The Illusion of Scarcity: Why NFTs Are Neither a Good Investment nor a Good Business

Author: Nakamoto Fennel

Key Takeaways:

• The real business model of NFT is not buying and selling scarcity and collection Instead, misleading information is used to attract a very small number of final buyers—that is, to gain trust with high-priced NFTs and sell other NFTs at falsely assessed prices.

• In the past, the "agreement price" of individual people was always confused as the "consensus price" of the market, but individual transaction prices are by no means "Market consensus price". In fact, the real buyers of NFT are limited, and the market depth of NFT determines that its pricing mechanism cannot be the "consensus pricing" generally considered.

• There are almost no thresholds and costs for issuing NFT, which is destined to make the so-called "scarcity" of NFT an illusion, the same as "scarcity" NFT is mass-produced, making it not only not scarce, but even too common.

• The market has actually priced in the false scarcity and substantial proliferation of NFTs. The hidden consensus of the market is that it does not recognize the pricing of NFTs. , so that NFT only has a price but no buyers.

• Most investors and issuance teams cannot make money from NFT. Investors are unlikely to buy lottery NFTs that have skyrocketed in price, but they have a high probability of becoming the "last buyer" (maybe even the only real buyer) of a mispriced NFT; most issuance teams only mechanically inherit The product form of NFT has not been seen through, and only by relying on strong financial resources and courage can we have a chance of creating a blue chip like BAYC.

• The seemingly fair NFT trading market and data platform are part of the deception. They use ridiculous statistics to mislead investors. Issuer errors in valuation and pricing.

• No longer weld our ideas on collections and scarcity narratives, correct the misunderstanding of the NFT market, and stop using wrong resources Configuration is the prerequisite for the NFT track to be revitalized.

• What this article writes is both NFT and more than just NFT. There are still many illusions to be exposed in the market, but this article Please give me some advice.

There is a secret maxim in the venture capital industry: when everyone flocks to an investment sector, it will no longer It is a high return track.

Profit-seeking behavior will produce an equilibrium - any obvious profit margin will be quickly snatched away, so that there may be no place where excess profits really hide. It may be a once-in-a-lifetime experience. (So ​​I love trading opportunities that people don’t understand)

Although this is not an unbreakable dogma, it often works in the investment and business fields, so that I I have always been confused by the booming NFT market two years ago:

Since selling NFT is a business model so simple that almost everyone can make huge profits at no cost, how about huge profits? Where did it come from?

Now that the profit path of NFT has been understood by everyone overnight, and NFT has inspired almost everyone’s imagination to describe the future business landscape, how can it still Is it called a potential track again?

Crowding and growth, low threshold and high returns are almost impossible to coexist. If they appear at the same time, one of them must be false.

Failure to explore this relationship will inevitably lead to irrational profit-seeking and various disastrous decisions.

This article will try to explain why most of the reality about NFT/NFT-like assets is not what people see.

Two years have passed, and the market’s understanding of NFT has not improved much. There are still a large number of teams investing huge costs into a track based on wrong assumptions. . Even though the market was so bleak before, there are still teams working tirelessly to launch new NFTs, and they still hope that the NFTs they issue can squeeze into the blue-chip sector. As of the time I started writing this article, there are still 30 projects waiting to be minted on CryptoSlam, not to mention the endless new NFTs emerging on the BTC chain riding on the Bitcoin ecological narrative.

The pursuit of profit can inspire people's endless creativity, but more often it makes people follow the trend and get lost in manipulation and misleading. The free market allows people to make free choices, but also allows people to freely create illusions and be deceived by illusions.

The importance of deciphering illusions is that we will begin to learn to protect ourselves, and the market will stop investing resources in the wrong direction.

The market size of NFT

For a long time, NFT track research reports love to mention NFT The total market value of the market is described as a huge market, especially when it was an astronomical figure of 3 trillion US dollars two years ago (November 2021); at the same time, research reports also talk about it as WEB3. 0 incremental users created, as of the time of writing, the NFT market still has nearly 5 million unique users, and the cumulative number of buyers exceeds 12.6 million.

Perhaps due to the tendency of human beings to fixate on their beliefs, people are willing to find supporting information for the NFT market with full potential and gold, rather than trying to prove that prosperity is not established.

So, whether it was two years ago or today, when the market value has shrunk by 99% and only 6.7 billion remains, almost no one questions the calculation method of NFT market value.

