs in the market. Some of the biggest celebs who got in on NFTs last year include Justin Bieber, Lionel Messi, Stephen Curry, Paris Hilton, Snoop Dogg, BTS, Shawn Mendes and Lindsay Lohan.

Art Auction Houses Saw The Potential in NFTs

2021 also saw NFTs make quite the impact in the art world. In addition to digital art selling for millions and grabbing headlines, last year saw the largest auction houses like Sotheby's and Christie's sell NFT art and discover a whole new revenue stream. To put things in perspective, while NFT transactions on Ethereum alone exceeded $44 billion in 2021, figures from UBS and Art Basel reveal that the global art market's net worth was a little over $50 billion during the period.

What to Expect in 2022

After reporting over $1.3 billion in sales in December 2021, the NFT craze seems to increase as we head into 2022, proving they’re in this for the long term. We're still in the early weeks into 2022 but there have already been significant developments in the world of NFTs in this short span of time. Here are some of the key developments in the market to watch:

The Growth of NFT Marketplaces

NFT marketplaces will continue to launch and grow in number. The success of OpenSea will power larger players, especially cryptocurrency exchanges and bigger crypto brands to enter this space and list NFTs.

LooksRare statistics, Image source: dappradar.com

A brand new NFT marketplace LooksRare seems to be gearing up to take on market leader OpenSea this year. Launched officially on January 10, the platform is offering free airdrops of its native token LOOKS to OpenSea users. In less than a week since going live, it has already raked up sales of over $500 million, overtaking OpenSea in weekly trading volume. This one is certainly worth keeping an eye on.

Making NFTs More Affordable and Driving More Opportunities For Revenue Generation

With NFTs becoming more expensive, there will be several projects looking to lower entry barriers or offer support to onboard more users into this market. Keep an eye out for initiatives that can merge DeFi and NFT better, offering loans to purchase NFTs, giving owners an opportunity to lend their NFTs and generate revenue from them, and more such opportunities.

The concept of fractional ownership will also get quite a boost in NFTs. This will also offer an opportunity for small investors to get in on the trend even if they lack significant sums of capital. Breaking down ownership of NFTs and then locking up the tokens to earn interest will offer one more revenue stream that will increase the scope of this market further. Known as NFT sharding, it's one of the top trends to look out for in this space according to Dapp Radar.

Discovering More Ways to Engage With NFT Communities

We can also see NFT collections driving higher levels of engagement by involving their community to a greater extent in the minting process. Bored Ape Yacht Club, one of the most successful and lucrative NFT collections, owes its lead in the NFT market to this concept, letting the community control the IP and come up with their own interpretations to add to the collection. This move not only drives up engagement with the collection's brand but also offers innovative opportunities for higher levels of monetization. This will also drive up interest among users to invest in NFTs.

More Mainstream Brands to Collaborate on NFTs

2022 can see more celebrities and mainstream brands announce more collaborations with NFT marketplaces to launch their own unique set of digital collectibles. One of the most recently announced examples of this trend is Associated Press launching its select works of photojournalism as an NFT collection soon.

Tokenizing Real World Assets as NFTs

We can also see NFTs going beyond the world of gaming, digital art and the metaverse into helping tokenize more real world assets and driving up the concept of fractional ownership. One such example is in the area of real estate, where projects can offer opportunities for users to claim fractional ownership of the highly expensive real estate market and generate revenue from it.

Metaverse Adoption to Grow

Speaking of real estate and NFTs, get set for the metaverse to see wider adoption and interest as well this year. At CES 2022, we have already seen Samsung play around with the metaverse on Decentraland, giving us a sneak peek into the future. Tech major Apple is also exploring entering the metaverse by possibly producing mixed-reality devices in the near future.

NFTs and KuCoin: Popular NFT Coins Worth Trading

KuCoin offers a wide variety of NFT-focused cryptocurrencies and tokens worth trading. Here's an overview of some of the leaders in this list and a snapshot of their recent performance:

The Sandbox (SAND)

The native token of the popular Ethereum-based metaverse, The Sandbox, SAND has received considerable investor interest in recent months owing to the hype around the concept of the virtual world. Its virtual parcels of land have been purchased by several known brands looking to enter the metaverse, making SAND an exciting cryptocurrency to add to your portfolio. SAND has enjoyed an ROI of almost 600% in the past three months.

Decentraland (MANA)

Decentraland (MANA) Trading Volume, Image source: Messari.com

Decentraland (MANA) is another popular Ethereum-based metaverse which has been in the news lately. Virtual land on Decentraland is rarer and more limited than on the Sandbox, making its MANA token a highly valuable NFT-based cryptocurrency to invest in. In the past three months, MANA's value has soared by nearly 300%.

Enjin Coin (ENJ)

Enjin is one of the leading names in the blockchain gaming space and its venture, the Enjin Coin (ENJ) lets game developers tokenize in-game assets within the Ethereum blockchain. The ENJ is an ERC-20 token that can be used to buy and trade assets with real world value within Enjin's ecosystem. It is one of the oldest NFT-focused cryptocurrencies in the market, which was introduced in July 2017 and went live on Ethereum's mainnet in June 2018. Unlike the metaverse coins listed above, gains in ENJ have been muted over the past three months at less than 60%.

Theta Network (THETA)

Theta Network (THETA),the blockchain network designed for video streaming has been a popular NFT coin as it offers a decentralized way for users to share bandwidth and computing resources, marking a revolution in online video streaming. The blockchain aims to shake up the video streaming industry which suffers from an ineffective centralized model of operation, driving high costs in infrastructure and poor experience for users. Its native token THETA is used for governance within Theta Network and is an exciting NFT-focused cryptocurrency for investors to consider. Over the past three months, THETA has actually seen its value decline by over 30%, although its ROI over the past one year remains over 100%.

Render Token (RNDR)

Distributed GPU rendering network functioning on the Ethereum blockchain, Render lets artists and studios gain access to decentralized GPU compute power from mining partners willing to rent out their GPU capabilities. Its native token Render Token (RNDR) is an ERC-20 token which artists can use to pay for renting GPU compute power from node operators. RNDR's price has more than tripled over the duration of the past three months.

Closing Thoughts

In 2022, we’re likely going to see the craze around NFTs get crazier. NFTs are still nascent; however, with institutional adoption, we could see the sector grow ten-folds of what it is today. What do you think? Have you been a part of the NFT craze?