2023 NFT Market Review: Convergence with AI, Blockchain Gaming, and Social, Solana and Bitcoin NFTs Gradually Going Mainstream
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2023 NFT Market Review: Convergence with AI, Blockchain Gaming, and Social, Solana and Bitcoin NFTs Gradually Going Mainstream
NFTs no longer need to be confined to a single network; they can go wherever they are needed.
Navigating Web3 tides with focused insightsBy WILLIAM M. PEASTER
Translated by TechFlow
Looking back at 2023, it's clear that NFTs have just weathered a tough bear market. Yet exploration amid hardship has always been synonymous with Web3, and thanks to new technologies and momentum, many NFT projects not only survived but thrived. This article takes a look back at the NFT market in 2023.
1. The Rise of NFT L2s
When I first started researching NFTs in 2019, there was no such thing as an NFT L2 ecosystem. This year, we began to see various NFT-friendly Layer 2 solutions emerge.
Pioneers like Arbitrum and Optimism started attracting more minting activity, and their evolving tech stacks were used to launch new cultural hub rollups such as Xai and Redstone.
Industry giants like Coinbase and Zora also joined the race, launching Base and Zora Network respectively.
Newcomers also entered the scene, such as Frame—an L2 that directly integrates NFT royalties into its network.
In short, the NFT scaling era has officially begun!
2. New Strengths in PFP
The NFT profile picture (PFP) space was hit particularly hard during this bear market, with most projects seeing declining attention and floor prices in the first three quarters of the year.
However, some NFT collections bucked the trend, emerging as dark horses in the PFP category—namely, OpenSea’s “Openens” and Pudgy Penguins.
Jack Butcher’s Openens launched Set 001 in May 2023, offering a new blueprint for how collectively curated NFT series can be released over time—and in the process capturing the imagination of thousands.
As for Pudgy Penguins, the project upgraded to blue-chip status in 2023 after a series of major developments, most notably placing Pudgy Toys in 2,000 Walmart stores.
3. Growth in Gaming NFTs
The entire NFT gaming landscape made significant progress in 2023, but it's safe to say that dominant titles Axie Infinity and Parallel continued to perform exceptionally well.
Axie’s ecosystem expanded not only through new Axie-based games, but also via massive upgrades to its flagship game—including the arrival of Axie Experience Points (AXP) and the Axie Part Evolution System.
On the other hand, Parallel released new starter decks and launched a test version of its game this year, which received widespread acclaim.
Both games are stronger than ever, with even more exciting content on the way in 2024!
4. Infrastructure Renaissance
2023 saw incredible explosive growth in NFT-related infrastructure.
For example, Nouns V3 recently open-sourced the first DAO-native fork mechanism.
The ENS name wrapper was also released, offering unprecedented flexibility and functionality for ENS domain holders.
Additionally, Zora launched Protocol Rewards—a system that rewards Zora users with ETH.
But these are just the tip of the iceberg. ERC-6551 has turned every NFT into a wallet; mint.fun simplified minting; Privy introduced user-friendly embedded wallets—and much more.
In short, now is a great time to build around NFTs!
5. Multi-Chain Forces
While Ethereum currently dominates the vast majority of NFT activity, Bitcoin and Solana NFTs massively joined the NFT arena in 2023.
Since the launch of Ordinals in January, the Bitcoin NFT scene has come alive with surging activity. Likewise, Ordinals quickly inspired standardization of alternative Bitcoin tokenization methods such as Stamps, further accelerating recent Bitcoin NFT activity.
As for Solana, the network has become the next major frontier for airdrops and has seen sharp increases in its SOL token price and activity metrics in recent months, drawing in a wave of new users flocking to top projects on the chain, such as NFT marketplaces Magic Eden and Tensor.
Thus, Ethereum, Bitcoin, and Solana are now the current mainstream for NFTs—and this trend is likely to continue for the foreseeable future.
6. On-Chain Revival
2023 witnessed a resurgence of on-chain NFTs and on-chain experiments.
For instance, Chaos Roads’ mint and the recent Terraforms update have pushed the boundaries of what’s possible in blockchain art. Additionally, projects like BasePaint and Party have opened new pathways for people to coordinate and co-create on-chain.
Of course, “on-chain” isn’t inherently better than “off-chain.” Blockchain is simply a new combination of medium and infrastructure, and the creative possibilities here have never been more open or full of potential!
7. The Boom of Crypto Social
Crypto social apps stood out in 2023, with notable examples being Warpcast and Lens.
With the surge of applications, NFTs received renewed attention as these platforms highlighted and promoted NFT mints.
As a result, it’s now easier than ever to discover NFTs your friends are minting and share your own NFTs with them in real time.
In short, the rising crypto social scene has made NFTs more social overall this year!
8. The Arrival of AI
In 2023, we saw the first major projects combining AI and NFTs.
In the metaverse space, Upstreet—a multiplayer NFT-integrated world designed for interactions between humans and AI agents—released a 28-page ChatWorld document exploring various potential applications of AI agents within Upstreet.
Moreover, experimental games like Parallel Colony introduced the idea of “1.5-player games,” where humans passively guide autonomous AI agents to carry out diverse tasks, blurring the line between human gameplay and AI-driven play.
Though still in early stages, these efforts suggest that the fusion of AI and NFTs could bring transformative changes in the future.
9. RWA Tokenization
RWA stands for “real-world assets” on the blockchain, which can include anything from real estate to physical trading cards.
One of the primary ways to bring off-chain assets on-chain is to represent them with NFTs!
Indeed, in 2023, we had a high-profile example of the NFT-backed RWA model through Courtyard’s tokenized Pokémon cards.
This was just one cultural example, but more experiments—both cultural and financial—are gradually arriving.
10. Cross-Chain Development
2023 was also the year when moving NFTs from one blockchain network to another became more feasible than ever before.
Much of this progress is thanks to the rise of projects like LayerZero, a pioneer in cross-chain NFT transfers between blockchains, and Holograph, which developed Hologram NFTs that maintain consistent IDs across all Ethereum Virtual Machine (EVM) environments.
Additionally, Chainlink’s Cross-Chain Interoperability Protocol (CCIP) launched this year, paving another solid path for projects to achieve NFT interoperability across multiple chains.
Therefore, NFTs no longer need to be confined to a single network. They can go where they’re needed—a relatively new possibility that will see widespread development in the coming years!
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