NFT market value = floor price (sometimes average price) * total supply; and the total market value of the NFT market is the simple sum of the market values ​​of all NFTs .

This formula is not reasonable when applied to the general securities market valuation, but it is even more ridiculous when applied to the NFT market. The degree of invalidity is no less than using the national GDP to measure each household. living standard.

Generally speaking, the lower the market value of a stock, the more likely it is that value bubbles and valuation deviations will occur. The actual circulation of most NFT series is only 1%-2% of the total supply, and the circulation of non-blue chips is even lower. The most important thing is, as will be explained later, because the price of NFT does not come from a full financial game, the value reflection effect will be worse.

Ineffective high prices and low circulation rates that no one cares about constitute paper wealth. It is this ordinary "accounting method" that makes market participants They overestimate the product value and market potential of NFT, and the end result is to be fooled by false prosperity.

Ignoring the irrelevance of indicators and conclusions is one aspect. Some data that can obviously falsify the prosperity of the NFT market are rarely mentioned. For example, as of November, On the 28th, the cumulative historical transaction volume of NFT was US$86 billion—less than the total transaction volume of Bitcoin on Binance in two months.

The stock market is full of all kinds of scammers, with trading volume being the only exception.

The NFT market is far less big than people think. When we reorganize all the data we can obtain, we will find that the only thing in this market that can be called "huge" is "It's just bubbles.

Measuring liquidity: real buyers in the NFT market

I have been thinking about it, except In addition to cumulative transactions, what other indicators can effectively measure the size and liquidity of the NFT market?

A scientist friend inspired me. He told me that he had casually crawled the transaction data of Cryptopunks, and after a simple sorting, he found that the vast majority of punks had never been traded.

This discovery lifts the veil on the liquidity dilemma of the NFT market. It leads to a conjecture: Perhaps the reason for the lack of liquidity in the NFT market is that most NFTs do not exist. Real buyers.

In order to verify the conjecture, I crawled blue-chip data other than Cryptopunks, and some interesting statistical results began to appear. Next, I will take BAYC as an example to explain one by one.

As of November 28, 2023, Etherscan There are a total of 36,990 BAYC transaction histories in 8 major NFT Marketplaces. It should be noted that they are not all BAYC’s transfer histories. The former is a subset of the latter.

As shown in the figure, among the 36,990 transactions of 10,000 BAYC, 10% have not been traded once so far, and 71% of BAYC The number of lifetime transactions is less than 5 times. There are less than 20 BAYCs that have changed hands more than 30 times in the market. There are only 4 BAYCs that have changed hands more than 50 times. No BAYC has more than 100 transactions.

These data go through A preliminary cross-check was performed.

I took out 100 extreme values ​​of more than 10 transactions and only 1 transaction, and compared their corresponding token ids with the sales data collected on Cryptoslam. contrasted.

Cryptoslam also captured data from other unnamed marketplaces in addition to the above 8 trading markets. When all the transaction history of BAYC with a certain ID is limited to this When there are 8 marketplaces, the data on both sides are consistent; the historical data on both sides of the sample token with only one transaction in 100 is also consistent.

But there are still some errors, such as BAYC#5497. The number of transactions I crawled from etherscan's NFT Trade records is 21, while the number of transactions collected by Cryptoslam is 54, of which 21 are blur and opensea transaction data, and the additional 33 occurred in other etherscan and Unlisted trading markets.

Like BAYC#4970, the number of historical transactions recorded on Cryptoslam is 17, and the number captured on etherscan is 24.

In fact, errors appear concentratedly Those BAYCs on the Cryptoslam activity list have almost 100% coverage. If you pay a little attention, you will notice that the 24-hour, 7-day and 30-day activity lists are all the same BAYC, and even the rankings have not changed at all. They are all traded frequently on unnamed exchanges, so they are displayed on Cryptoslam. The number of historical transactions is generally higher than that recorded by etherscan.

Whatever caused this part BAYC There is a surge in turnover. Since we measure the turnover distribution of BYAC over a long period of time, this sudden extreme outlier should be excluded.

So, this has no impact on the conclusion — 99% of BAYC has no market (no possibility of changing hands) because they do not have buyers of a certain scale .

