Inventory of the status quo of the top NFT fragmentation protocols: the overall market has turned cold, and the transaction volume and user activity have plummeted

How is the development of NFT fragmentation track? Can it effectively help the NFT market get out of the liquidity dilemma?

Written by: Nancy

Recently, the NFT fragmentation protocol Tessera (formerly Fractional) and its NFT market Escher announced that they will end all operations in the next few weeks. The sudden closure of leading projects that have received tens of millions of dollars in financing from Paradigm and others shocked the NFT community.

The liquidity problem is the key to breaking the development bottleneck in the NFT field, and will capture huge value in the future. This has also led to the emergence of many fragmented solutions designed for different NFT types in the market to promote NFT liquidity, improve price discovery and lower participation thresholds . This article takes representative protocols such as Tessera, NFTX and Unicly as examples to see how the current fragmentation track is developing? Can it effectively help the NFT market get out of the liquidity dilemma?

Tile（Fractional）

Since the NFT market went bearish in 2022, Tessera's market performance has been unsatisfactory. Dune data shows that as of May 16, Tessera's cumulative trading volume reached 190 million US dollars, the total liquidity market value reached 82 million US dollars, and a total of 2,441 vaults were created.

From the perspective of daily trading volume, although Tessera once hit a daily trading peak of 200 million US dollars in August 2021, since 2022, the daily trading volume has dropped sharply, only a fraction of previous years; from the perspective of Vault creation volume, Tessera The total number of creations is 2442. Since 2022, the highest number of Vaults created in a single day is only 49. After entering October 2020, the number of creations is only single digits; Growth will start to slow down sharply after 2023, with only a short-term pick-up during March 2023.

NFTX

NFTX is an NFT track project focusing on floor models. The liquid vault is composed of 49,000 NFT assets such as CryptoPunks, Milady, Remilio Babies, Chromies Squiggle, and Meebits. Currently, there are only 120 active vaults. In addition, there are only 7 tokenized NFT projects with more than 100 ETH in the NFTX liquidity pool.

According to Dune data, entering 2022, NFTX's TVL has doubled by 2.7 times in half a year, but then continued to decline. As of May 16, NFTX's TVL was $30.43 million, down about 13.8% from a year ago. At the same time, the highest daily transaction volume in the past year was 1910 ETH, which is far from the record high of 5894 ETH.

From the perspective of the total number of pledgers, since October 2022, the growth of NFTX's inventory and liquidity pledgers has begun to slow down sharply. As of May 16, the total number of pledgers has only increased by 10.1% during this period. At the same time, the number of active stakers has dropped sharply, down by more than 72.8% from a year ago.

Unicly

Unicly is the first platform to support NFT fragmented transactions. The NFT projects in the Unicly vault are MAYC, BAYC, Meebit, etc. Among them, only MAYC#3780 has high liquidity, and the others are all below $1,000.

According to DefiLlama data, as of May 16, Unicly's TVL was 2.13 million US dollars, and it has continued to decline since September 2021. In June 2021, its TVL once exceeded 61 million US dollars. Not only that, but Unicly's daily transactions and active users have also dropped to single digits. In addition, in terms of monthly transaction volume, only US$55,000 has been traded since 2023, which is only about one-fifth of the US$236,000 transaction volume in December 2022.

Currently, the top 5 tokens in Unicly protocol liquidity are ETH ($940,000), uPunk ($460,000), uGLYPH ($290,000), UNIC ($160,000), uMask ($50,000). The liquidity of globalized tokens is low, and there is no trend of recovery in the short term.

From this point of view, although these NFT fragmentation protocols have been updated and iterated on the basis of the original products to improve user experience, such as NFTX launched Goerli Testnet using Uniswap V3 to create centralized liquidity positions on the platform, Tessera launched the game NFT aggregation Service and art NFT aggregation platform Escher et al. However, judging from various data, after the peak of these agreements in 2021, the growth of various businesses has slowed down, and some have even experienced a sharp decline. As for the reasons for the weakness of these protocol businesses, in the final analysis, in addition to being related to the overall NFT market trend, fragmentation is mainly aimed at blue-chip NFTs and is not friendly to long-tail NFTs. Manipulated by giant whales. In addition, the rate of return of most liquidity agreements is not attractive enough to investors, especially compared to new NFT projects that can easily earn several times.

All in all, although the NFT fragmentation track once flourished and the market discussions remained high, as the overall NFT market cooled and activity declined sharply, the fragmentation track was no longer the same. At the same time, judging from the market performance of top fragmented projects, it has not had a significant effect on the liquidity and transaction activity of the NFT market, so the shutdown of Tessera may not be surprising.