Demystifying NFTs

Understanding NFTs and the players in the NFT Market

Demystifying NFTs

Understanding NFTs and the players in the NFT Market

Date: 23 January 2023
Author: Gaya Chandrasekaran

In this article we aim to demystify NFTs. We begin with understanding NFTs that involves two key elements, then move on to market statistics – the current & projected overall market cap. 

We also look at various categories to demonstrate that NFTs are not all about Digital Art (which represents a mere 14% of the overall volume traded). Next, we understand the players in the NFT Market and the Top 10 NFT Marketplaces. Finally, we discuss Crypto Winter & NFT valuation.

Understanding NFTs

NFT stands for Non-Fungible Token. Understanding NFTs requires clarity on two key elements:

The Principle of Fungibility: Fungible assets are those where each unit is identical and interchangeable such as Bitcoin, Ethereum, all other crypto currencies, non-digital examples of fungible assets include Bank Notes, commodities and common shares. 

This contrasts with NFTs that are unique, of different value and can’t be interchanged or substituted. Physical assets like diamonds, land, or baseball cards are not fungible because each unit has unique qualities that add or subtract value.

The Concept of a Token: An NFT is a token or receipt of ownership that points to an asset but is not the underlying asset itself. It is generated using a ‘smart contract’, which is a computer code stored on a blockchain.

Examples of NFTs include CryptoKitties (Digital Collectibles), NBA Top Shots (Digital Collectibles), CryptoPunks (Digital Collectibles), Everydays: The First 5000 days by Beeple (Digital Art).

NFT Market Statistics

  • Historicals: The cumulative average value of all NFTs (termed ‘market cap’ by, a leading NFT data resource provider) was $16.9bn at 2021 (vs. $44.2bn quoted by ‘The 2021 Market Report’ of Chainalysis, a blockchain analysis firm). Difference is because’s Yearly/Quarterly NFT Market Reports include transactions on Ethereum ERC-721, Ronin and Flow whereas Chainalysis includes ERC-721 and ERC-1155 contracts. Also, account for activity that has qualified as coming from genuine transfers (excludes those from tests, robots, wash-trading, etc.). The equivalent measure for 2022 will be released by Nonfungible in the year-end report (it is not available in the Quarterly reports). 
  • Looking Forward: Forecasts by Verified Market Research (a global research & consulting firm) of $231bn by 2030, a CAGR of 33.7% over the next 8 years with key drivers of growth include art, music, gaming and collectibles. The current market environment is likely to slow down the forecasts, however the direction of growth is quite clear.

NFTs & Digital Art

Digital Art is one of five broad segments as classified by Nonfungible’s NFT Market Reports. The largest segment is collectibles and accounts for 60% of volume traded, followed by Art (14%).



Volume of $ Traded (%)


A project, the aim of which is to be collected. They may be avatars, animals, aliens or any other type of digital item. These collectible assets may have several uses from forming part of a community and being used for video games to providing exclusive rewards or perks.


Digital Art

NFTs created on artistic marketplaces, from individual collections of artists or a generative art algorithm.



Utilities cover very varied uses from domain names to concert tickets. They can also be badges or access codes enabling access to exclusive content.



Interconnected virtual worlds. NFTs mainly represent virtual land in this segment, they can also take the form of ‘wearables’ and accessories to personalise your avatar.



Video games using NFTs in their gameplay. They may be weapons or equipment in an RPG, unique skins for weapons or characters.




Buyers & Sellers Rendezvous: NFT Marketplaces

NFT Marketplace is a digital platform for buying and selling NFTs that facilitates purchase & sale. Each marketplace differs based on fees, payment options and permitted blockchains.

The top 10 marketplaces vary according to different sources. 

Based on volume traded, Opensea is the largest marketplace with a valuation of about $13.3bn (Jan-22), followed by Larva Labs, Solanart, Rarible, SuperRare, Theta Drop, Foundation, Makersplace, KnownOrigin and Nift Gateway (source: Nasdaq). 

Buyers are typically in the age group of 20-30 and male falling within an income bracket of >$150k p.a. as well as HNI collectors. 