Among the remaining 1%, if we regard a change of hands as the emergence of a new independent buyer, then there will only be less than 30% - 17 BAYC There are more than 30 buyers.

In other words, in the past 950 days, less than 30 people were willing to buy each of these 17 BAYCs; and only 1 out of 10,000 BAYCs was purchased. 60 historical buyers.

Such a data distribution is also true for other blue-chip NFTs.

Some people may ask, since 90% of BAYC has been traded at least once, how can we conclude that there are no buyers for NFT?

In fact, just looking at the sales rate of each NFT series on Opensea can reveal clues. Blue-chip NFTs with a circulation of 10,000 are almost only 1%- 2%—that is, 100–200 units are on the market.

If the NFTs with transaction records are all truly sold, why is the sale rate so low?

According to the crawled data, a total of 1,729 BAYCs have only one lifetime transaction record. What if these 1,729 BAYCs were all purchased by independent real buyers? After buying, how can BAYC manage to have only 200 of them listed for sale and circulation in the market — — Bookmakers have the motivation to control the listing rate, but market participants aiming for profit have no reason not to sell after buying, allowing funds to stagnate subjectively .

Now, I think everyone should be able to fully understand why the NFT market lacks liquidity.

Lower liquidity than imagined

We always talk about liquidity, now is the time Give it a clear definition. I have observed that when people talk about the liquidity of NFT, most of the time they refer to the liquidity of NFT as an asset itself, but also to the existing funds in this market segment.

Asset liquidity is the speed and ease with which an asset can be sold for fair market value. Assets with good liquidity can be sold quickly at the current market price without significant discounts, and without paying high transaction fees.

The amount of funds in the market refers to the adequacy of funds in this market, which depends on the comparison between the amount of funds and the amount of assets. It is the liquidity on the liability side. .

The lack of liquidity in the NFT market is both an asset side and a liability side.

First of all, because the NFT Marketplace makes the casting and issuance of NFT extremely simple, the supply of NFT assets is growing like a virus, and the number of NFTs that can be circulated is The increase caused a squeeze on the liquidity of the entire market.

Secondly, the characteristics of non-fungible tokens make each NFT itself a market segment, even if it is a PFP released as a series, the PFP in the series Each NFT is in its own single trading environment, which ultimately leads to the fragmentation of liquidity.

The nature of NFT itself leads to the fragmentation of liquidity, and there is always a lack of mechanism in the NFT market to observe marginal changes in liquidity, which makes the liquidity problem worse. In the FT market, once the marginal amount of funds on the market changes, the price of FT will also change accordingly. The withdrawal and increase of liquidity in the FT market will inevitably be reflected in the price.

However, in the NFT market, the marginal amount of liquidity and price are isolated from each other, and the withdrawal of funds on the market cannot be directly reflected in the price; even if it is on the market Without incremental funds, existing funds can also be used to push up the selling price of NFT, thus promoting the expansion of the book-market value of the entire NFT market.

When there is no mechanism to measure and lock the existing funds in the NFT market, it will lead to a false prosperity — even though there is little liquidity left in the market , but the NFT book price and total market value can still remain high.

For NFT investors, the lack of buying/trading counterparties and the myth of sudden wealth created by survivor bias will ultimately result in their Being lured into the market by a high price, not only did he not buy the lottery-winning NFT, but he became the "last buyer".

Consensus pricing fallacy

So, can the price of NFT be believed?

According to past statements, the price of NFT can be believed, because from extensive discussions, both market participants and observers recognize NFT The pricing mechanism is "consensus pricing".

Consensus and scarcity are the explanations people find for the expensiveness of NFTs.

In my opinion, "consensus pricing" is that elegant but vague expression that the crypto market has always loved, and the widespread recognition of such expressions is itself A typical irrationality in crypto markets.

Once we trace back to the logical starting point of the "consensus pricing" view, we can easily find that the true meaning of "consensus" here is actually visibility indicators and group emotional characteristics. They correspond to a hypothesis:

Hypothesis 1: The issuer of NFT is well-known and has many fans, so the consensus base is naturally broad and solid, because the fans of celebrities People will flock in enthusiastically to provide liquidity and turnover, giving NFT value-added potential.

Hypothesis 2: Different groups of people are looking for a sense of belonging and self-expression, and groups are willing to pay high prices for NFTs that meet their emotional needs.

This is not consensus pricing, this is visibility pricing and emotional pricing.

