Even before the FTX collapse, nonfungible token (NFT) collections have already felt the impact of the crypto winter with trading volumes going down by 98%. With the FTX debacle, the once burgeoning space seems to have been hit with the final nail to its coffin. However, executives within the industry are optimistic about the space’s recovery.
With the enormous amount of user funds stuck in the FTX exchange amid its liquidity crisis, users have tried roundabout ways to withdraw their money. One of the alleged methods for withdrawing balances is buying NFTs based in the Bahamas. Many community members criticized the method as it bypasses bankruptcy laws, even mocking NFT utility in the process, painting a negative picture of NFTs.
However, Oscar Franklin Tan, an executive at NFT platform Enjin, believes that this is not a fair summary. Speaking to Cointelegraph, Tan said that while NFTs were used, other items could have also been used. “It had nothing to do with NFT technology and more to do with that loophole for Bahamas users,” he noted.
The executive is also positive about the survival of the NFT space despite the FTX effects and the bear market. Tan highlighted that the space should refocus on how NFTs demonstrate the acceptance of digital ownership, new models for content creators and funding content creation. He explained that:
“Admittedly, there was a lot of hype and excessive exuberance for some models, but this is true with all new technology. The NFT space is sure to stabilize and consolidate around the strongest communities, then we will see a second generation of smarter, more sustainable NFT models.”
Tan highlighted that to recover, NFT projects should focus more on utility and building their communities. Avoiding short-term speculation and unrealistic roadmaps is a must. Rather, they should have long-term sustainable value.
Various players within the NFT space also echoed the sentiment. Jamie Thomson, the CEO of NFT game studio Vulcan Forged, commented that NFTs with utility in proven markets are bound to survive. Thomson told Cointelegraph that the same cannot be said for NFTs based on speculation and bragging rights. However, the executive said that these types of NFTs will “suffer more due to more frugal hands” as users wait for a better market. Thomson further said:
“Less speculation, more mandatory utility. As with tokens, if the NFT is essential for a project's functionality or user's presence, then there is less concern for price furcations. In essence, a gaming item, access to certain features, access to added value.”
Meanwhile, NFT artist Johnathan Schultz believes that the era of NFTs without utility is dwindling. “That is why we are seeing more projects with a lot more use cases and utility,” he said. Schultz also told Cointelegraph that for the space to survive, it must outgrow what he describes as the “memeification” of things. This means building projects that matter and help the entire space.
With FTX’s NFT marketplace caught in the middle of the company’s implosion, Nick Rose Ntertsas, the founder of the NFT platform Ethernity, offered suggestions on how it can be done better. Speaking to Cointelegraph, Ntertsas said that FTX’s centralized exchange-based model for its NFT platform was closed. He explained:
“That model should have been democratized and transparent. NFTs should eventually go cross-chain and be interoperable, not siloed by one gatekeeper, something we’re working on and passionate about.”
Contrary to the other sentiments, Ntertsas believes that there’s no one thing that NFT projects should focus on as different projects will have different objectives. However, the executive wants to see more projects that challenge the space to “rethink what is possible with NFTs.”