NFT Projects Retaining Much of ETH Generated from Minting

[TL; DR]

NFT projects retain about 50.2% of the ETH generated from minting non-fungible tokens.

There were over 1.5 million wallets used in minting NFTs in the first half of 2022.

Approximately half of the NFTs were minted for free.

NFT minting projects retain more ETH than last year

keywords: Nansen Report, ETH, NFTs, free minting, Binance Chain, Arbitrum

Nansen, a platform that analyses the behaviour of NFTs creators and collectors, released a report on how NFT projects use the ETH generated from minting non-fungible tokens. It recently published a second report covering the period January to June 2022. According to Nansen, the key focus of the research was to answer two questions: “What happens after the Ether is transferred out? How many people are minting NFTs?” In its approach, Nansen tracked the movements of funds and NFTs within the primary and secondary NFT markets.

As a fact, Nansen’s recent report is a follow up to the one it published in August 2021, referred to in this article as the previous report. The research covered the movement of ETH from NFT projects in the primary NF market.

Primary vs. Secondary NFT markets

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The primary market includes all the platforms where NFT creators, mint or list their tokens for sale. On the other hand, secondary NFT markets are the platforms where NFT collectors relist them for sale. According to NonFungible.com data, the volume of NFT sales is higher in the primary markets than the secondary ones. On the contrary, the value of the traded NFTs in USD terms is greater in the secondary market than the primary one.

NFT Market spending analysis

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Nansen reports that over NFT creators spent more than $2.7 billion on minting non-fungible tokens during the first half of 2022. During this period NFT creators spent 963,227 ETH in minting the tokens on the ethereum blockchain.

Nansen concluded that 50, 7% of the ETH generated from the sale of NFTs was reinvested in the production of NFTs. And 45.7% of the ETH was transferred from the wallets used during the minting and sale process. The projects transferred part of the ETH to non-entity wallets. However, the amount of ETH circulating in the non-entity wallets decreased from the previous record of 52.3% to the current 45.7%. Therefore, this statistic shows an increase in the amount of ETH reinvested in the production of NFTs. Some of the non-entity wallets belong to several millionaires, NFT collectors and top DEX traders.

In total, The NFTs creators used 1,088,888 ETH wallets during the minting process that required a minting fee. However, over 1.5 million wallets were involved in minting NFTs. This is inclusive of wallets used in free minting activities. The highest level of NFT minting took place on the BNB, probably due to the lower minting fees. Specifically, about 80.2% of the weekly average minting activities were on BNB which had a total mint volume worth $107 million. Nansen collected the data of NFT minted on Binance Chain, Ethereum, Arbitrum and Avalanche, among others. The basic statistics regarding the volume and number of wallets used during the minting process is presented in the following table.

Source: Nansen

You can easily understand the minting statistics within the period by referring to another important graph, which indicates the level of minting activity on the various blockchains.

Source: Nansen

The two graphs make the visualization easier. From the graph, it is evident that the BNB average minting activity was higher than the others. On the other hand, the activities on Arbitrum were action23rated on a few periods such as the end of January to the start of March.

It is also important to note that about half of the NFT minted on Ethereum were free of charge. In reality, the average amount of ETH generated per project was 59.4 ETH while the median was 1.43 ETH.Nansen also witnessed an increase in the number of unique wallets the creators used in the current period compared to the previous one. The average mints per wallet increased from 3.16 to 3.65. The following graph summarises the spread of NFT mints per wallet.

Source: Nansen

As you note, each of the 563,348 wallets was used to mint a single NFT while 187 082 were used to mint 2 NFTs, et cetera. The other important data relates to the approximate amount of ETH raised during the minting process. The following graph tabulates that information.

What is striking is the level of free NFT minting on the Ethereum blockchain. There were a total of 14, 961 free mints, approximately half of the total. Also, there were only 140 projects that raised 1 000 ETH, leaving the rest ranging between 5 and 1000 ETH.

Destination of ETH generated through minting

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In this part of analysis, Nansen focused on the destination of the ETH the projects raised through NFT minting. Part of the ETH went to non-entity wallets. Nansen defines non-entity wallets as wallets with no identifiable owners. In other words, these are private wallets as they are not linked to any known project or institution.

In terms of distribution of the proceeds, Nansen concluded that more is being retained by the minting projects than in the previous period. Here is a table showing the distribution of the raised ETH in the previous period.

Let’s compare this data with that of the period under consideration. The data shows that most of the ETH raised was retained by the projects, most likely for reinvestment. The following are the top projects, based on the amount of ETH generated.

Source: Nansen

Nansen explained the connection of the projects and the cited ETH wallet addresses. For example, the ETH from Pixelmon was transferred to one of its wallets identified as ““Gnosis Safe Proxy'' (private) wallet (0xf6bd9fc094f7ab74a846e5d82a822540ee6c6971)” This is likely to be the project’s multi-sig wallet.

Moonbirds moved the ETH to its” Public Mint Beneficiary Address (0x000ddf0af676ec8e21d77c5af8166a95531a1668)”. These two examples illustrate how Nansen reached its conclusion on how the projects used the ETH generated from minting NFTs. In all, Nansen found that the NFT minting projects retained much of the ETH generated from the minting activities.

Conclusion

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Nansen published a research report focusing on how NFT minting projects use their ETH earnings. The research was based on several blockchains including Binance Chain, Ethereum, Arbitrum and Avalanche which mint NFTs. In short, Nansen concluded that most of the minting projects retained the ETH they generated.

Author: Mashell C., Gate.io Researcher

This article represents only the views of the researcher and does not constitute any investment suggestions.

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