2023 NFT Market Review: Integration with AI, Blockchain Games, and Social Media, Solana and Bitcoin NFTs are Gradually Becoming Mainstream

Compiled by: Deep Tide TechFlow

As we look back on 2023, it's clear that NFTs have just weathered a tough bear market. However, exploration in adversity has always been synonymous with Web3, and thanks to new technologies and new driving forces, many NFT projects have not only survived but thrived. This article takes us back to review the NFT market in 2023.

1. The Rise of NFT L2

When I first started researching NFTs in 2019, the NFT L2 scene did not exist. This year, we began to see various NFT-friendly L2 developments.

Pioneers like Arbitrum and Optimism started to see more minting activity, and their evolving technology stack was used to launch new cultural centers like Xai and Redstone.

Industry giants like Coinbase and Zora also joined the competition, deploying Base and Zora Network, respectively.

Newcomers also joined the scene, such as Frame, which integrates NFT royalties directly into its network.

In other words, the era of NFT scalability has officially begun!

2. New Capabilities of PFP

The domain of NFT profile pictures (PFP) took a particularly hard hit during this bear market, with the attention and floor prices of most projects in this category declining in the first three quarters of the year.

However, some NFT series defied the trend and emerged as dark horses in the PFP category, such as Openens and Pudgy Penguins.

Jack Butcher's Openens launched Set 001 in May 2023, providing a new blueprint for releasing collectively curated NFT series over time and inspiring the imagination of thousands in the process.

As for Pudgy Penguins, the project upgraded to a blue-chip PFP after a series of significant developments in 2023, the most important of which was placing Pudgy Toys in 2000 Walmart stores.

3. Development of Game NFTs

The entire NFT gaming scene made significant progress in 2023, but it's safe to say that the dominant games in this field, Axie Infinity and Parallel, continued to perform exceptionally well.

Axie's ecosystem not only expanded with some new games based on Axie but also saw significant upgrades to its main game, such as the introduction of Axie Experience Points (AXP) and the Axie Part Evolution system.

On the other hand, Parallel released a new starter deck this year and launched a widely praised test version of its game.

These two games are better than ever, and there's more exciting content on the way in 2024!

4. Infrastructure Renaissance

In 2023, there was an incredible explosion of infrastructure around NFTs.

For example, Nouns V3 just open-sourced the first DAO-native forking mechanism.

The ENS Name Wrapper has also been released, providing unprecedented flexibility and functionality for ENS domain holders.

Additionally, Zora introduced Protocol Rewards, a system that rewards Zora users with ETH.

But these are just the tip of the iceberg. ERC-6551 just turned every NFT into a wallet, mint.fun made minting easy, Privy introduced a user-friendly embedded wallet, and so on.

In short, now is a great time to build around NFTs!

5. Multi-Force

While Ethereum currently dominates the majority of all NFT activity, Bitcoin and Solana NFTs made significant inroads into the NFT camp in 2023.

Since the launch of Ordinals in January, the Bitcoin NFT scene has seen a surge in activity. Similarly, Ordinals quickly standardized other alternative Bitcoin tokenization methods, such as Stamps, which only accelerated recent Bitcoin NFT activity.

As for Solana, the network has become a frontier for the next big airdrop and has seen a significant increase in its SOL token and activity statistics in recent months, attracting a large number of new users who are flocking to top projects on the chain, such as NFT markets like Magic Eden and Tensor.

Therefore, Ethereum, Bitcoin, and Solana are the current mainstreams of NFTs, and this trend is expected to continue in the foreseeable future.

6. On-Chain Revival

In 2023, on-chain NFTs and on-chain experiments experienced a revival.

For example, the minting and recent Terraforms update of Chaos Roads have pushed the boundaries of blockchain art. Additionally, projects like BasePaint and Party have paved new paths for people to coordinate and create together on-chain.

Of course, "on-chain" is not inherently better than "off-chain." It's just that blockchain is a new medium + infrastructure combination, and the vision created here has never been as open and full of potential as it is now!

7. Flourishing of Crypto Social

Crypto social applications stood out in 2023, with typical examples being Warpcast and Lens.

With the surge of applications, NFTs received new attention as these projects highlighted and promoted NFT minting.

Therefore, finding out what NFTs your friends are minting and sharing what you're minting at any given time has become easier.

In short, the continuously emerging crypto social scene this year has made NFTs more social overall!

8. The Arrival of AI

In 2023, we witnessed the first important projects combining AI with NFTs.

In the metaverse space, Upstreet, a multiplayer game world designed for interaction between humans and AI agents, released a 28-page ChatWorld exploring various potential applications of AI agents in Upstreet.

Additionally, game experiments like Parallel Colony introduced the concept of "1.5 player games," where humans passively guide autonomous AI agents to perform various tasks, blurring the boundaries between human game endings and AI game beginnings.

While these efforts are still in the early stages, they indicate the potential for significant changes in the future with the combination of artificial intelligence and NFTs.

9. RWA Tokenization

RWA stands for "real-world assets" on the blockchain, which can be anything from real estate to physical trading cards.

One of the primary ways to bring off-chain assets onto the chain is to use NFTs to represent them!

In fact, in 2023, we saw a high-profile example of NFT-supported RWA through the tokenization of Pokémon cards by Courtyard.

This is just one example in the cultural realm, but more experiments, whether cultural or financial, are gradually coming.

### 10. Cross-Chain Development

2023 was also a year when NFTs became more feasible than ever to move from one blockchain network to another.

This is largely due to the rise of projects like LayerZero, which is a pioneer in cross-chain NFTs for transferring between blockchains, and Holograph, which developed Hologram NFTs that maintain consistent IDs across all Ethereum Virtual Machine (EVM) environments.

Additionally, Chainlink's Cross-Chain Interoperability Protocol (CCIP) was also launched this year, paving another solid path for projects to achieve NFT interoperability across a range of chains.

Therefore, NFTs no longer need to be limited to one network. They can go where they need to go, which is a relatively new possibility that will see widespread development in the coming years!

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