Step Data Insights: Success of Community-Driven NFT Projects
Evaluating Galactic Gecko Space Garage, ABC, and GhostKidDAO as representatives of native Solana users.
Advisory
This article is not financial advice and is meant to be treated as an informative piece. Always do your own research before investing or trading any cryptocurrencies.
Advisory
This article is not financial advice and is meant to be treated as an informative piece. Always do your own research before investing or trading any cryptocurrencies.
Introduction
Since the FTX crash, which we analyzed in detail in the previous episode of Step Data Insights, Solana is not having its best moments in terms of price action. The price of SOL, which is currently hovering around $14.22, has dropped about 59% since November 7. Previously we mentioned how the FTX crash can actually be beneficial for Solana in the long run despite its recent negative effect on token price. This week, we'll take a look at one of Solana's core strengths that could hugely contribute to the chain's success in the long run.
Today, many experts from leading institutions speculate that crypto mass adoption is a matter of when, not if. User activity can be an accurate metric to understand which of the existing blockchains is closer to this mass adoption goal. Apart from the advantages of its architecture, Solana's arguably most competitive advantage over other chains is its strong user base.
NFT communities or traders make up a bulk of Solana's user base. Solana has a thriving NFT economy and ranks 2nd among all blockchains in terms of NFT market cap. Despite the unfavorable news and the recent downtrend of SOL, the trading volume in the Solana NFT economy is still there. In the past 7 days, Solana's leading marketplace Magic Eden has generated $13.92 million in volume, which is around 28% of the 7-day trading volume of OpenSea, the world's largest NFT marketplace. With the volume starting to increase since the beginning of November, the total floor value (in terms of SOL) in the Solana NFT ecosystem seems to have found a bottom on November 10 and continues to increase steadily.
SolanaFloor's Blue Chip NFT Index also seems to confirm the bullish structure in total floor value and volume of the Solana NFT ecosystem. This index is calculated by taking the weighted average of NFT collections selected according to multiple criterias such as volume and mint date. When we look at the SF NFT index, with the bankruptcy news that started on November 7th, there was a decrease in both SOL and USD in the market. However, this decline seems to have found a bottom on November 10th. Despite the decrease in SOL price, the SF NFT Index maintains its value in USD, and steadily increases in SOL. It seems reasonable to expect that the rise in the SF NFT index in USD will follow the one in SOL when the SOL price stabilizes.
These indicators show that the Solana NFT ecosystem has not been affected much by FTX's bankruptcy. In fact, it can even be said that the incident positively affected some of the metrics. However, would it be right to generalize these developments we've seen on the Solana NFT ecosystem to the user base of Solana?
NFT communities as representatives of Solana users
In the past 30 days, more than 217,000 unique users have traded NFTs via Magic Eden. If we take into account other Solana NFT marketplaces and decentralized NFT exchanges that are growing in popularity, that number is even higher. Based on this data, it can be said that NFT communities and traders make up a large bulk of Solana's user base.Â
It's not just that there are so many of them. Since the NFT traders/communities spend more time on the blockchain than novice users, they tend to be more familiar with the blockchain terminology. This makes them not only a fraction of active users, but also makes them natives of the Solana blockchain and protocols built on it. For example, the vast majority of NFT users use self-custody wallets. Therefore, it is possible to consider them more inclined to interact with Solana on their own rather than through centralized parties like FTX. This may be one of the reasons why activity in the Solana NFT ecosystem has not been affected much by FTX's bankruptcy.
In addition, most of the NFT community members claim that the purpose of their NFT trades is to accumulate more SOL because they believe in the long term success of Solana. For this reason alone, they can be perceived as true representatives of Solana users. As we see during these days that community is the most important factor for the long-term success of the cryptocurrency industry, we will review 3 NFT projects that have stress-tested communities that represent the users of Solana in this episode of Step Data Insights.
Galactic Gecko Space Garage
Galactic Gecko Space Garage (GGSG) is one of the earlier projects in the Solana NFT ecosystem. They were minted on September 22, 2021 at a price of 2 SOL. Launched as an NFT project featuring a social club, GGSG consists of 10,000 gecko NFTs that represent four factions of galactic warriors turned space racers. A part from their main collection, GGSG also has 2 other collections being 3,200 pet lizards named Concordians and 2,601 Enigma Crystals which are intended to be the keys that unlock future utility. Both Concordians and Enigma Crystals were airdropped to Galactic Gecko holders.
These sci-fi themed lizards are arguably one of the most unique profile pictures in the Solana NFT ecosystem. However, one of the main features that distinguishes the project from others is the immersive lore drops. GGSG has a vast fictional universe. In this sci-fi universe, every detail has been thought through. In fact, even each individual trait of the NFTs has their own backstories. The unique design theme and the fact that it offers such an inclusive experience helps GGSG to build a tightly knit community.
Apart from all these, the biggest feature that distinguishes GGSG from other projects is the Gecko DAO, which took over the management of the project from the founding team.