The visibility hypothesis is easily falsified by plummeting prices and real on-chain data—that is, true market consensus.

Take Jay Bear as an example. It once seemed to be really "hot" in the market, but in fact, the sales ratio of Jay Bear is not as high as the price. BAYC and Punk of the company (Issuance ratio = number of issuances/total number of transactions, I use it to roughly measure the average turnover rate of a series of NFTs).

Famous for "emotional value" The sales ratio of mfer and azuki is actually higher (even higher than BAYC and Cryptopunks), and their "consensus" is more reliable. I guess this has to do with user positioning. Fans of celebrities are not NFT audiences. The number of fans of a certain celebrity in the NFT audience (still the kind who are willing to spend money) will not be more than those who like Japanese comics or shout "long live the asshole". .

In other words, turning celebrity fans into NFT audiences and finding celebrity fans from NFT audiences is obviously more difficult than tapping the emotional needs of NFT audiences.

However, even if emotions can stimulate people's willingness to trade more than popularity, the results are still not enough to form a so-called "consensus."

As mentioned above, each NFT actually corresponds to a single market segment. If 99% of NFTs only have one or two customers in their lifetime, even If the client cannot be found, who will form their consensus? If an NFT has less than 30 historical customers, is the consensus of 30 people a consensus?

How can we find fair prices for tens of thousands of personalized markets?

NFT's price theory confuses the "agreement price" of individual people with the market's "consensus price". In fact, the real buyers of NFT are limited, and transactions have been completed. Among NFTs, 81% of NFT holders have less than 5 counterparties, which also includes the dealer’s self-buying and selling. The price depth and frequency of changing hands of NFT determine that it cannot have a “consensus price”. The pricing mechanism is by no means “consensus pricing” as generally considered, but speculative pricing by limited investors.

But this is not entirely the reason why the price of NFT is not trustworthy.

The Emperor’s New Clothes: The Illusion of Scarcity in NFT

Another way to price NFT The main factor is scarcity, but when we understand the proliferation of NFT on the asset side, the scarcity narrative of NFT is self-defeating.

NFT business model was born around the scarcity narrative. Its essence is to sell scarcity at high prices - a mechanical copy of the luxury business model.

I can generally understand the source of this logic. Some scattered market theories in classical economics dominate the way of thinking of NFT market participants.

Although people do not fully agree that the invisible hand is an ideal way to organize economic activities, they do apply it to the NFT market one-sidedly.

We simply know how supply and demand determine prices. Without considering elasticity, excess supply causes prices to fall, and supply shortages cause prices to rise.

NFT issuers want the result of "price increase", so they artificially create a "shortage".

The concept of stealing is the first step, claiming that the uniqueness of non-fungible tokens equals scarcity; not only that, the issuer will divide it among a bunch of NFTs Attribute levels make "scarcity" more "scarce".

But the real market demand for NFT has obviously not been taken into account.

Price is affected by supply but determined by demand. People's demand for NFT is nothing more than consumer demand and investment demand. Consumer demand pays attention to cost performance. NFT obviously cannot support the cost performance of high prices, so only investment demand remains. However, as NFTs that can be continuously produced, they can have very low consumer value, but they will never have the investment value of truly scarce (but never lacking market) antique collections.

In the real art market, the prices of paintings are also distributed in a 28% distribution. The works of a few famous artists are extremely valuable, while the works of most painters cannot be sold at a high price.

The strange thing about the market is that although the illusion of scarcity has been created, the market does not easily buy it on a large scale.

The data results show that 10,000 NFTs in each blue-chip series cannot be fully bought and sold (in fact, the market’s response to the “most promising” 200 transactions Willingness is also quite limited). There is currently no yardstick to measure the market's true demand for NFTs, but the excess supply of NFTs is an obvious fact. Although the supply of a series of NFTs is limited, the total supply of NFT assets in the entire market is in excess.

This just shows that the myth of NFT’s sky-high price and trillions of market capitalization attract more than just “buyers”. Instead, it provides the issuer of NFT.

But judging from the final result that most NFTs are unknown, most issuers obviously do not understand what makes NFTs successful.

Who blew the bubble

Due to limited real demand and liquidity, issuance and sale Or investing in NFT is not a profitable thing, especially when the investment cost is high.

But how was it originally packaged into a trillion-dollar industry full of excess profits?

