In a recent report from Alchemy, data showed that many projects and application developers are trooping into the web3 ecosystem despite the fact that the trading volume of non-fungible tokens (NFTs) is significantly declining.
Alchemy is a Web3 developer platform. The firm reportedly carried out a study on the development of Web3 in the second quarter of the year. And according to the platform’s report, developers have continued to embrace the Web3 space even though there is a huge decline in the NFT utility rate recently.
In the report, the trading volume of NFTs recently dropped by 41%. However, on the contrary, the number of smart contracts and projects launched on different chains such as Polygon and Ethereum in the last six months has increased by almost six million, as stated by Alchemy in the study.
In other words, the web3 space has been busy welcoming new developers who are trying to create new utility cases that would further project the virtual space in the mainstream. Meanwhile, the space has also been experiencing a diminishing rate of collectors who are trading non-fungible tokens.
Developers Launched 5.9 Million Smart Contracts In Q2 2023
Alchemy’s report revealed that the past few months have been challenging for NFT trading, recording a decline of about 41%. Nonetheless, Web3 developers remain bullish and optimistic as they continue to launch more projects and smart contracts amounting to about 5.9 million on Arbitrum, Polygon, Optimism, and Ethereum.
The number represents about 302% growth rate since the first quarter of 2023 and about 1,108% growth rate since the last record in Q2 of 2022. Furthermore, about 26.9 million Ethereum software builder kits, SDKs, were reportedly launched in Q2, representing a 7% increase from Q1.
Although not all smart contracts or Ethereum SDKs recently launched would be used to generate NFTs, the report pointed out that the increased deployment signifies a positive growth in the Web3 industry and depicts massive adoption. This is evident in the recent surge in ETH price, climbing 12% since 2022.
According to Blake Tandowsky, Alchemy’s growth technician, Web3 records massive whale NFT trading volumes, but the market now witnesses lesser traders. However, gaming and other evolving utility cases for NFTs have kept enticing more developers to Web3, Blake said.
The analyst continued that in the 2nd quarter of 2022, Web3 experienced a strong wave of new users such that the trading volume of NFTs in the space could no longer serve the number of users adequately. He explained that that was the main reason for the seemingly low NFTs trade volume recorded recently.
There Is a Need For New Utility Cases For NFTs
In addition, Blake stated that one seemingly certain concept is that new NFTs utility cases are needed to further evoke users’ participation in the NFTs trade. He added that the future of NFTs utility cases could transcend beyond its primary purpose of virtual JPEG representation.
In the report, many unique web3 utility cases were highlighted such as the collection drop of Nike dubbed “Our Force 1,” the development of Lens Protocol which is a decentralized social platform, and gaining Google Play to support NFTs-integrated games.
Blake commented that there were many builders who built on Google, saying the ability for developers to now launch some variations with dApps makes gaming, NFTs, and blockchain technology more fun and enticing. He added that it eliminates the barriers that limit developers on where they can launch their dApps (decentralized applications).
Since the beginning of this year, the NFTs trading volume has been fluctuating up and down despite the increased efforts to prove web3 into the mainstream. The trading volume peaked at $2 billion in March nonetheless, it lost 50% value as it diminished to $1 billion in mid-may. Since then, many famous NFTs collections have significantly declined from their peak value including the Azuki, Mutant Apes Yacht Club, and Bored Apes Yacht Clubs NFTs collections.
