In 2025, NFTs will become the main driver of Web3 mass adoption, but successful projects will be very different from what happened before. Let's figure out what will change and why.
We spent most of 2023 seeing NFTs go extinct. The floor (lower price limit) of top collections fell by an average of 25%:
- BAYC - 27%
- DeGods - 55%
- Azuki - 36%
Jack Dorsey's first tweet as an NFT has lost almost 100% of its value. The price of an NFT purchased by the singer Justin Bieber from the BAYC collection has dropped tenfold. There were fewer than 12 thousand active traders left on the market, and volumes and royalties showed 2-year lows. In 2022, collections earned a combined 28,000 ETH (±$76 million) per week, with an overall peak income of 2,000 ETH (±$3.8 million) in June.
To be fair, I note that the decrease in royalty income is associated not only with the decline of the NFT market, but also with the arrival of Blur with its optional commissions.
But at the end of 2023, we saw a “revival” of interest in the NFT market size. Pudgy Penguins sells products through major retailers and online retailers. On top of that, we even have digital real estate.
NFT gaming expansion projects conduct successful sales and show impressive trading volumes.
As a result, in 2025, the creation of brands, including game projects, based on NFT utility will become a significant driver of Web3 adoption. The gaming industry has been experimenting with blockchain-based tech for years.
The next wave of successful non-fungible token products will likely be very different from what we've seen before, because this is now a competitive landscape. Rather than focusing on a limited number of high-value assets, many of these products will be made in bigger quantities and sold at lower prices, targeting a broader consumer market. The entire year of 2023 was marked by the market trends of freemints (when NFTs could be obtained for free).
Increasing supply chain management collections and preserving the meta for free distribution can kill trading, but will give the desired mass NFT adoption. Most will buy from the NFT market for actual use. Moreover, the mass market may not even realize that they are using a non-fungible token.
We've already seen experiments with bulk digital artwork NFTs from companies like Nike, Reddit, Starbucks and even Donald Trump - which can be seen as primary research in key developments in overall adoption.
In addition, brands such as Pudgy Penguins, Cool Cats and Kitaro Studios have released phygital items - which is a term for when a physical product is linked to an NFT via a QR code, which has become a rising demand. This is also because they believe that the compound annual growth rate will be very high for the fungible token NFT market.
In parallel, major firms like Ticketmaster are testing out digital art NFTs for event tickets, memberships, and so on. Their product also allows the organizers to issue NFTs tied to tickets on the Flow blockchain on the global NFT market.
The Live Nation subsidiary said event organizers could make these non-fungible tokens available before, during or after the event and even provide special experiences such as loyalty rewards or celebrity meet-and-greets - or simply offer memorabilia in a non-fungible token format.
Thus, 70,000 tickets were issued for Super Bowl LVI. Following this debut, the company says it has already created more than 5 million non-fungible tokens through its partners.
Among music festivals looking to integrate blockchain technology, Coachella is the most notable. With the release of Coachella collectible NFTs, AEG Worldwide has introduced a new example of using NFTs as memorabilia and lifetime passes.
While the Coachella collection (which was born out of a partnership with FTX) died for obvious reasons, the project opened the door to other market segment initiatives such as Afterparty from Las Vegas and the Swedish music festival Way Out West.
With the release of Afterparty, Soin Holdings Inc. took on a project much like Coachella. Aiming to shake up the standard music festival model, Soin offered 1,500 NFTs that served as a pass to the two-day Afterparty festival.
On the other hand, Way Out West, backed by crowdfunding platform Corite, ran a similar campaign but on a smaller scale. Also drawing parallels to Coachella, Way Out auctioned off three lifetime tickets as non-fungible tokens. Corite also offered attendees the opportunity to monetize their festival moments and memorabilia as part of the NFT market, but it lacked any festival pass mechanics.
Next up was Loudpunx, a massive PFP project launched by Rolling Loud, the world's largest hip-hop festival. Like previous ticketing projects, Loudpunx provides a unique digital asset set of permanent goodies for owners.
Such products enable consumers who are new to easily and seamlessly begin using the new NFT technology. Most often, phygital items are sold at prices that correspond to the regular price of physical assets. This makes them valuable assets.
Whereas in the early stages of the NFT market, people had to use complex cryptocurrency wallets for self-custody, these non-fungible tokens now often have a platform design that submerges blockchain technology into a system of partially or fully custodial wallets.
This moves away from the original idea of decentralized finance and also represents ownership of digital assets. However, this doesn’t prevent consumers integrating the tokens into their digital identity on social networks and other platforms. This, in turn, doesn't stop them from participating in the broader non-fungible token ecosystem if they want to - which is more like a revenue model.
Meanwhile, if digital assets are more accessible – both technologically and in terms of price – this expands the potential NFT market trends and lays a foundation on which brands can build.
For example, Starbucks Odyssey participants created entire third-party sites dedicated to the program, and organized informal events without Starbucks' direct involvement.
This has extended digitally, with program participants creating their own group chats with friends on the public Starbucks server, meaning that community members who wouldn't know each other now stay in touch on a daily basis in both the digital and physical worlds, and the internet enabled virtual world as well - that is one of the key factors of NFT utility.
For brands like Starbucks or Nike to get the most out of their NFT market products, they must eventually be able to provide them to their entire global customer base. Conversely, whenever a customer wants to be part of a brand's digital ecosystem, they should be able to do so, with a non-fungible token NFT as an example.
This means that NFT marketplaces products we're seeing, even if they are smaller and “experimental”, are the inevitable future with more increasing popularity incoming in the following years. When creators started using open edition* NFTs successfully in early 2023, it proved how well this approach actually works. By the end of the year, businesses had clearly taken notice and embraced the model.
*This is a type of NFT sale where users can mint an infinite number of tokens. Restrictions can be set, for example, by time.
Therefore, I think that in 2025, brands will begin to actively use such cheap and massive NFT utility practices, whether it be in augmented reality or in the real world. And they will likely attract many more consumers to the NFT market space.
