Bitcoin Keeps Going Up, Web3 Keeps Underperforming

Bitcoin is rallying while Web3 is underperforming
As Bitcoin continues to rally, Web3 creators and the nonfungible token (NFT) space are facing challenges. According to new data from eBit Labs and LiveArt, creator royalty losses may have been miscalculated in the past. The estimated $35 million in creator royalty losses may be significantly higher, the data suggests.
NFTs have been instrumental in introducing users to the Web3 space. NFT “degens” have promoted the technology for artists and creators using Web3 tools to enhance their ownership and profit. However, the latest data reveals a high loss of creator royalties. This loss is specifically present over the past year in the NFT space.
The metrics indicate that after October 2022, two leading NFT collections experienced shortfalls. The two collections in question are Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC). Statistics show that these collections experienced royalty shortfalls of approximately $20 million. This information suggests that the previous estimate of $35 million in royalty losses in the whole NFT industry is too low.
Creator royalties have been a hot topic of debate in the NFT industry. One example of how “holy” creator royalties in the NFT space are is the OpenSea scandal last year. Back in 2022, the biggest NFT marketplace in the world decided to halt creator royalties. The marketplace was faced with huge community backlash, forcing them to end the halt. In November 2022, BAYC founders proposed a new model for NFT creator royalties. This new model would keep NFT transfers between wallets free, while the creators would still profit.

The Reality Of NFT Royalties: Boris Pevzner

Boris Pevzner, the co-founder and CEO of LiveArt, commented on the situation as well. He focused on the gap between the Web3 ecosystem’s promises and the reality for creators. Pevzner noted that the shortfall in royalties indicates that the current system is effective. He also expressed concerns that if NFT marketplace wars deter artists from participating in the industry, the space could lose its creative spirit. According to him, the current state of the NFT industry resembles the stock market.

The entrance of a new marketplace has intensified competition. New marketplaces are targeting OpenSea’s market share as the platform is the biggest one out there. Meanwhile, the market capitalization of the NFT industry stands at approximately 3.7 million Ethereum or around $6.8 billion. The sector’s 7-day trading volume is approx. 80,000 Ethereum, translating to $144 million, according to eBit Labs. This does not include all NFT collections in existence, however, but it can paint an approx. image of how big the sector currently is. While the NFT space grapples with royalty issues, Bitcoin has been experiencing a bullish trend in recent weeks. The current rally is attracting attention from investors. This comes after the banking sector crisis, with investors seeing Bitcoin as a safe haven for recession. The Bitcoin rally and the condition the NFT sector finds itself right now further highlight the disparity between cryptos, Web3, and NFTs.

Ultimately, while Bitcoin continues to perform well, Web3 creators and the NFT industry do not. The main issues right now seem to be creator royalty losses. Experts believe that these issues must be addressed so that the industry’s creative spirit continues.