In the first half of 2022, market participants spent around $2.7 billion on minting NFTs. So what exactly do NFT projects do with the money they raise?
- Between January 1 and June 30, 2022, market participants spent 963,227 ETH (~$2.7 billion) on the Ethereum blockchain for the minting of NFTs.
- About half (50.7%) of the ETH raised by NFT project parties is kept in their own hands, while 45.7% of the ETH is circulated in non-physical wallets.
- The amount of ETH raised by minting NFTs circulating to non-physical wallets has dropped from the previously reported 52.3% (11 months ago) to the current 45.7%. The top non-physical wallets include ETH millionaires, wallets that have used EIP1559, NFT collectors, heavy DEX traders, and some private wallets.
- Cumulatively, the top five NFT projects that raised ETH through minting raised a total of 81,364 ETH; an estimated 8.4% of the total ETH raised by all projects during the observation period.
Nansen previously published a research article that traced the flow of ether (ETH) raised by NFT collectibles through primary sales, the minting of NFTs. For nearly a year, we’ve revisited this research topic to see if the previously identified trends still hold. Specifically, what do NFT collectibles do with the ETH they raise?
An investigation into NFT minting on Ethereum
Mint volume of NFTs on Ethereum (January 1st to June 30th, 2022)
The current research analyzes the flow of ETH acquired by project parties through the sale of major NFT collectibles between January 1st and June 30th, 2022. During this period, market participants spent 963,227 ETH (~$2.7 billion) on NFT minting. A total of 1,088,888 wallets participated in the minting activity. However, if the free minting activity is included, the number of wallets involved in minting NFTs has grown to over 1.5 million unique wallets.
On a weekly basis, minting between January 1 and June 30, 2022 accounted for approximately 13.7% of total NFT activity. Compared to other blockchains where Nansen provides NFT activity coverage, the proportion of NFT minting on Ethereum is small. Notably, Binance Smart Chain reported the highest proportion of minted NFT-related volume, with an average weekly minting volume of 80.2% on the blockchain. Between January 1st and June 30th, 2022, the total minted volume of NFTs on Binance Smart Chain was approximately $107 million.
NFT minting volume on different blockchains (January 1st to June 30th, 2022)
NFT activity on Arbitrum (January 1st to May 31st, 2022)
NFT activity on Binance Smart Chain (January 1 to May 31, 2022)
NFT activity on Avalanche (January 1st to May 31st, 2022)
Proportion of minting volume on different blockchains (January 1 to June 30, 2022)
Current scope of research
During the research period, a total of 28,986 NFT collectibles were deployed on Ethereum. In total, these projects raised 963,227 ETH. Interestingly, no more than half of the items in these NFT collectibles are free NFT minting items (51.6%, n=14961). For NFT projects that successfully raised ETH through minting, almost two-thirds (65.8%, n=9229) of these projects raised less than 5 ETH. The median project raised was 1.43 ETH and the average was 59.4 ETH. A total of one hundred and forty NFT collectible projects have raised over 1000 ETH. As such, the amount raised through minting still varies widely between different NFT collectibles.
NFT collectibles by amount of ETH raised (for contracts deployed between January 1st and June 30th, 2022)
As the number of unique wallets participating in NFT minting activity grew, we also witnessed a slight increase in the average NFT minting volume per wallet during this period, reaching 3.65, up from the previously reported average of 3.16.
NFT minting participation by wallet address (excluding free minting)
For contracts deployed between January 1 and June 30, 2022
Similar to our previous findings, most wallet addresses continued to mint a unique NFT during the observation period (51.7%, n=563348).
So, where will the ETH raised during the primary sale of NFT collectibles go? More specifically, what exactly does the project do with the funds?
In this part of the analysis, we followed the research parameters set by the original study — analyzing projects that generated more than 20 ETH in primary sales between January 1st and June 30th, 2022. ETH is transferred out of the project’s treasury, usually as a contract call on Etherscan as an internal transaction record. We use Nansen’s wallet address tag database to analyze the flow of the above ETH. Here, Nansen defines a non-physical wallet as an address whose owner or known entity cannot be determined. In some cases, such an address may still have a name (eg, nansen.eth). In short, non-physical wallets are usually private wallets and untagged wallets.
Our previous research found that 52.3% of the ETH raised from primary sales went to non-physical wallets. Additionally, 0.2% of ETH raised was transferred to decentralized exchanges, 3.6% of ETH raised by NFT projects was deposited into centralized exchanges, and 17.7% of ETH raised was returned to the broader market NFT project.
Outflow distribution of raised ETH
Receive the outflow of the primary sales address of the NFT project
And in the newer study, previous research observations were challenged. Most of the ETH raised during the primary sale now stays in the NFT project. Half (50.7%) of the ETH raised by NFT projects was kept. Only 0.2% of ETH is sent to centralized exchanges or centralized exchanges. Finally, around 3.5% of outflows were classified as “other” wallets, including service providers, angel investors or charities.