In 2021, I have sorted out the development history of the NFT market , talked a lot of nonsense about digital scarcity, cultural change and crypto cultural expression. Now it seems that the most important gain from writing that article is to discover that the reason why NFT became a business opportunity began in various crypto art markets. In 2020, it actively promoted sensational high-priced auction events (especially Nifty Gateway and Async Art), which culminated in the promotion of Beeple, Pak and Cryptopunks to Christie's and Sotheby's.

In other words, it is the encrypted art market and traditional auction houses that have progressively increased the popularity and pricing of the NFT market.

• In 2020, in the second month after AsyncArt was launched, it promoted "First Supper" at a price of $344,915. 》auction, after which single transactions of hundreds of thousands of dollars began to appear frequently. Nifty Gateway conducted three curated auctions for Beeple from October to December 2020, with a total transaction price of 258 ETH (worth approximately $180,600 at the time).

• In December 2020, Pak became the first crypto artist to earn more than $1 million.

• In March 2021, Beeple's "Everydays: The First 5,000 Days (2008–21)" sold for a sky-high price of US$69.34 million. In the same month, Sotheby's announced that it would hold an auction for Pak in April as the first step to officially enter the NFT field.

• But the most important event is that in February 2021, CryptoPunks 6965 was traded for 800ETH (equivalent to 1.5 million US dollars). Then on March 11, CryptoPunks #7804 was sold at a high price equivalent to US$7.5 million. So, the following month (April 8), Christie's officially announced that it would be at Christie's 21st Century Evening Sale.

The emergence of PFP and the rapid expansion of NFT asset scale began at this point in time.

• On April 23, 2021, BAYC started minting at a price of 0.08 ETH

• On May 3, 2021, Meebits started casting

• July 1, 2021, Cool Cat

• July 28, 2021, World of Women

• July 28, 2021, World of Women

  p>

• September 9, 2021, CrypToadz

• On October 17, 2021, Doodles will open for casting

• On December 12, 2021, CloneX

• January 12, 2022, Azuki

• March 31, 2022, Beanz

• April 16, 2022, Moonbirds

The above are the top ten blue chip PFP issuance times on the entire network.

The myths written by the crypto art market and traditional auction houses for Cryptopunks have inspired a group of gold diggers with the sharpest sense of smell and the most capital gaming experience in this market— — So BAYC was born.

"Men make history from the conditions inherited from the past" ——— Marx

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Bull markets always come like this - certain elements of random events are deliberately amplified and turned into word-of-mouth narratives and replicable products.

As the ancestors and founders of PFP, Cryptopunks and BAYC basically finalized the issuance framework of all subsequent NFTs - BAYC followed the product structure of Cryptopunks, while others NFT follows BAYC's (ostensibly) business model and promotion scenarios.

The magician’s trick— NFT price manipulation

BAYC’s founding team For the NFT market at that time, he was a master genius in dimensionality reduction.

While most people are still ignorant about NFT, BAYC’s team has planned how to use blindness and people’s cognitive flaws to build BAYC into The next myth.

Going back to what we mentioned before, some and only bookmakers have the motivation to control the NFT sales rate - the control starts from the time of casting.

I crawled 5,000 mint data of BAYC. In this sample, which is close to half of the total, I found: 668 independent addresses participated in minting, One of the addresses minted 16% of BAYC (800), and 46% of BAYC (2311) were concentrated under 20 addresses.

Moreover, more than 87% of BAYC are minted in batches through a single address (the amount minted at one time is more than 4).

When BAYC was first released, the number of casters was far less than 1,400. We reasonably suspect that it completed the casting within the team in a rather low-key manner, plus charging Seigniorage sets the first psychological line for BAYC's price, and the two phases cooperate to start the first step of its high-level control.

The second step is to create price myths.

From a transaction level, the biggest difference between NFT and FT is that the price manipulation of NFT is simpler. NFT does not need to go through the process of price suppression and chip recycling; market makers can accurately avoid tokens that are not in their hands and only allow the machine part in their hands to become high-priced targets.

The nature and transaction method of NFT are destined to make market makers able to decide who to buy and who not to buy.

If we participate in FT or stock securities markets, as long as we choose the right target, we will definitely be able to benefit from the growth (whether it is a capital game or a basic Growth caused by surface improvement), even if there is no influx of public investors in the end, there will still be exit opportunities from the indiscriminate promotion of market makers.

