Between 2021 and 2023, primary mint volumes on major cryptoart marketplaces on Ethereum Mainnet fell by 90%. It has been an incredibly difficult 3 years now. Multiple platforms have discontinued operations. And quite a few artists have left the space, bitter and disillusioned.
It does look bleak compared to 2021. But then perhaps things aren't always as good or as bad as they appear. The truth often lies somewhere in between.
How big is the Cryptoart Space
The Art Basel and UBS Art Market Report puts the Cryptoart market size at $1.2 Billion. The Global Art Market Sales is estimated at $65 Billion.
Even with the very significant fall in values from late 2021, sales of art-related NFTs reached close to $2.4 billion in 2022, a decline of 16% year-on-year, but still representing values that were over 100 times the size of the market in 2020 ($20 million). However, following the decline from 2021 to 2022, the art segment decreased in value by a further 51% in 2023 to $1.2 billion.
While it is not an Apple to Apple comparison, but can help us build some perspective on the relative size of cryptoart ecosystem. The YouTube Creator Economy is estimated at $25 billion, Instagram at $20 billion, and TikTok at $10 billion.
YouTube has about 50 million creators and over 2 billion visitors each year. In contrast, the crypto art space has grown to the current size with just 10,000 to 15,000 artists and about a million collectors. It is some ways a bit of wonder on how big the space grew even with what would seem like a small number of participants.
Anyone who has minted or collected crypto art at least once in 2023 on platforms such as Manifold, Foundation, or Superrare.
Why does it feel much smaller?
The cryptoart market resembles an extreme form of Pareto Distribution. Approximately 90% of the total volume typically comes from drops made by 10% of the artists. Similarly, around 90% of purchases are made by 10% of the collectors. You will find this as a recurring theme across crypto.
For example, the Solana had 125M unique active accounts in Q3, but only 170K (0.13%) accounts paid 90% of the fees.
On Base and Arbitrum, it's similarly…
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This coupled with the fact that our perception of happenings in crypto art is largely shaped by what's being talked about on crypto twitter leads to this feeling. For instance, in this year's Onchain Summer you had artists whose open editions got minted in thousands reaching volumes 1 ETH and higher but there was hardly any chat about them on twitter.
Who is collecting
We spent quite some time studying edition and collection drops across platforms. About 60-70% of the mints come from artists themselves. When we broke it down, roughly half of these artists were deeply embedded in crypto art, while the other half have a strong practice outside of crypto.
The more surprising insight? There are prominent collectors that most artists know and follow. But there’s also a quieter group of collectors who don’t fit the typical profile. If you look at their social media profiles, you might just overlook them. They’re gradually moving into art collecting.
This probably explains how new age platforms like Drip Haus and Zora have scaled to over 100,000 users minting affordable open editions every day.
What factors impact art sales
Macro
Every blockchain is an economy in itself. There are different participants that include crypto builders, traders, investors, content creators, and of course artists. When the macro is good, i.e. crypto prices are booming, capital is flowing into projects, or memecoins are mooning, a percentage of the liquidity flows into the art market.
The expansion of the Solana Art Ecosystem back in December, 2023 probably can be attributed to the increasing value of SOL and the rising activity in memecoins like BONK. This surge has resulted in a growing number of Solana Onchain Users accumulating liquidity, a part of which they redirected towards art.
Micro
There are 4 key factors that impact the success of the launch of an artwork / collection.
Resonance:
How strongly the art resonates with an individual - be it artist or collector. This is the most important factor determining the success of the launch. A great example I can recollect is from an artist who is not even in the crypto art space.
Mr.Ugleh (https://twitter.com/MrUgleh) is an AI Artist. Last year, his art blew up due to its unique style with people both in web3 and outside web3 writing about. At that point, his twitter following was also not huge .
- Incredible how one artist, @MrUgleh created a new branch of AI art
Say what you want, but this is creative, novel, and endless. Incredible to see the community pick this up so fast
Below are some more examples and how to do it yourself
Discovery:
Twitter is the platform where bulk of the discovery happens. Getting featured on a marketplace home page such as Opensea or Rarible can also give a boost in visibility, albeit not as impactful as they used to be. Farcaster has emerged as an alternative to twitter and artists who went really deep into the ecosystem have been doing well.
I believe it ultimately comes down to who sees the art. While there's a lot of focus on views and engagement, the "who" aspect often gets overlooked. An art drop post with thousands of views can still see disappointing participation if it never reaches the right collectors.
Price:
Pricing art is tricky. On one hand, there's a subjective element where an artist would have a point of view on how much their work is worth. On the other hand, there's an objective aspect involving the recognition that collectors, regardless of their scale, have a spend capacity. Understanding who will resonate with an art work can help artists price it appropriately, avoiding the risks of both underpricing and overpricing.
Community and Relationship:
A lot of times discovery of the art or the price point it can command is influenced by the relationship collectors have with the artist and how strong a community has an artist cultivated around their art. A collector who is a superfan of an artist will always be on lookout for new artworks from them.
Changing Landscape
2021 was a magical year. I have heard multiple stories from artists on how they just listed their works on marketplaces and found them sold in days and sometimes in hours. More often than not shooting out tweet would suffice.
My hypothesis is that 2021 and 2022 were years of discovery for crypto art. The novelty of the space drew many collectors. However, as the broader crypto market shifted, people began to realize that non-fungible assets tend to have lower liquidity and require a longer-term holding perspective compared to other crypto assets.
Fortunately, we're at the early days of the next bull cycle. I am hopeful for better days but I suspect it will look different from 2021. There are two broad themes I see emerging.
Spontaneous Affordable Editions Drops on L2s
Platforms like Zora and Rodeo have built a sticky collector base with a very standardized experience. An artist can launch on these platform to get discovery. It is an improvement on instagram and twitter. I see it as a way for artists to find their first collectors or expanding their existing collector base.
But for an artist who is looking to build a sustainable living out of cryptoart, this may not suffice.
Exclusive 1/1s and Collections on L1s Supported by Premium-Quality Launches
This is on the other end of the spectrum. Platforms like Nifty Gateway and Daily.xyz (fellowship ai) that do a lot of heavy lifting in terms of creating a very high quality production grade marketing collateral to build awareness for upcoming launches. A few examples that comes to mind are Sam Spratt's Monument Game and Dave Krugman's Drive Lap 2 on Nifty Gateway and Nice Aunties by Daily XYZ.
The Sovereign Artist
This is what I wish for though. I don't think it is an easy path neither do I think it is a path for every artist. But more than ever if there was a time where it was possible for an artist to survive and eventually thrive independently, this is probably it. And I've seen a few do it over the last 1 year despite the challenges.
Social Media Platforms like X, Farcaster, Zora, and Rodeo can help artists find people who vibe with their work. Manifold, Thirdweb, and Transient allows artists to setup self owned contracts to mint their artworks. Tools like Mailchimp can help with managing email lists, something I wish more artists did.
I do think there is a gap in web3 native marketing toolkit that artists can leverage to grow their practice.
The way forward
Crypto is at the edge. Cryptoart is at the edge of the edge.
An Artist Fren
There are about a 6 Billion people on Internet. Half a Billion of them hold cryptocurrencies, most of them on a centralized exchange. Optimistically 40 million active users onchain every month.
1 Million people over a year have collected art.
There is a long way to go. A lot of room for growth.
The number of artists who are able to make a living purely from cryptoart today probably would be a few hundreds. I'm hopeful though by end of the next cycle, we would have thousands of artists making their living from the cryptoart economy.
