Navigating NFTs: 2024 Trends And Opportunities For Growth
NFTs have experienced a “career progression” like no other. Starting from Rock JPEGs and pixelated delinquents, to fueling the next iteration of asset ownership and AAA games - with brands like Azuki and Pudgy Penguins even hitting entertainment and retail scenes - It’s been a whirlwind to say the least.
The market has experienced its fair share of ups and downs since its inception and has fundamentally altered the landscape of digital ownership and art. As we enter 2024, the NFT space is not just about digital art anymore; it's an evolving ecosystem ripe with opportunities and trends reshaping its future.
The fast-paced nature of the industry brings many opportunities for developers to make their mark, here's a few we think are worth looking out for.
More chains, more fragmentation, more opportunities
ZkSync, Starknet, Sui, Sei, Aptos, Aleph Zero. These are a few of the many chains that have entered the market in some capacity over the last 2 years.
As more networks arise to fill different needs, the fragmentation of liquidity, communities, and data - which comes with an inevitable lack of standardisation - poses a huge challenge for many developing cross and multi-chain solutions.
Before 2021, only one chain could boast more than $10M in total NFT transaction volume, while now there are more than 50. The rapid expansion of the wider ecosystem may seem overwhelming for builders, as it just makes the roadmap turn into an atlas, but there is real opportunity for those who look hard enough.
The first comes in the form of solving the data problem. At SimpleHash, our API currently supports over 50 chains, giving projects and businesses unparalleled access to real-time data. As data is the core of all infrastructure in this space, providing businesses with standardized, in-depth insights is a key opportunity.
Another opportunity that lies on new blockchains is the good ‘ol first mover advantage. As bigger organizations take more time to move, newer teams can outpace and take market share on new networks, especially those out of the EVM ecosystem such as Solana. The power of the first mover in this space is incalculable, as we have seen with OpenSea, PancakeSwap, and other marketplaces and DeFi protocols. Finding a network that needs a home for its NFT ecosystem is an opportunity worth taking.
Adding another piece to that puzzle, creating engaging and differentiated experiences for users, using gamification and questification to drive engagement and loyalty, and tapping into new markets is an opportunity worth exploring when it comes to building marketplaces. In the age of attention, self-sustaining engagement mechanisms are almost table stakes. There will be new chains and marketplaces innovating at a rapid pace, and you need to be able to keep up.
For agile developers looking to take advantage of marketplace shifts, the 2 opportunities outlined above are interesting spaces to look at.
Looking Beyond Ethereum
Ethereum's pioneering role in the NFT space is undeniable. It laid the foundational framework for the NFT concept and offered a platform where digital assets could be uniquely owned, traded, and authenticated. However, with the burgeoning demand and growth in the NFT market, the Ethereum blockchain has encountered significant challenges around scalability, which have prompted users and developers to look beyond Ethereum's ecosystem. Currently, Bitcoin and Solana are in contention for driving NFT volumes and competing with Ethereum.
One chain that has caught the attention of many is Frame. Arriving on the scene in September 2023, Frame is a Layer 2, created with the intention of an being an NFT-centric network, by deeply enshrining certain features into its architecture - such as royalties.
Alongside this, they are enshrining a Creator Fund. Network transaction fees contribute to the Creator Fund, which is set aside to reward creators and developers on the network.
Founded by cygaar, 0xBeans.eth, and stinkypablo.eth - NFT veterans - and given the social nod by other big players in the space, Frame is a network worth keeping on the radar.
In addition to Layer 2 solutions, the NFT landscape is witnessing a surge in the adoption of non-Ethereum Virtual Machine (non-EVM) compatible chains like Solana and Bitcoin, each offering unique features to the NFT space. Solana, known for its high-speed and low-cost transactions, has introduced the concept of cNFTs (compressed NFTs). cNFTs store data off-chain, making them more affordable to produce in bulk. Meanwhile, Bitcoin, the Dinocoin that started it all, is making waves with its introduction of ordinals and the BRC-20 standard.
