The NFT Market Is Exploding
The Intelligent Insurer #9 — Make sure your NFT investment isn’t exposed to unnecessary risks — Insure it with Insured Finance
The Non-Fungible Token (NFT) marketplace is experiencing an explosion. In a significant growth that started in 2020, both trading volume and increases in the number of participants are swelling by the day. The NFT innovation has introduced a viable system of unlocking the value that exists in various industries. This innovation is attracting both attention and significant investment. Industries like art, gaming, real estate are now being revolutionized with new money entering the system.
However, Increasing investments implies increasing risks. But unlike the early days of cryptocurrency development, insurance solutions are now available. These solutions are necessary to protect investors from running into the various risks associated with cryptocurrencies. In the latest Intelligent Insurer, we detail how Insured Finance can provide comprehensive protection for investors, boosting their confidence and ensuring that investors’ funds do not get exposed to unnecessary risks.
NFT Adoption is Skyrocketing on Every Side
The NFT marketplace serves many unique industries. Due to the nature of the digital assets in this category, they can only be deployed for specific use cases that revolve around ownership and custody. NFTs are not interchangeable, nor can they be broken into smaller units. Therefore, they are deployed for verification, authentication, and other areas where provenance is necessary. This makes NFTs very suitable for industries such as arts and collectibles.
The evidence of increasing application in arts is growing considerably, especially in 2021. According to data from SuperRare, a marketplace to collect and trade unique, single-edition digital artworks, auctions and sales volume is on track to record over $8 million in February 2021. This is a huge leap from the just over $2 million volume that was recorded in the previous month.
During the same period, the number of monthly collectors has also reached a record high of almost 600. This surpasses the previous record high of 457 collectors that was incidentally recorded in the previous month as well.
Indeed, available data reveals that the implementation of NFTs has introduced continuous growth in the artworks marketplace. This growth is not just in the area of volumes traded, but also in the number of participants. This suggests that, to a large extent, NFTs have injected a new sentiment into the industry. Perhaps, buyers have become more confident of the authenticity and uniqueness of products in the market. A cumulative record of artworks sold in SuperRare reveals that over $16 million has been generated through NFT sales. And this is just for one marketplace!
Going beyond a single marketplace and considering other artwork markets, game collectibles, real estate, and the top brands that are embracing NFTs, we realize that the market size has grown significantly over a short period. Data from Nonfungible.com shows that between 2018 to 2020, the market capitalization of NFT had risen to $338 million from scratch.
The market is still growing, as most of the big sales that are happening in 2021 were not captured in the market capitalization value mentioned above. A typical example is the record-setting virtual property sale worth $1.5 million in ETH which took place on February 9th 2021 via the gaming platform, Axie Infinity.
NFT is Suitable For Mainstream Cryptocurrency Users
To a large extent, NFT also comes across as an innovation that is designed for the mainstream. According to reports from L’Atelier, top brands like Nike, NBA, Louis Vuitton, and Formula 1 have already started to issue their own NFTs. It may only be a matter of time until other top designers and jewelers join the trend. This implies the influx of a new generation of investors and more money entering the system.
As mentioned earlier, with the growth of NFT and influx of investment comes the need for risk management and insurance. A number of insurance products already have solutions for the digital asset ecosystem. However, they often have severely restricted solutions. For instance, Nexus mutual does not cover against stablecoin failure. This will automatically exclude many cryptocurrency users.
Insured Finance fills the gap left by previous solutions by implementing peer-to-peer decentralized insurance that is powered by smart contracts on the Polkadot blockchain. Insured Finance provides tailored solutions to everyone, especially mainstream cryptocurrency users. Participants can therefore engage the NFT marketplace with the confidence that they’re not exposed to risks like technical failure.
About Insured Finance
Insured Finance is a decentralized, peer-to-peer insurance marketplace. Built on the Polkadot blockchain, Insured Finance users can request customized insurance on a wide variety of digital assets. Those that fulfill requests earn premiums and can earn a competitive return on their capital. Claims are fully collateralized and settled instantly.