Original Author: Sanqing, Foresight News
On January 5, the NFT Paris developer conference, originally scheduled for February, suddenly announced its cancellation. The once vibrant Seine River, known for all-night parties, is now left with a cold official announcement tweet: "The market crash has hit us hard. Even with aggressive cost-cutting measures, we still cannot sustain ourselves."
Five years ago, digital artist Beeple's work "Everydays: The First 5000 Days" sold for a staggering $69.3 million at Christie's auction house. Following that, from CryptoPunks selling for tens of millions of dollars to countless digital collectibles endorsed by mainstream institutions, it was the golden age of NFTs.
From a record-breaking auction sale written into history to a forced cancellation of an industry conference, NFTs have completed a full cycle from frenzy to liquidation in just five years.
Image - Everydays: The First 5000 Days NFT
Imbalance in NFT Market Supply and Demand
Explosive Supply. According to CryptoSlam data, the supply in 2025 increased by 35% compared to 1 billion in 2024. Over the past four years, the total number of NFTs skyrocketed from 38 million to 1.34 billion, an increase of approximately 3,400%.
Declining Sales. According to CryptoSlam data, the total sales of NFTs in 2025 were approximately $5.63 billion, a 37% decrease from $8.9 billion in 2024. CoinGecko data shows that the total market cap of NFTs fell from a peak of about $17 billion in April 2022 to about $2.4 billion by the end of 2025, a decline of about 86%. In just 2025, the total market cap of NFTs shrank from about $9.2 billion in January to the end-of-year scale, with a drop of up to 68% within the year.
Diluted Liquidity. As minting thresholds lowered, the market entered a "high-frequency, low-price" mode. According to CryptoSlam data, the average transaction price dropped from $124 in 2024 to $96 by the end of 2025. Compared to the average transaction price of over $400 during the peak bubble period of 2021-2022, it has fallen by three-quarters.
Image Source: CryptoSlam
Even once top NFT projects and blue-chip NFTs are not spared. For example, the floor price of CryptoPunks has dropped to about 30 ETH, down 78% from its peak of 125 ETH in 2021; Bored Apes (BAYC) fell 83% from about 30 ETH to around 5 ETH; Azuki dropped 93% from about 12 ETH to 0.8 ETH.
Collective "Flight" and Evolution of Platforms
The movements of industry leaders mark the end of this cycle.
OpenSea, which once held the top position in the NFT market, saw its platform revenue drop from $50 million to $120 million per month during the NFT golden age to less than a million.
As a result, OpenSea announced a transformation, shifting from a pure "NFT marketplace" to a universal on-chain trading center called "Trade Everything," covering physical collectibles and tokenized digital assets, and confirmed it will issue a token.
Blur, which once debuted at its peak, has seen its TVL continue to hit new lows, with its token price dropping 99% from its high.
Magic Eden, a Solana chain project, after a year of operation, launched its token, but due to the NFT market conditions and the impact of bearish expectations, the platform's trading volume began to shrink, and its token price also fell over 98% from its high.
Even projects that could not keep up with the changing times, such as the veteran NFT trading market X2Y2, have been eliminated and completely shut down, with the team shifting to the AI field.
From "Token" to "Brand"
Amidst the widespread despair, Pudgy Penguins has successfully broken through against the trend, becoming an industry outlier. Its success does not rely on complex innovations in token technology or short-term speculative hype, but rather on transforming digital IP into physical consumer products, gradually building a sustainable brand ecosystem that spans Web3 and traditional retail.
Through the dual revenue model promoted by CEO Luca Netz, Pudgy Penguins deeply integrates IP licensing with physical products, with its toys now available in over 10,000 retail channels worldwide, including Walmart, Target, and Walgreens. According to AInvest, this transformation has brought the project about $50 million in annual revenue, effectively offsetting the overall shrinkage of the crypto market.
Image - Pudgy Penguins toy shelves at Walmart in the U.S.
During the Christmas season of 2025, Pudgy Penguins spent about $500,000 projecting a giant animation on the Las Vegas landmark Sphere.
Image - Pudgy Penguins image on the Sphere
This advertisement, aimed at millions of tourists, avoided crypto jargon and NFT terms, presenting only a family-friendly IP image, stimulating liquidity in the secondary market through brand exposure. In the past 14 days, the floor price of this NFT has risen by 25%, and trading volume has increased by about 33%.
This shift from speculation to cultural operation seems to be becoming a consensus among industry survivors. In May of last year, Yuga Labs, the publisher of Bored Apes (BAYC), transferred the IP rights of the top NFT project CryptoPunks to the non-profit organization Infinite Node Foundation, aiming to strip it of its speculative attributes tied to price fluctuations and seek longer-term artistic protection and cultural operation.
Physical Backing and Functional Return
In addition to IP branding, NFTs are becoming the underlying tool connecting real-world assets (RWA).
Physical Card Trading. The platform Courtyard.io is changing the game. They store real Pokémon cards in certified vaults and tokenize them as NFTs. Within 30 days at the end of 2025, the platform processed over 230,000 transactions, generating about $12.7 million in sales, proving the strong market demand for such high liquidity, physically-backed assets.
Functional Tickets. FIFA has also joined this camp, introducing "priority purchase" NFTs in the ticket sales for the 2026 World Cup. These NFTs are not for speculation but serve as a verification tool to prevent scalping and price fraud in the secondary market.
What Has Died in NFTs, and What Remains
NFTs have not "cooled off," but they have indeed died once.
What has died is the illusion of viewing NFTs as financial assets that can be minted and traded solely based on narrative, detached from real-world value. In the face of unlimited supply and limited demand, this path is destined to be unsustainable.
What remains is the role of NFTs as a "credential layer." They are no longer required to create value independently but are embedded within IP brands, physical assets, and functional scenarios, undertaking the fundamental functions of rights confirmation, circulation, participation, and verification.
From the toy shelves of Pudgy Penguins to the on-chain circulation of physical cards, and to the anti-scalping mechanism for World Cup tickets, NFTs are retreating from the speculative stage back to the toolbox.
For the NFT speculative market, this is undoubtedly a winter. But for NFTs themselves, it feels more like a rebirth after disillusionment.
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