But this is not the case with NFT. For ordinary investors, the only liquidity exit method is other public investors.

The brilliance of the BAYC team lies in creating "price".

As we said before, FT is an indifferent price. At the same time, the value of one FT is equal to the value of another FT, and the price of FT is The real "consensus price" is determined by the real-time game between buyers and sellers, and is a price supported by trading volume. In other words, only "transactions" can change the price.

But this is not the case with NFT. The price of the other 9999 NFT is determined by one sky-high price NFT as the price anchor.

This is why they must create a price myth, and it is precisely because of this that there will be a large number of BAYC price jumps - — the first time they are sold on the market, they will When the transaction price reaches hundreds of ETH, or the first transaction price is only 3 ETH, the second transaction price suddenly increases by 139 times.

Why a price gap can never be a natural price increase?

Because those BAYCs with huge transactions are not listed for sale on the market, and there are almost never auction records, the transaction records are all direct transactions.

Thinking about it from another angle, how can a BAYC that has never experienced market pricing become worth millions of dollars overnight?

Makers and sellers may price it for huge amounts, but buyers have no reason to buy at high prices regardless of their consumption motives or investment motives. The actual situation is also the same. The number of transactions of sky-high BAYC is extremely limited - it's not that no one buys it, but that it is no longer listed on the market after one or two sky-high transactions.

Buyers who "accept" orders at sky-high prices are not real buyers.

But are there real buyers among them?

Exists, but is extremely rare. As mentioned above, the number of real buyers will not exceed the market sales volume.

The few real buyers are those who believe in the "scarcity narrative" and the value-added possibility of NFT. They are the ones who do not see the risk, only see the increase, and People who believe they can win the lottery are the real target group of NFT issuers.

Those who enter the game make investments with the mentality of winning a lottery ticket, but who is the "winning lottery ticket" is determined by the controlling party. Their whole purpose is to raise the price at a high price and then sell it at different prices to ensure that there are people taking the orders at each price level, that is, "just sell it."

The real business model of profitable NFT is to raise the price of NFT and find a small number of buyers who believe in the narrative.

The huge increase in individual BAYC prices, the increase in floor prices, and the control of the listing rate are the most important links.

The price of NFT has nothing to do with scarcity, consensus, and intrinsic value. The "scarcity narrative" packages a bunch of bad assets together and pretends to be gold. , just like the subprime mortgage crisis in the past———— 

This can be done because of the "high floor price" in the NFT trading market. , it only requires the listing price to increase, not the actual value to increase or the last lowest transaction price to increase.

Yes, the floor price of NFT will not be raised until there is a transaction. — — The floor price listed on the NFT trading market (at least Opensea) is the selling price. rather than the last lowest transaction price.

Still taking BAYC as an example, BAYC’s floor price on Opensea on December 1, 2023 is 28.8ETH, which is the current listing price of BAYC#8864 , Opensea shows that its last transaction occurred 6 days ago at a price of 29.4 ETH, but Cryptoslam shows that it was traded at an unnamed exchange 8 hours ago at a price of 16.98 US dollars.

BAYC#9196 was traded on an unnamed exchange at a price of 19.9 ETH 2 hours ago, and BAYC#7410 was traded at 28.1 The price of WETH was traded 1 hour ago. These prices all occurred within 24 hours. They are all lower than the price of 28.8ETH, but Opensea shows that the floor price of BAYC is 28.8ETH.

The seemingly fair and open NFT issuance platform and trading market are part of the price magic.

And they are also the biggest winners of this deception.

Market value maintenance is a flaw

In addition, we can also prove through a phenomenon that NFT is really worth buying Scarcity of home: BAYC prices have not yet returned to the foundry cost line.

When the market is in a long-term depression, the reasonable development of prices is to gradually return to the cost line.

BAYC’s first visible cost line is the minting price, and the second cost line is 90% of BAYC’s initial transactions (ranging from 2ETH-1000ETH). Assuming that the casting and initial sales are all through real buyers, after a long period of market stagnation, there may always be significant differences in selling prices on the market, but the floor price will return to the cost line.

But as far as the current situation is concerned, BAYC's floor price on Opensea on December 1, 2023 is 28.8ETH, which is far from the minting price and the lowest price of the initial sale. Still far from it.

