According to DappRadar’s data, the NFT trading volume so far this month has only reached $333 million, making May likely to become the first month in 2023 where trading volume falls below $1 billion.
Interestingly, compared to April, the average number of unique active wallets interacting with NFTs daily in May has increased by 27%. Although DappRadar attributes this growth to the popularity surrounding the “Milady Maker” NFT series, the authenticity of this trend remains to be tested. However, observing the inverse phenomenon between active wallet numbers and NFT trading volume, we can conclude that the average transaction per wallet has declined. This decrease is fundamentally due to a reduction in active wallets with large transaction volumes.
This trend is likely a consequence of the negative impact of soaring gas fee prices for Memecoin and ETH.
Why? Many people don’t understand why a surge in Meme’s gas fees would lead to a drop in NFT trading volume.
What exactly has Meme experienced from being an air coin to becoming a popular NFT?
Meme was initially created due to a satirical tweet from Consensys developer Jordan Lyall. In the tweet, he created a mockup image via Notion, describing a project idea called “The Degenerator”. This conceptual project’s website allowed people to launch a new DeFi project within minutes via drag and drop. He named this fictitious project: Meme.
However, as you might guess, an anonymous individual actually created the Meme token riding on the heat of this tweet, and it skyrocketed by 700% in a very short time.
Gradually, meme became a novel project for creating tokens, centred on spreading through SNS and communities in accordance with trends or popularity. Due to meme’s inherent influence and provocative nature, it has always been dubbed an “air coin”.
The most representative meme coin is of course Dogecoin, supported by Elon Musk. Dogecoin uses the image of a Shiba Inu, which was very popular online at the time.
What is Meme now?
Today, Meme has become a decentralized platform for farming NFTs.
Now, let’s return to the initial question, why would a surge in memecoin and ETH’s Gas fees lead to a drop in NFT trading volume?
The introduction of the Meme concept undoubtedly gave a boost to the uncertain NFT market. Numerous NFT memes flooded the market, as seen in the trading conditions of MEME NFT on the trading platform OpenSea.
So, in the 2023 NFT race, there’s a joke: today’s NFT market is filled with 3Ms: Money, Media attention, and Memes. The scariest part is, Money, and Media attention are brought by Memes.
When we focus on execution, we can find that using MEME, users finally stake or provide liquidity mining LP to gain pineapple points, which can be used to exchange for NFTs offered on the platform. The NFTs on the platform have different rarity levels, like “Common”, “Rare”, with the rarity level determining how many pineapple points need to be spent.
The extremely rare “Legendary” category can only be obtained by providing liquidity for the MEME/ETH trading pair on UniSwap and staking LP tokens on the MEME platform.
It can be said that the current NFT market is deeply integrated with Meme and ETH. When the gas fees for Memecoin surge, the difficulty of user activity in NFTs significantly increases, thus reducing the amount of NFT exchanges. Moreover, the simultaneous surge in ETH’s gas fees has greatly reduced the quantity of top-tier “Legendary” category NFTs.
Therefore, it’s a natural phenomenon that aligns with the logic of market economy that a surge in gas fees for meme coins and ETH would lead to a sharp drop in NFT trading volume.
However, although the NFT market is still collapsing, I believe the surge in Meme coins can still bring a smile to your face!