The Gecko DAO
In October 2021, shortly after the mint, GGSG swiftly caught a lot of hype and became one of the top projects with largest market cap projects in the rapidly growing Solana NFT ecosystem. The floor of the main collection peaked around 52 SOL, which was around $8800 during that time. However, this hype burst of GGSG did not last very long. The bearish price action that hit the entire Solana NFT ecosystem after the launch of FTX NFT marketplace also affected GGSG. The inactivity of the founding team during this downtrend was not welcomed by the community. In the eyes of the community, GGSG had a great potential and its potential was being wasted under the management of the founding team. After these events, members of the GGSG community started to put pressure on the founders to transfer the management of the project. On 2nd March of 2022, the DAO which was formed by the community members, bought the project from the founders and took over the management completely. Gecko DAO is currently run by more than 50 committee and council members. It is possible to say that the GGSG community, which has been managed by the DAO since then, has undergone every serious stress test and is similar to the Solana community in this context.
Besides its inspiring past, Gecko DAO also has exciting future plans. About 2 months ago, the DAO announced that it is launching an initiative called GreenListed. GreenListed aims to be the largest investment fund on Solana which is powered by an NFT project. Galactic Gecko owners will have a say in which initiatives GreenListed will invest in. Despite being recently launched, GreenListed has already closed its first investment round. The first investment was made in Matrica Labs, which is a popular verification services provider in the Solana NFT ecosystem. Gecko DAO disclosed that their first investment is quite sizeable, about 7 figures.
Apart from GreenListed, there are other exciting developments ahead for GGSG. The team is currently working on building a gamified staking platform for $CRED, which is the native token of the GGSG universe. Currently, $CRED has no use case. However, the team plans to use $CRED in an animation station where NFT holders can buy animations for their NFTs in exchange for $CRED. It is also worth noting that the animation station is currently in work-in-progress and animations for some individual traits have been prepared already.
On-chain metrics
GGSG's vigorous history can also be seen in the price action of their main collection's floor price. The floor price of the collection, which was rapidly increasing towards the peak of the Solana NFT ecosystem, started to decrease with the FTX NFT marketplace launch we mentioned earlier. During this decline in the ecosystem, the floor price of the collection fell below 3 SOL due to the inactivity of the founding team. The floor price, which entered an accumulation phase with the DAO's takeover, broke out of its range when the details about the GreenListed initiative were first announced. The floor price of the collection currently roams around 20 SOL.
Besides the floor price of the collection, another on-chain metric that can give a clue about the future of the collection is the number of NFTs listed. The chart of the listed NFT count confirms that the increasing inclusivity of the GGSG universe and the events the community has gone through have knitted the community together. Since launch, the Galactic Gecko NFTs listed across marketplaces have been steadily decreasing. We can say that this downtrend in the number of listings shows the increasing conviction of the GGSG community in the potential of the project.
We already mentioned that GGSG stands out with its unique sci-fi theme in the Solana NFT ecosystem. When we look at the sales in the last week, we see that the average price of Galactic Gecko sales is 39% higher than the floor price. This shows that community members have no problem with paying a premium to get NFTs with the features they prefer. Let's take a look at what features the community prefers when purchasing GGSG NFTs.
Many of the community members state that when it comes to Galactic Geckos, they make their purchases based on aesthetics over rarity. There are a few key traits that the community finds more visually appealing than the others. For example, NFTs with 'Neon Body' trait are perceived to be elite-tier and more catchy. Accordingly, the floor price of Geckos with 'Neon Body' is 124 SOL at the time of writing, which is 6.5 times higher than the floor price of the collection. NFTs with 4 attributes are also highly appreciated by the community as they look 'cleaner'. The floor of Galactic Geckos with 4 attributes is also traded at a premium which is roughly 45% more than the floor price of the collection.
ABC
ABC is a collection of 10k NFTs which was minted on Aug 23, 2022 at the price of 1.23 SOL. ABC has a unique design that is easily distinguishable from other NFT projects. The team clarifies that the design of the NFTs is intended to remind people how fun everything was before they grew up. However, ABC's main difference from other projects in the Solana NFT ecosystem is that it has a working product with a huge use case and a large active user base behind it, which is called Hadeswap.Â
Hadeswap
Hadeswap is an Automated Market Maker (AMM) NFT marketplace. As a fork of the Ethereum-based Sudoswap, Hadeswap is the first decentralized NFT exchange built on Solana. Users of the marketplace act as liquidity providers for an NFT collection where prices are determined by a mathematical model. To buy or sell an NFT on Hadeswap, traders use liquidity pools and incur LP fees which are distributed to individual liquidity providers. It is important to note that on Hadeswap, traders do not pay any platform fees, all proceeds go to users who provide liquidity for their NFT collections. Additionally, Hadeswap includes an order book that allows traders to place limit orders to the floor price of NFT collections.
Hadeswap's working mechanism has some advantages over Magic Eden. As Magic Eden advanced towards the optional royalty-payment model, the cost of wash trading has been significantly reduced. However, in Hadeswap's AMM model, the LP fees that traders pay make wash trading costlier than centralized NFT exchanges where creator royalties can be bypassed. An analysis of wash trades on Hadeswap in October reveals that only 6.4% of total trades and less than 1% of total trading volume are composed of wash trades. Despite the team’s zero platform fee policy, the scarcity of wash trading on the marketplace increases users' trust in Hadeswap.