Sellers are typically blockchain technology companies that develop NFTs and digital collectibles including Yuga Labs, Larvalabs, Dapper labs, corporates & financial institutions in collaboration or partnership with blockchain technology companies as well as individual artists.

Crypto Winter & NFT Valuation

Valuing an NFT is generally challenging due to lack of clear guidelines, regulations and structure. Also, NFTs as an asset class are very versatile with expanding applications. 

However, there are several factors that influence the value of NFTs which can provide broad guidance, although these factors themselves are rapidly evolving. 

The key factors include rarity, utility, tangibility, interoperability, social proof determining future value, ownership history, liquidity premium as well as speculation.

Crypto winter is when digital asset prices drop and remain substantially lower than their previous highs or levels for a prolonged period. The crypto market had a market cap of $2.9tn in Nov-21, which fell by ~70% to $918bn in Oct-22. 

Crypto winter has surely affected activity and valuations in the NFT space during 2022 to the extent that NFTs are priced in cryptos and a general discount in the market to anything linked to cryptos.

As part of the next article we will expand a bit more on the last topic of this article and explore what Crypto Winter means for the NFT World.

Please find below links to Fintech Circle Webinar on NFT Masterclass – Part I & II by Gaya Chandrasekaran which discusses these topics and others in a bit more detail. 

NFT Masterclass – Part I 

NFT Masterclass – Part II

“Please note the opinions expressed within the content are solely the author’s and do not reflect the opinions and beliefs of people, institutions, or organisations that the owner may or may not be associated with in a professional or personal capacity.”

About the Author

 Gaya Chandrasekaran

Gaya works in the Global Digital Solutions Group (DSG) within Santander Corporate & Investment Banking (SCIB), which focusses on developing innovative, sustainable and profitable digital capabilities and providing state of the art advisory services to clients. She joined Santander in 2014 gaining broad experience across Corporates & FIG in SCIB and has also worked on several strategic initiatives including regulatory deliverables. Her work involved deal structuring, due diligence and portfolio management. During this period, she has won awards and nominations to Accelerating You Programme for Future Leaders and Global Risk Leadership Programme.

Gaya recently completed the Fintech Programme from Oxford University. She holds a Masters in Finance from London Business School (Recipient of Graduating Student Award) and an MBA (Gold Medallist) from India.

She has contributed actively to alumni engagement at LBS since graduation through several leadership positions, most recently as an ExCo Member of London Alumni Club where she led events on identifying fintech winners, cyber risk, sustainability & factor investing involving C-suite speakers, industry experts and faculty. Gaya is a Mentor and the Head of Personal Excellence Programme (PEP) for London with Women in Banking & Finance (WIBF). She is passionate about supporting women in their ambitions and enjoys organizing knowledge-sharing networking events.

Outside her day job, Gaya is a self-taught artist and has been influenced by art right from her early childhood. She loves learning new techniques and underwent training in India as well as in the UK (Slade School of Art). Her choice of themes are inspired by key life moments. An expression of her thoughts and emotions, her artworks invite the audience to go deep within, explore and connect with their own experiences. Gaya offers NFTs in lieu of a Certificate of Authenticity to all her collectors – its her mission to facilitate digitisation to her audience. Based on feedback from a renowned NFT Collector she is now exploring software tools to mint NFTs of pure digital artworks. 

Gaya’s first solo exhibition was in 2018 at Santander’s London office, a fundraiser where she sold >70% of artworks donating 50% of proceeds to charity. Her painting, ‘The Golden Lion’ won a special commendation in the David Shepherd Wildlife Foundation’s #sketchforsimba competition in 2019. She conceptualised the first ever Art Exhibition within the LBS community, which led to LBS Art Week in 2021 where her paintings were selected for the online exhibition and she was a chosen speaker of the Artists Panel. She exhibited her artworks with The Holy Art Gallery and The Boomer Gallery in London during 2022. Her artworks are published in the Artist Talk Magazine Issue 22 & 23. 

“Please note the opinions expressed within the content above are solely the author’s and do not reflect the opinions and beliefs of people, institutions, or organisations that the owner may or may not be associated with in a professional or personal capacity.”

You might also be interested in