“Real wealth is created during bear markets,” wrote a Twitter anon. Before we get to the bull, let’s address the bear in the room:
Without preparation, bear markets can be especially cruel amidst SOL’s harsh dips. For traders, this means negative wealth effects, reluctant liquidations and portfolios in red. Did you buy the dip? It’s a no-brainer that you’ll reap the ATH benefits of the bull market if you survived the bear market. Therefore, how you position yourself is crucial. To start, ask yourself:
Remember, most Solana NFT projects are not a year’s old and given how saturated and competitive the landscape is, not all will survive.
The past few weeks are indicative that we are at the start of a Solana NFT bull run. On an ecosystem level, Solana’s market cap (consisting of NFTs and non-NFT projects) went from ~$26B in the beginning of March to nearly ~$42B in the past few days, making a strong case for the bull market. Solana’s NFT total market cap shot up to $1.8B. At the top of this is Solana Monkey Business (SMB). Across different chains, SMB ranked #23 in NFT collections by volume over 30 days. Axie Infinity took the first place, followed by CryptoPunks and Bored Ape Yacht Club. In the grand scheme of NFTs, the mass majority remains heavily dominated by projects on Ethereum but the proliferation of Solana NFTs is coming fast. Take DeGods for example, who broke $2M in volume yesterday. In the last 7 days, their sales volume went up by 50% with 276 unique wallets. And for the past three weeks, DeGods has been the #1 NFT collection by volume on Magic Eden.
After the first Solana NFT run-up which saw an explosion of collections, the ecosystem witnessed a contraction in collection sizes. 10,000 supply collections were cut to meet dwindling demand. Some were further halved as collections struggled to mint out as a result of a lack of liquidity and minting fatigue. One indicator that the bull run has started is the return of larger-sized collections. Current rising stars Cets on Creck minted on March 10 and recently, TombStoned High Society minted, both of which have a close-to-7K total supply. Collections with large supply like DeGods and the Degeniverse have seen strong demand which shows a restoration of people’s confidence.
@SolanaLegend, co-founder of MonkeDAO, shared that larger-sized collections have a key role to play. Firstly, they maximize community and network effects. If a large supply of NFTs are optimally distributed, there would be a unique holder for each NFT in the collection. 10K NFTs would equate to 10K people who believe in the project. Each acting as an ambassador and advocating to their friends at college and their family at home. Secondly, larger-sized collections have the capacity to expand and introduce more accessible projects, giving more people opportunities to be part of a project they’d otherwise be priced out of. Ownership empowers and such people may “upgrade” to the next tier in that NFT universe.
We’re also moving away from the “utility” era marked by tokenomics. This meta began when Boryoku Dragonz minted on November 3. Some view Boryoku as the CyberKongz of Solana. CyberKongz is credited for pioneering the utility token movement with its 10 $BANANA daily yield, which could be burned to rename jpegs, biographies and breed baby CyberKongz. To eliminate the securities issues, CyberKongz devs emphasized that $BANANA is a utility token and not an investment. Where a yield is directly associated with passive income and expectations of profit, it falls near the sticky area of securities law. Boryoku Dragonz’s utility token, $BOKU, is best viewed as a community utility token. A utility token derives its value from how well it is implemented into a project’s ecosystem. DeGod’s $DUST does this well with its feedback loop which requires $DUST to get a DeadGod. And, the only way to get $DUST is through their staking and burning mechanism.
Most projects have “staking” on their roadmap. This foray into tokenomics has encouraged innovation. By implementing DeFi into NFTs so seamlessly, utility tokens further solidify the Solana blockchain amongst other chains. Whether staking is good or bad for projects remains to be seen but if collections are repurposing another project’s approach, it’s unimpressive. Those that follow the trend but are able to differentiate themselves remain competitive. As people exit their positions to free up liquidity, they’d likely rotate back into blue-chip NFTs thus causing it to pump. And with more eyes on Solana NFTs than ever, newer entrants need a PFP to call theirs.
You can’t say NFT Bull Market without numbers…
We’re excited to see how Q2 progresses. May we all suffer from success.
PSA: Not financial advice, always DYOR.
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