One of the main benefits Hadeswap offers to the Solana NFT ecosystem is that it provides the opportunity to earn passive income by providing liquidity to the NFT projects that the users support. Users of the platform can also create pools to buy or sell NFTs on Hadeswap by themselves. The popularity of Hadeswap is growing each day, as the platform enables NFT communities to benefit from the merits of DeFi and to increase the decentralization in the ecosystem. Although the platform has only been in beta for less than 2 months, Hadeswap recently surpassed 500k SOL volume.
Apart from these, ABC team is also making moves to draw attention to the entire Solana NFT ecosystem through Hadeswap. In September, the team announced that they are going to bridge 50 Crypto Punks, which are arguably the most popular NFT collection in the world, from Ethereum to the Solana blockchain. Stating that the bridging process will be executed soon, ABC team seems like they will attract more attention through Hadeswap in the future.
ABC's use case and community
The team's planned use case for ABC NFTs will begin when Hadeswap switches away from its 0% platform fee policy. Currently cultivating Hadeswap successfully, the team will distribute all of the revenue generated through platform fees to ABC NFT holders with the native token to be issued in the future.
The present goal of the ABC community is to create the first decentralized community in the Solana NFT ecosystem. As they gather around a meaningful and ambitious goal, ABC community is tightly knit together like an inner circle. In addition, it would not be wrong to expect that the community of a project that wants to improve the decentralization in the Solana NFT ecosystem, which is one of the core values of the blockchain culture, will consist of like-minded members. For this reason, we think that ABC community, which is well-versed in blockchain terminology, is a valid representative of Solana’s native user base.
On-chain metrics
The on-chain metrics of the NFT collection also showcase the conviction and loyalty of the ABC community. The listed count of ABC NFTs has been declining since launch, and dropped to all time lows in November. There are currently 297 NFTs listed across all marketplaces. This corresponds to a very small portion for a collection of 10,000, which is roughly three percent of the entire supply.
Looking at the wallet activities of the top 10 holders of ABC over the past month, the total net change in the number of NFTs they hold is +202. As the largest holders continue to aggressively accumulate ABC NFTs, we can say that the conviction of the top members of the community in the project continues at full throttle. This may be due to top community members in the inner circle finding the project's as yet undisclosed developments bullish. The fact that the biggest supporters of ABC keep supporting the project is a quite positive indicator.
Lastly, it is worth mentioning that the price of ABC NFTs has increased in both USD and SOL since November 10. This shows that the ABC community, far from panicking after the collapse of FTX, is now even more interested in the project.
Ghost Kid DAO
We reviewed Ghost Kid DAO (GKD) and the Boonties platform in a previous issue of Step Data Insights, which was published on October 31. Last time, we reviewed GKD from a product perspective. In this episode of Step Data Insights, we will evaluate whether the GKD community can be counted as representatives of Solana users, and how they responded to FTX's crash.
This month, as a part of their new roadmap (3.0), GKD announced the Ghost Foundation which will aggregate all of the project’s current and future activities. GKD was already offering their unique raid-as-a-service model to their clients. However, from now on, they will start using a software-as-a-service business model to provide solutions to other NFT projects. GKD already found 7 customers in a very short notice, and plans to derive most of its revenue from this business line in the future.
GKD stands out with the tailored software products and services it provides to other NFT projects in the Solana NFT ecosystem. Since all of the revenue generating activities of the project are blockchain related, it would make sense to think that community members of such a project would not be distant from the blockchain culture. In this context, we can think that the GKD community can be a valid representative of native Solana users.
Before and after
Since our review last month, the listed count of GKD NFTs has dropped 23% to 189 currently listed. If we look at the chart of listed NFT count, we see that the number of listings has dropped steadily during the month despite the FTX crash. This shows that the general behaviour of the GKD community does not change even under circumstances with high levels of panic.
Furthermore, looking at the trading volume GKD generated over the past month, it is not possible to see a systematic increase during the week of FTX's bankruptcy. Instead, the trading volume of the collection increases remarkably before or after the team's announcements. From this, it is possible to conclude that the main focus of the community is the developments in the project, and that the events outside do not shake the GKD community.
It is also worth noting that the floor price of GKD has been steadily increasing in both USD and SOL as of November 10. Apparently, the FTX crash also had a bullish impact on the floor price action of Ghost Kids.
Conclusion
When we look at NFT projects with strong communities which represent the authentic users of Solana, we see that the dramatic events that took place in the past weeks did not affect the users' interest in the ecosystem negatively. In fact, we see that these events even had positive influences on some of the on-chain metrics. This indicates that Solana users' conviction in the communities they belong to is not influenced by external events or centralized, third party entities at all. As long as daily users of Solana consist of such strong and confident communities, black swan events like FTX bankruptcy are unlikely to hinder the success of the Solana ecosystem in the long run.
Author: @levvercetti
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