Original author: ChandlerZ, Foresight News
NFT trading platform X2Y2 issued an announcement on March 31, confirming that it will officially cease operations on April 30, 2025. The platform had a total transaction volume of US$5.6 billion during its three years of operation.
X2Y2s CEO pointed out in a statement that NFT market transaction volume has dropped by 90% from its peak. He said: Market platforms live and die by network effects. Its time to let go and build something with more lasting value.
The team emphasized that this is not a complete farewell, but a strategic transformation. Over the past year, they have been exploring the field of AI, with a particular focus on the possibility of integrating AI with encryption technology. They plan to develop an AI-driven decentralized platform that aims to continuously create value rather than just follow market trends.
The CEO admitted that since the X2Y2 token is closely tied to its NFT business, this shift may affect the token price, but he is optimistic about the long-term value of the team’s new direction.
X2Y2 attracted a large number of users in the early stage through low transaction fees and no-royalty strategies, but as market competition intensified, its advantages gradually weakened. In 2023, X2Y2s average market share was 8.79%. It had a relatively high market share at the beginning of 2023, but by the end of the year, its market share was negligible.
The decline of X2Y2 is not an isolated case, but a microcosm of the downturn in the entire NFT industry. According to data from The Block, the monthly trading volume of NFTs based on Ethereum fell to almost the lowest point in recent years in March this year due to the general decline in activities on major platforms. The continued decline in activity in major markets such as OpenSea, Blur, LooksRare and X2Y2 further confirms that the NFT industry is facing severe challenges.
The sluggish NFT market
From 2021 to 2022, the NFT market has rapidly emerged as an important branch of the blockchain industry, becoming the core driving force for the growth of the Ethereum network after DeFi. Driven by active transactions, user influx, and capital injection, blue-chip NFT projects such as OpenSea, CryptoPunks, and BAYC have quickly spawned an emerging market with a valuation of over $100 billion. However, since the second half of 2022, NFT trading volume has begun to decline drastically, the value of blue-chip projects has shrunk significantly, and the entire track has fallen into a liquidity crisis.
According to The Block’s data dashboard, monthly trading volume for Ethereum-based NFTs fell to nearly its lowest level in recent years in March, falling to $139 million, a 59.9% drop from $347 million in February and approaching the lowest volume since June 2021.
In 2021, NFT transaction volume reached its peak, with a monthly peak of more than 5 billion US dollars. This period was the first time that the NFT concept broke out of the circle on a large scale, and a large number of NFT projects represented by high-value projects such as CryptoPunks and Bored Ape Yacht Club (BAYC) emerged. After 2022, the overall market quickly fell back, and the monthly transaction volume dropped significantly, averaging around 1 billion US dollars. During the same period, the Blur platform emerged and quickly seized market share, even surpassing OpenSea at one point, forming a clear competitive landscape.
According to data from Dune Analytics, OpenSea once dominated the NFT market and obtained investment opportunities with a valuation of US$10 billion. The peak transaction volume in early 2022 was even close to US$5 billion per month, becoming a symbol of the NFT boom.
After 2023, OpenSeas transaction volume has shrunk significantly, users and funds have been lost significantly, and its market share has declined significantly. The market has gradually entered a rational or even overcooled stage. In March, OpenSeas active users fell by 22% to 165,000.
ETH is on the verge of collapse
On March 31, the ETH/BTC ratio fell to 0.02193, a five-year low. ETH has fallen 39% against BTC so far this year, the first time ETH has underperformed BTC in the 12 months since the Bitcoin reward halving.
According to Glassnode data, the last time ETH underperformed BTC was in the third quarter of 2019, when the ratio fell to 0.0164, a quarterly decline of 46%. This historic performance once again reveals that Ethereum lacks sufficient endogenous growth momentum to support the stability of its value in the face of changes in market cycles.
The decline in the ETH/BTC ratio reflects the deep-seated dilemma facing Ethereum. DeFi and NFT once contributed 75% of Ethereums on-chain activities. When both of them were cold at the same time, there was a lack of new narratives. The collapse of the NFT market and the sharp decline in Ethereums gas fees directly affected ETHs intrinsic economic momentum. As the largest source of high-frequency applications on the Ethereum chain, the cooling of the NFT market has greatly reduced the transaction demand on the chain, resulting in a decline in gas fee income.
At this point, the economic model that ETH relies on, which is to promote network value through high gas consumption, has obviously encountered a bottleneck. As DeFi projects adjust and the value of blue-chip NFTs evaporates, the value foundation of ETH is also shaken.
In addition, the decline in the ETH/BTC ratio is also related to Ethereums technical path. Although Ethereums PoS transformation solves problems such as energy consumption, it does not fundamentally solve the key factor of Ethereums price performance, the sustainability of market demand. Although Ethereums successful transformation has brought higher efficiency and lower costs to the network in the long run, in the short term, its impact on ETH prices is minimal, especially in the context of the overall sluggish market environment, ETHs value performance appears to be even weaker.
ETHs future difficulties and breakthroughs: Exploration of new growth points
Faced with the current predicament, Ethereum urgently needs to find new growth points to restore its leadership in the crypto space. The negative effects of the NFT market stalling on Ethereum are difficult to reverse in the short term. The decline in network activity, shrinking gas fee income, and the systemic crisis of asset credit have caused Ethereums economic model to lose balance in the market turmoil.
The continued decline of the ETH/BTC ratio and the loss of market confidence indicate that the Ethereum ecosystem needs new breakthroughs and rebirth after the collapse of the NFT market. Whether Ethereum can break through the current difficulties and regain the favor of the market still needs the test of time, and whether it can find a breakthrough in emerging asset classes and blockchain technology innovation will determine the future fate of ETH.
