NFT Minting is Increasingly Competitive, But One in Three NFTs End Up Dead – Nansen

Ethereum NFT Non-fungible tokens

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Fredrik Vold

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June 26, 2023

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The minting of non-fungible tokens (NFTs) is becoming increasingly competitive, with more new projects created and the cost to mint new NFTs being cut. However, a number of NFTs minted still end up as part of a “dead collection” with no trading activity — though, notably, the proportion of such NFTs is decreasing, a report from blockchain analytics platform Nansen has said.

The average cost to mint an NFT peaked in May of 2021 at ETH 0.56 (USD 1,741), before it dropped to a low of ETH 0.06 (USD 186) in June 2021. Since July 2021, the average cost to mint NFTs has been between ETH 0.07 (USD 217) and ETH 0.1 (USD 311), according to Nansen’s report.

A possible reason for this, the firm said, is that NFT minting is becoming more competitive as more new projects are brought to the market.

Between January 2021 and February 2022, the number of minted collections increased by a whopping 4,800%, from 39,802 to 1.97m, the report said.

The result appears to have been a sharp drop in minting costs in the first half of 2021, with costs after that stabilizing at a much lower level.

Meanwhile, Nansen also said in its report that as costs to mint new NFTs have come down, the number of projects that end up “dead” has risen.

“When analyzing the profitability of minted NFTs, it shows that, on average, one in three NFTs minted go on to become a dead collection with little or no trade activity,” the firm said.

Still, it added that it’s not all bad and that the proportion of new NFTs that are in profit relative to their minting cost is increasing. 

Consequently, the proportion of new NFTs that end up as dead collections is gradually decreasing, Nansen said.

In conclusion, Nansen said that participating in NFT mints is something investors should only do after “careful consideration,” while noting that this also includes having an understanding of the macro outlook for the NFT market.

Additionally, it is crucial to conduct due diligence on the project an investor is considering to participate in, and this includes researching “the community, their roadmaps and the founding team’s history,” the report warned.

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