When something goes wrong, there must be a monster.

The possible reason is that there is no existing market. The cost line of real buyers is 0.08ETH (or even lower than 20ETH), that is, there is no market. Real buyers bought BAYC during the casting and first low-price sales, which shows that the floor price is still controlled by market makers.

Or, there are a very small number of low-price buyers who still hope to make big gains with their small purchases, but reluctance to sell does not mean they have no intention to sell. BAYC’s listing rate on Opensea is 2%, and the market-wide listing rate is 3.43%, which means that there are only more than 300 BAYCs circulating in the market. The price distribution is still manipulated by bookmakers, so the real number of BAYC buyers must be lower than the number of listings (343), and almost no buyers' cost line is at the mint price.

At this point, we finally understand what kind of carefully woven dragnet NFT buyers face.

But not everyone is as good at this as the auction house and the BAYC team.

NFT is a market where only platforms that collect tolls have an absolute advantage. For most participants, participating in this market is almost unprofitable, both for buyers and sellers. Issuing NFT is not a profitable business - The issuance of NFT is very simple, but finding a buyer for NFT requires financial resources and courage. It relies on investing huge amounts of resources in the right place. The success of BAYC and other blue chips lies in the fact that the team has strong financial resources and a deeper understanding of how the market operates. They have known how to use blinding methods to lure people into the game from the beginning. However, many people still do not understand the market, so they are still expecting the NFT market to develop in a certain way. way to recreate glory.

Conclusion

I have always wanted to write a real NFT market insight, so I have This article.

The cognitions mentioned in the article are not new. They should have vaguely existed in the minds of most people who have been deeply involved in the NFT market.

However, I think it is still necessary to systematically clarify the market’s wrong assumptions about NFT in the past. We currently cannot prove what NFT is, but we can prove what it is not—  It is not scarce in nature and is even too widespread; its pricing is based on manipulation rather than consensus; NFT is a market with extremely limited liquidity and buyers. Most NFTs have almost no real buyers, and their huge market size comes from Due to the absurd formula; the high returns of NFT business are by no means achievable with the low threshold you see.

Those seemingly professional NFT Marketplaces and data platforms, including top auction houses, are also part of the trick. They are willing to deepen people's misunderstanding of the market. And by disguising some wrong valuation factors as professional indicators, they have the least motivation to debunk this magic.

···

It is also important to recognize the failure of the NFT market - it has not improved the overall economic welfare of the crypto industry as expected, and what is even worse is that it has led to the wrong allocation of resources, which has a negative impact on investment. This is true for entrepreneurs, and it is even more true for entrepreneurial teams.

The current NFT is neither a good investment nor a good business. We should not go further and further in the wrong direction. If the NFT market itself is not liquid, how can we release liquidity through NFTfi? If there is no real buyer for NFT, how can it be used for pawning and liquidation? If the price of NFT is a castle in the air, how can the market recognize loan and pledge based on market price?

Recognize the situation clearly, abandon your illusions, and prepare for struggle, so that the NFT sector can hope to be reshaped. If it is impossible for NFT to be priced based on scarcity and consensus, then we should start to boldly try a new pricing mechanism; if we realize that a single NFT has no trading depth, we will start to consider aggregating scarce and dispersed liquidity when developing NFTfi. , new indicators will be developed to screen NFTs with real buyers and liquidity for lending or pawning, instead of just using "blue chips" to determine life and death.

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As an anti-anxiety fighter, I also hope to take this opportunity to convey the fact that the reality is different from what we see. Sky-high prices and huge profits are often lies packaged to tempt you. If you want to seize an opportunity, it is best to first understand how magicians work. The one who took the coins out of our pockets.

When you fully understand how profits appear and disappear in a fanatical narrative, you may begin to understand why "the one who makes money is always the one who makes money" other people".

Myths do not exist, and magicians are not a simple profession. The perfect scam still relies on abundant capital.

At the same time, NFT price scams are not a special case. Deception is both common and inevitable. If we have some kind of weakness and there is some way for us to be deceived, there will be deceivers secretly waiting for the opportunity to deceive. This means we need to learn to guard against misleading stories and the spotlight that grabs our attention. It also means we will start taking steps to defend against the negative side of the market.

We don’t need an absolutely perfect industry, but we need a relatively healthy ecology. I hope this is a good start.