GM frens,

In today’s edition of the Ground Floor we will be breaking down the case of digital artists leading the next bull market…

The Next Bull Market

In 2022, total NFT volume exceeded $24.7 billion

During this period of time, copious amounts of capital flowed into projects seeking to emulate the success of Bored Ape Yacht Club.

At peak prices ~ people were paying upwards of $420,000 for a BAYC, an asset people originally purchased for $80 such that there was no shortage of people interested in minting assets that aimed to replicate this success story.

Innovation

With the benefit of hindsight, the collective allocation of capital by the NFT community during the 2022 “bull market” was wasteful, to say the least.

Each day, a new project would raise 6 figures, with many projects raising millions ~ with 99% of these projects providing road maps that promised the world.

✔️ Whiskers raised over $2,700,000

✔️ Starcatchers raised over $3,200,000

✔️ World of Women Galaxy raised $34,000,00

For many months, the lack of innovation from projects went unnoticed, however, as each day passed, it became ever more clear to the people that participated in minting these assets that they would not be receiving anywhere close to the value BAYC holders had received, commonly receiving low quality merch instead.

The Real Innovation

During this same period of time, a number of digital artists had success selling out projects, with Beeple famously selling his everyday for $6.6 million.

Additionally, a number of generative artwork collections such as Squiggles, Fidenzas, and Autoglyphs reached all time high floor prices.

Nonetheless, these collections, and digital artists as a category of the participants creating NFTs during this time received a small percentage of the capital invested into NFTs in 2022.

In May 2023, however, it’s becoming clearer by the day that times are changing as digital artists continue to play an ever more important role in providing Web3 participating with reasons to remain interested & excited about NFTs.

Why Digital Art?

The issue that eroded Web3 participants trust in 2022 was project’s inability to create and execute realistic roadmaps.

In an effort to build awareness and excitement, or perhaps to simply temporally pump floor prices ~ collections were effectively in a bidding war against each other to create the most hype.

At its best, this created significant excitement within communities, however, the more hype a project created without a product to match this hype, the greater the loss of trust that occurred between collectors & creators thereafter.

On the other hand, the people collecting digital art during this same period of time had experiences that stood in sharp contrast to this erosion of trust that proliferated across NFT projects as the collectors who purchased digital art knew exactly what they were receiving in return ~ digital artwork.

Yes, a number of digital art projects reached peak prices during this time that have since fallen, however, unlike the hundreds of 10K profile picture projects that relied on abstract roadmaps, collectors of digital art knew exactly what they were purchasing, and they received this the moment they made their purchase.

Looking Forward

I am willing to wager ~ and have positioned my portfolio to benefit from this thesis that the next NFT bull market will be led by digital artists.

As we explored in a previous edition of The Ground Floor, digital art minted on a blockchain is the single best use case we have so far discovered for NFTs.

Yes, it’s possible that we will soon see tickets being sold as NFTs, in game assets in our favorite video games being sold as NFTs, memberships, and so much more, however, all of these use cases work without NFTs.

Digital art, however, needs NFTs as without them, digital artists are without the means to limit the supply of their creations as anyone with an iPhone can simply save the file they created to their device ~ at zero cost.

By minting their artwork on chain, digital artists can limit the supply of their creations, and while anyone with an iPhone can still save these files, blockchains provide collectors with the means to verify their ownership of these assets.

This is the best use case for NFTs today, and I have little doubt that digital artists will lead the next bull run as they continue to create artwork on chain.

💡 Web3 Roundup

1) 🚀 Over $1,000,000 in Art Block sales

2) 👀 My journey to create a Single Check 

3) 💸 Binance enters NFT lending today

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See you next time! — OB1👋

This newsletter is for informational purposes only and does not constitute financial or business advice to any person or entity.