The table below breaks down the top 20 non-physical wallets that received ETH from January 1 to June 30, 2022. The top non-physical wallets included ETH millionaires, wallets that used EIP1559, NFT collectors, heavy-duty decentralized exchanges, and some private wallets. As shown, Vee Friends Series 2 accounted for 5 of the top 20 transfers to non-physical wallets; it mostly made transfers to wallets identified as highly active wallets.
Top 20 non-physical wallets that received ETH (January 1 and June 30, 2022)
We acknowledge that this study only looked at direct transfers from NFT project addresses to instant transaction addresses. In other words, we still did not capture transactions from these wallet addresses to other potential subsequent counterparties, which further limited our findings. Therefore, we reviewed the top 5 NFT collectibles ranked by the amount of ETH raised to track the flow of ETH raised. Using Nansen’s Wallet Analyzer and Counterparty features, we provide an in-depth analysis of each NFT series and the flow of ETH raised through its primary sale.
On-chain data shows that Pixelmon – Generation 1, through its main sale, became the #1 NFT series in terms of the amount of ETH raised. The table below lists the top five NFT series. In total, they raised 81,364 ETH, an estimated 8.4% of the total ETH raised by all projects during the observation period.
Top 5 NFT projects by amount of ETH raised
The ETH raised by Pixelmon-Generation through the primary sale was transferred to another wallet identified as Nansen’s “Gnosis Security Agent” (private) wallet. (0xf6 bd9 fc094 f7 ab74 a846 e5 d82 a822540 ee6 c6971) on Nansen, which may be the implementation of the project team’s multi-signature wallet. While investigating, we found relatively sporadic activity on this wallet. An analysis of the wallet’s counterparties revealed that funds raised were transferred out of this wallet in the form of USDC (57%) or WETH (43%).
For Moonbirds, the ETH the project received through the primary sale was transferred to the Moonbirds public minting beneficiary address (0x000 ddf0 af676 ec8 e21 d77 c5 af8166 a95531 a1668). From the beneficiary wallet, another 19.7k ETH was transferred to several wallets pegged to Gemini.
VeeFriends Series 2
Activity on the VeeFriends Series 2 wallet dropped after minting. Funds raised were primarily transferred to 30 wallet addresses associated with EIP 1559 users and high-activity users.
World of Woman Galaxy（WoWG）
Most of the ETH raised from WoWG was transferred to Nansen’s wallet labeled ‘OpenSea Royal Recipient’ (0x646 b9 ed09 b130899 be4 c4 bec114 a1 aa94618 be09) – an address that likely belongs to WoW’s team. Most of the ETH in this wallet was then transferred to the wallet address associated with the EIP 1559 user of this new wallet.
Most of the funds collected from the Genesis Box’s main sale were re-deposited directly into a wallet identified as Nansen’s Gnosis Safe Proxy wallet (0xd1 f124 cc900624 e1 ff2 d923180 b3924147364380). Most of the ETH funds deposited into this wallet were redistributed to a private wallet (0 xbe560 d510 e4223 c2 e68 f4 ddc956 da58 eb01132 a9). The funds were transferred from this wallet to Blockfolio’s wallet (now owned by FTX).
In our first attempt to track ETH raised through primary sales, we found that most of the funds raised were moved to non-physical wallets. In our updated study, this is no longer the case, with half of the ETH raised by the NFT project side being kept. However, 45.7% of ETH raised was moved to non-physical wallets. Nansen has continuously improved our labels and metrics since our initial research. This increase in wallet tags may contribute to the statistical results of this study, where more physical wallets were captured. Improvements to our labels also mean that on-chain investigations and due diligence are easier to conduct. The original study was conducted with the constraints of filtering out ongoing wash trades, and the current study was also conducted with the integration of Nansen’s wash trade filter, which helps to improve the quality of the investigation. Reflecting on the on-chain results, we stand by our conclusion that the minting situation in the NFT market remains in a very healthy state as the average minting volume per unique wallet address increases. Additionally, the on-chain evidence that NFT collectibles reinvest major sales revenue into NFTs suggests that there are conscientious builders and creators in this market.
The authors of this content and members of Nansen may be involved in or invest in some of the protocols or tokens mentioned in this article. The above statement is a disclosure of a potential conflict of interest and is not a recommendation to buy or invest in any token or participate in any protocol. Nansen does not recommend any specific course of action related to any token or protocol. The content here is purely educational and informative and should not be relied upon as financial, investment, legal, tax or any other professional or other advice. Nothing contained and information herein is intended to induce or attempt to induce any reader or other person to buy, sell or hold any token or to enter into any agreement, or to enter into or offer to enter into any agreement for the purpose of buying or selling any token or entering into any agreement protocol. Statements here (including statements of opinion, if any) are entirely general and do not take into account the individual needs and unique circumstances of any reader or any other person. Readers are strongly advised to exercise caution and consider their own personal needs and circumstances before making a decision to buy or sell any token or participate in any protocol. Nansen may change the observations and opinions expressed here at any time without notice. Nansen shall not be liable for any loss or liability arising out of the use of or reliance on any of these content.
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