Thousands of NFTs that were previously considered the newest craze in technology and attracted celebrities, artists, and even Melania Trump have now been rated almost useless.
69,795 out of 73,257 NFT collections have a market cap of zero ether, according to a recent research by dappGambl that examined data from NFT Scan and CoinMarketCap, leaving 95% of those who possess NFT collections, or 23 million people, with worthless investments.
To verify ownership and authenticity of a digital resource, such as a picture, video, or text, NFTs, or non-fungible tokens, are a type of crypto asset.
The allegation comes almost two years after the NFT craze swept over artists and celebrities alike, with many flocking to buy NFT collections of the Matrix and Bored Ape Yacht Club avatars.
The cryptocurrency entrepreneur Sina Estavi garnered media attention in March 2021 when he paid $2.9 million for an NFT of the first tweet sent by the former Twitter CEO Jack Dorsey. A limited edition digital artwork of the former first lady’s eyes was part of the Melania’s Vision NFT collection, which she introduced in December 2021.
According to the analysis, the sharply downward market change surrounding these crypto assets highlights the importance of conducting comprehensive due diligence before making any transactions, especially ones that have a large value.
This terrifying fact ought to act as a sobering check on the exuberance that has frequently accompanied the NFT realm. It is simple to miss the fact that the market is rife with traps and potential losses amid tales of digital art pieces fetching millions of dollars and overnight successes, it added.
According to the report, 79% of all NFT collections are still unsold since there is not enough demand in the “highly speculative and volatile market” to offset the supply.
Researchers from dappGambl examined the top 8,850 NFT collections listed by CoinMarketCap to analyse the current situation of the most valuable NFT assets.
They discovered that 18% of these best-selling collections had a floor price of zero, making them essentially worthless. According to the survey, 41% of the top collections had prices between $5 and $100, which would indicate that there isn’t much value associated to these assets. A sharp contrast to the million-dollar deals that dominated a $22 billion market in 2021, less than 1% of the collections were valued at more than $6,000.
The study also looked at the costly environmental impact of the NFT minting procedure. Researchers discovered 195,699 NFT collections with no obvious owners or market share and discovered that the energy necessary to mint the NFTs was equivalent to 27,789,258 kWh, leading in a release of about 16,243 metric tons of CO2.
To put the startling figure into perspective, the analysis indicated that 16,243 metric tons of CO2 is equal to the annual emissions of 2,048 households. It is also the equivalent of 3,531 cars’ annual emissions or the carbon footprint of 4,061 passengers travelling from London to Wellington, New Zealand.
The research also indicated that there may be an even greater number of dead NFTs.
According to the report, MacContract on Ethereum has a floor price of $13,234,204.2 but its all-time sales are only $18. This stark disparity between listed floor prices and actual sales data exposes a significant problem in the NFT market – inflated valuations that don’t reflect genuine buyer interest or real-world transactions.
It becomes evident that a sizeable chunk of the NFT market is characterized by speculative and hopeful pricing tactics that are wildly out of sync with the real trading history of these assets, the company added.
NFTs still have a place in the future, according to dappGambl experts, despite the NFT market’s instability.
According to the paper, NFTs must either be historically significant, like first-edition Pokémon cards, true art, or offer genuine utility in order to endure market downturns and maintain their worth.