With developments like Firedancer aiming to scale Solana beyond its already boast-worthy numbers, the NFT space in this ecosystem, in particular, seems particularly fruitful going forward.
The real question would be, how does one shift a whole community from one network to the other? Creating infrastructure is one thing. Unearthing a community is another.
The Rise of Alt Token Standards
ERC-721 has been the longstanding hallmark of what makes an NFT just that, with alternative ERC standards becoming more popular, we are seeing a shift in how NFTs are viewed. Stemming from a complete lack of real utility, NFTs were seen as nothing more than sets of digital art that acted like a point of congregation - inducing a seemingly bad rap from outsiders. The rising popularity of alternative ERC standards breeds a wider array of real utility for NFTs and presents a golden opportunity for developers to innovate and build beyond the space’s initial boundaries.
The advent of ERC-1155 has marked a significant leap forward. This multi-token standard enables the creation and management of multiple token types within a single contract. It's a versatile approach that enhances efficiency and opens up new possibilities for token utilization in various digital ecosystems, particularly in areas like gaming and digital collectibles.
Following on from the multi-token standard, arguably the most interesting ERC token standard is 6551. ERC-6551 essentially allows NFTs to hold and transfer other tokens, with delegation from the owner. To create one, owners just have to deploy a token-bound account through a permissionless registry.
But what use does this have?
Think of it as a tokenized portfolio of tokenized assets, and implemented into many use cases, like loyalty cards holding rewards, in-game characters and their items and a wallet that collects staking rewards from tokens locked in DeFi protocols.
For developers, these emerging standards are like an open canvas – offering a chance to build innovative projects and infrastructure. Whether it's creating new platforms, developing unique digital assets, or finding novel uses for NFTs in various sectors, the possibilities are vast. These standards are not just technical upgrades but enablers of real-world utility and market growth.
Ethereum isn’t the only network that has had evolution in their token standard. The Solana ecosystem is seeing the introduction of a major new token standard - Token-2022. (now more commonly known as Token Extensions). SPL tokens allow developers to add specific functions, and Token-2022 / Extensions has built on top of this.
Introducing and adopting these alternative token standards signify a maturation in the NFT space. They are crucial in moving NFTs from being predominantly collectible items to assets with multifaceted utility and significance. For developers, investors, and enthusiasts, this shift heralds an era of opportunities, creativity, and growth. As the market continues to evolve, these standards will play a central role in shaping the future of NFTs and blockchain technology.
The Need for Seamless Data Accessibility
In a market that shifts and splits so rapidly, the need for real-time, comprehensive NFT data is not a luxury, it's a necessity - that's where we step in.
Our API is designed to provide developers with easy and efficient access to NFT data. By integrating SimpleHash, developers will gain access to real-time NFT metadata, media, sales, floor prices, and listings, enabling them to streamline their workflow, keep on top of the market, and make decisions without hesitation.
Developers looking to create market-leading applications and experiences tailored to a specific niche, now have access to the necessary data tools to take flight in this tumultuous market. And we’ve seen the positive impact of that time and again, over the past 2 years.
A Bright Future For Non-Fungible Tokens
As we navigate through 2024, the NFT landscape is more dynamic and promising than ever. From the evolving marketplace ecosystems to the adoption of new blockchain technologies and standards, the NFT domain is ripe for exploration, innovation, and growth. Whether you're a developer, artist, investor, or enthusiast, the opportunities within the NFT space are vast and waiting to be seized.
The introduction and adoption of alternative token standards also signify a maturation in the NFT space. They are crucial in moving NFTs from being predominantly collectible items to assets with multifaceted utility and significance. For developers, investors, and enthusiasts, this shift heralds an era of opportunities, creativity, and growth. As the market continues to evolve, these standards will play a central role in shaping the future of NFTs and blockchain technology.
