Beyond Volume & Floor: New Metrics for NFT Market Analysis | Kate Li - Electric Capital

alrighty Saturday afternoon we're making it through um so our next speaker is um Kate Lee a data scientist from Electric Capital and I'm very excited for this talk uh Electric Capital has great data great reports if you're not familiar with the annual electric data developer report and sorry if I'm stealing some Thunder here but you should check it out out it's uh one of the industry leading reports um so please welcome Kate hello everyone um it is my great honor to be here to share with you some of the exciting research that we did let's start off with something that is non- crypto back in Hollywood's Golden Age success was measured by box office Revenue alone and then came the Blockbuster era when opening weekend Revenue became important home video sales merchandise franchise expansion think Star Wars and Jurassic Park became an important part of it now fast forward to the digital era in the 1990s critic scores started influencing box office performance and the streaming platform disrupted the traditional Revenue model asking for new metric success success and today when we think about a film success it's so much more than box office revenue it is about the viewer accounts on streaming platforms it's about social media engagement Awards critical reception and cultural influence all these metric shape of film's Legacy box office revenue something that once told the whole story now only tells tells a fraction of it we saw the same shift in the technology era in the early days of the internet the success of a digital product is all about eyeballs unique visitors and Page views Were King and then fast forward to the 202010 companies start to realize that they need better models of monetization thus leading to monthly active users daily active users session duration cost per click cost per action Etc and today with subscription Services s and e-commerce we're tracking even more sophisticated metrics like customer acquisition cost retention turn lifetime value Etc yet in the space of nfts we are still very toned in on two metric the trading volume and floor price these metrics really only scratch the surface of what's really happening so what do we go from here today I'll introduce several multi time metric Frameworks that helps evaluate the success of a chain of an nft collection and an nft Marketplace a multimetric framework that steps Beyond trading volume and floor price to create a more meaningful picture of success so let's start with chain metrics think about the life life cycle of n nft it really starts from deployment where a Creator deploys a contract ract and Then followed by the minting process where the token is officially recorded on chain once the token is minted it can be traded on secondary marketplaces or it can be transferred between users by tracking the metrics at each step from deployment to minting to trading we can gain a more comprehensive understanding of the nft adoption and usage so let's take a look look at couple examples from each of these categories starting from deployment monthly deployment Surge from 36k in October 2023 to 172k in October 2024 across all chains and this is a four-fold increase more than four-fold increase and interestingly most of this deployment are happening outside of the ethereum main net in January 2023 70% % of the deployments are on ethereum but that number had plummeted to less than 0.5% by December of last year and since April of 2024 90% of those nft contract deployments are on base in Zora but this is just the first step what happens after deployment as we can see here the nft minting is also on the rise the minting volume hit an all-time high in December 2024 at 2.8 billion minting volume US Dollars and by stretching that out in a area chart we can see that 94% of that volume since mid of last year happened on base and what is being Meed is also changing in 2024 the nft collections being Meed go far beyond arts and collectibles so here we have the most minted nfts uh in 2024 we can see that the categories extent Beyond art and it goes into Finance rewards identity gaming and so much more and in fact every one of us here we are nft users we have an nft in our wallet and that is the ticket to eat Denver and we can see that the use case of nft is expanding at its core nft is not an asset class it is not pfps not art not Collectibles there are token standards there are ways to encode unique assets onto a blockchain any digal asset can be represented by an nft and any physical asset can be mirrored on chain the data we're seeing just shows the you diversifying and expanding use cases for nfts so with that in mind let's take a look at volume ethereum commanded 57% of trading volume in the last year but deeper look at other metrics reveal a more nuanced picture if we see the active trading wallet Solana is leading in user engagement with 1.6 million active trading wallets in the last year and we're looking at Creator sustainability salana generated $3 34.1 million in in Creator royalties and ethereum is closely following that at $33.

