NFT momentum shifts to brands

“Artists are struggling to make ends meet and are looking for other opportunities,” said Prasad Bhat, a Bengaluru-based artist who has listed his works as NFT on platforms like WazirX and OpenSea.

NFTs are built on blockchain technology and act as a digital equivalent of property deeds. Amid last year’s crypto boom, artists and creators saw platforms like OpenSea as a way to circumvent traditional means of showcasing their art. However, with the crypto market turning bearish, NFT markets have also taken a hit.

Both volumes, as well as the value of NFT transactions, fell after the crypto market crash in May and June. According to crypto research firm Chainalysis, NFT sales in June totaled just over $1 billion, the worst performance in 12 months.

Dhruv Saxena, chief strategy officer at Fantico, an NFT and gaming company, said the hype that drove the initial phase of NFTs was mostly funded by excess capital. “People who traded stocks and cryptos showed an initial interest in NFTs. After stocks started to slide and crypto wallets started falling, liquidity dwindled. Suddenly, NFT artists find that people aren’t buying anymore,” Saxena said.

Meanwhile, brands see NFTs as an opportunity to keep customers engaged. More brands have launched NFT collections in recent months, stakeholders said.

For example, Flipkart launched its first NFT platform which dropped NFTs by British consumer electronics brand Nothing earlier in July. The company wanted to generate advance reservations for its Nothing Phone 1 smartphone through these NFTs. They gave customers early access to future company events, products and giveaways.

Textile manufacturer Mafatlal Industries has also announced plans to open a metaverse gallery and NFT store on Comearth, a metaverse e-commerce platform launched by Gurugram-based NFTically. Other names include ticketing platform MakeMyTrip and automaker MG, which launched NFTs earlier this year and last year, respectively, using KoineArth’s ngageN platform.

Praphul Chandra, Founder and CEO of KoineArth, said more and more brands are seeing NFTs as an engagement tool.

Toshendra Sharma, CEO and Founder of NFTICALLY, said the decline in value and volume of NFTs has not affected the company’s interest. On the contrary, it generated more interest. NFTICALLY is currently working with “multiple brands” and expects more brands to launch NFTs in the coming months.

“The best way to fight the downturn is to sell, engage and maintain healthy metrics,” Sharma said.

Unlike crypto exchanges and decentralized finance (DeFi) platforms, the bear market may actually turn out to be good news for NFT businesses. Experts said the entry of more brands will bring maturity and credibility to the industry and drive growth. Sharma, which offers a software-as-a-service (SaaS) product for brands to build their own NFT platforms, said it pays subscription fees for using NFTICALLY.

“When the big brands come in, the smaller brands follow and bring volume with them, which means more growth,” added Sharma. According to a May report from HubSpot, 39% of marketers who have used NFT for brand engagement found it to have the highest return on investment of any tool they’ve used.

Chandra pointed out that the next phase, which is rapidly maturing, is where true engagement will be generated by delivering premium experiences to NFT holders.

Pedro Herrera, data analyst at DappRadar, warned that creators who want to sell an NFT at inflated prices are unlikely to see much traction anymore. “The outlook is good for people who want to create smart, programmable assets,” he added.

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