Even before the FTX collapse, nonfungible token (NFT) collections have already felt the impact of the crypto winter with trading volumes going down by 98%. With the FTX debacle, the once burgeoning space seems to have been hit with the final nail to its coffin. However, executives within the industry are optimistic about the space’s recovery.
With the enormous amount of user funds stuck in the FTX exchange amid its liquidity crisis, users have tried roundabout ways to withdraw their money. One of the alleged methods for withdrawing balances is buying NFTs based in the Bahamas. Many community members criticized the method as it bypasses bankruptcy laws, even mocking NFT utility in the process, painting a negative picture of NFTs.
However, Oscar Franklin Tan, an executive at NFT platform Enjin, believes that this is not a fair summary. Speaking to Cointelegraph, Tan said that while NFTs were used, other items could have also been used. “It had nothing to do with NFT technology and more to do with that loophole for Bahamas users,” he noted.
The executive is also positive about the survival of the NFT space despite the FTX effects and the bear market. Tan highlighted that the space should refocus on how NFTs demonstrate the acceptance of digital ownership, new models for content creators and funding content creation. He explained that:
“Admittedly, there was a lot of hype and excessive exuberance for some models, but this is true with all new technology. The NFT space is sure to stabilize and consolidate around the strongest communities, then we will see a second generation of smarter, more sustainable NFT models.”
Tan highlighted that to recover, NFT projects should focus more on utility and building their communities. Avoiding short-term speculation and unrealistic roadmaps is a must. Rather, they should have long-term sustainable value.
Various players within the NFT space also echoed the sentiment. Jamie Thomson, the CEO of NFT game studio Vulcan Forged, commented that NFTs with utility in proven markets are bound to survive. Thomson told Cointelegraph that the same cannot be said for NFTs based on speculation and bragging rights. However, the executive said that these types of NFTs will “suffer more due to more frugal hands” as users wait for a better market. Thomson further said:
“Less speculation, more mandatory utility. As with tokens, if the NFT is…