7 million so we can see that although salana only commanded less than 15% of market share in trading volume salana shines in other metrics like user engagement and royalties now with that multi-dimensional mindset or perspective in mind let's take a look at what defines success of a nft collection from the perspective of different stakeholders so first for creators what matters could be the mental rate the royalties revenue or a holder engagement and for a holder um key metrics include unique holder concentration the utilities and the benefits of holding and for Traders Traders car much about price volatility and the market activity that's going on so let's take a look at an example from each of these categories creative royalties really provides the ongoing incentive for Innovation and creativity and in the last year mat Lads generated $5.7 million in royalties from secondary sales and this demonstrates that a Creator driven ecosystem could go far beyond initial sales some of the other collection that is performing well in this metrix include pudy Penguins Courtyard retardo cousins and torians another interesting metric is ownership concentration so uh as of February 24th which is 5 days ago doodle stand out as a highly concentrated collection with the top one holder holding 35.1% of the total Supply that's raising a lot of questions about Market liquidity or decentralization and when we look at isuki isuki as if is a less concentrated structure with the top five holders holding 88.9% of the total Supply still raising some questions but not as much and when we look at paji penguins paji penguins has a pretty decentralized structure with top five holders holding less than 5% of the total Supply suggesting a strong user engagement and reduced risk of Market manipulation so let's take a look at trading volume oh there's a typo here it should say by trading volume um since November 2024 the trading volume surged due to Blue Chip collections on ethereum including paji penguins and board apes and these trading volume of these Flagship collections not only provided liquidity Within These collections but also created more Market activity in all the other nft Collections and throughout the nft space so now let's talk a little bit about where the nft collections are traded the nft marketplaces for the nft marketplace we can really evaluate from a user's life Journey with a Marketplace starting from acquisition to engagement to retention so let's illustrate this multimetric framework with a timely example openc launched os2 on February 13th and let's use this framework to evaluate how effective this launch event is now starting from acquisition so really for a user who's interacting with a platform like openc their first activity usually starts with a trading activity so the first question we ask is how many new wets started trading on open C and plotting this out from the start of the year we see that the daily new wallet 6X from 1K on February 2nd to 6K on February 12th and hitting a Peak at 7K on February 16th but this is not telling us much about like the deeper Insight so we're broken it further down to see are these wallets coming from other marketplaces or are they new wallets onto the nft trading platforms and by breaking that down we can see that most of these wallets are first time trading nfts which means that open C is grabbing new users instead of trying to pull Traders from other competing platforms now the next important question is is openc getting a larger market share of the new wallet that's trading nft so next up we plot out all the new nft trading wallets through all the marketplaces and broken it down by Marketplace we can see that despite a couple of um magic Eden launch events daily new wallet stays rather stable at around 8,000 wallets per day and os2 launch event had a little bit of Spike but a deeper stretch out and to see the market share we see that 30 7% of those wallets traded on open CA first on January 1st of 2025 but that number has increased to more than 50% since os2 launch event this is a sign to me that os2 was effective in attracting new wallets onto the nft marketplace so now next there is another question that comes up which is how about the wallets that's already trading on open C what about the active wallets so let's plot that out so we see the daily Traders on open C dropped a little bit from 15K during the first week of Jan to 10K first week of February and it bounced back to around 17K during the week of o 2 launch this is a rather moderate increase so what can we say about these wallets or another question in my head is did os2 wi back wallets that has been inactive for a while so we break it down we broke down all the daily active wallets by new wallets versus recently active wallets versus reactivated wallets by how long they have been inactive for and looking at the chart on the right side here we can see that most of the wallets in fact 70% of the active Wallets on open CA are either new wallets or wallets that has been recently active and the os2 launch event doesn't seem to change that by much so this tells me that this event did not attract back wallets that has been inactive for a while so we're starting to talk about retention here so let's talk about retention a little further an important retention question is are wallets sticking around and one way to look at that is by looking at a daily active wallet over weekly active wallet ratio you might have heard this term as da over wau or wau over ma which is weekly active user over a monthly active user they all tell the same story a higher ratio indicates a more engaged user base who keeps coming back and from here we see that open C is has stays at the same same level in terms of stickiness with the other major marketplaces like blur magic eaten okay a and so on and if we look at open c um which is really the middle line in between um os2 launch did not really get the stickiness up for opy and one interesting thing on this chart is that more leaves the pack with around 40% da wau ratio it the strongest stickiness out of all these major marketplaces so here is another way for us to look at retention is through a retention triangle each row here indicates a cohort of new wallets that join in a specific week and each column indicates a percentage of those wallets that remain active over time and a diagonal is a specific week or point in time and I've highlighted os2 launch week in pink there and from this chart it seems like os2 launch event was effective in retaining the users that joined in 2025 which is the bottom few rows there indicating indicated by a brighter or like a darker blue color but not so effective for the older wallets that joined before that so let's wrap this up with this case study overall it seems like os2 launch event was effective in attracting new wallets and retaining wallets that joined in 2025 but it wasn't effective in gaining back wallets that were active before 2025 or improving stickiness overall and think back to how little we talked about volume or floor price this study really further demonstrates that Beyond Matrix Beyond volume and floor price could give us a clearer picture of how success looks like in the nft space all right so um with some of the other more diverse metrics for marketplaces like users royalties trading Revenue collection diversity and volume we can see here that magic Eden are and openc are really winning in the multi-dimensional framework that we're trying to build here so let's wrap this up here are some of the key takeaways that I would like you to get with around with after this so first we need to look Beyond volume and floor price keeping our eyes focused on volume and floor price does not give us a full picture of utility and Community engagement it is usually Limited in scope and it's easily manipulated so the solution is a multimetric framework we talked about for chains we can look through the nft life cycle from deployment to minting to trading and for collections we can look at the different perspectives of stakeholders from creators to Holders to Traders and for a Marketplace we can follow a users life cycle from acquisition to engagement to retention and third lastly third takeaway is that this multimetric framework applies to nfts and sectors Beyond nfts just take Dex and lending for example the total value locked or tvl is not a definitive measure of how much usage is being present in the protocol for tokens the pricee does not necessarily tell us how much utility is present in the protocol so employ employing this multi-dimensional more nuanced framework is going to give us a more meaningful picture of true adoption and engagement so that is my time with you today I wish I could be here longer but for more data you can find most of the charts that I've presented today at nfpa.org this is a public product that we're making and to show analytics to everyone who's interested and here are my contacts if you would like to keep in touch or talk analytics there is also the contact of our awesome designer Misha who helped put this beautiful deck together thank you very much [Applause]