Pudgy Penguins' success happened after the announcement of its upcoming “Pengu” token launch on Solana. The NFT market is witnessing a revival, with sales rising to new highs, led by Ethereum’s dominance. However, some challenges persist. This is evidenced by the large number of NFT scams targeting artists and Kraken’s decision to close its NFT marketplace to focus on other services. Despite this, other NFT projects are still growing. Yuga Labs plans to enhance NFT utility through its acquisition of Tokenproof.
Pudgy Penguins Surpasses Bored Ape Yacht Club
Pudgy Penguins, the well known non-fungible token (NFT) project, surged past Bored Ape Yacht Club (BAYC) to claim the position of the second-largest NFT collection by market cap. Over the past 24 hours, Pudgy Penguins’ floor price climbed by 8.4%, reaching 22.1 ETH, or $86,922. It also saw an impressive 44.9% increase over the week, according to data from CoinGecko. This growth propelled its market cap to $772.5 million, surpassing BAYC’s $755 million. CryptoPunks still dominate the NFT space with a market cap of $1.5 billion.
Top 10 NFT projects by market cap (Source: CoinGecko)
The remarkable rise in Pudgy Penguins’ value happened after the project’s announcement regarding the upcoming launch of its official token, “Pengu.” The token is set to debut on the Solana network later this month, and will have a total supply of 88,888,888,888 tokens, with 25.9% earmarked for the Pudgy Penguins community.
An NFT is a unique digital asset that represents ownership or proof of authenticity for a specific item, like artwork, music, videos, or virtual goods, on a blockchain. Unlike cryptocurrencies like Bitcoin (BTC) or Ethereum, which are fungible and interchangeable, NFTs are one-of-a-kind and cannot be exchanged on a like-for-like basis. Their uniqueness and ownership details are secured through blockchain technology, which makes them quite popular for digital collectibles and other applications.
Despite the NFT market experiencing a downturn compared to its peak in 2022, there are signs of recovery.
NFTs Surge in December
NFTs started December with strong momentum, led by Ethereum’s dominance in digital collectible sales. According to data from CryptoSlam, NFTs generated more than $187 million in sales volume during the first week of December, surpassing November’s strongest week that recorded $181 million.
This growth continues the upward trend that started back in October after a challenging period where NFT volumes declined since March to reach a low in September with the worst monthly sales since 2021. October was the beginning of a recovery, which culminated in a 57% month-on-month increase in November, with over $562 million in NFT sales.
Ethereum maintained its leadership position among NFT blockchains by recording $92 million in sales last week. This was a 44.69% increase from the previous week. This surge was largely driven by popular collections like Pudgy Penguins and CryptoPunks.
NFT collections by 7 day sales (Source: CryptoSlam)
Pudgy Penguins saw $25 million in sales, reflecting a staggering 346% weekly increase, according to DefiLlama. CryptoPunks followed with $16.5 million in weekly sales, with its floor price briefly hitting 44 ETH on Dec. 4 before settling at 40 ETH, worth about $160,000.
Bitcoin-based NFTs ranked second after Ethereum after recording $43.8 million in sales. Other blockchains, including Solana, Immutable, Mythos Chain, Polygon, Cardano, and Flow, collectively contributed $47 million in weekly sales.
ETH’s price action over the past 7 days (Source: CoinMarketCap)
Ethereum’s NFT resurgence coincided with a price breakout for ETH, which surged above $4,000 on Dec. 6 to reach a high of $4,067.
Fake NFT Websites Target Artists
While the NFT market is picking up some steam, so are NFT crimes. Brooklyn’s District Attorney announced the closure of 40 fraudulent NFT marketplace websites after a case where an 85-year-old artist was scammed out of $135,000.
The victim was approached on LinkedIn by someone posing as an art dealer, who convinced him to mint his artwork on a fake NFT marketplace that mimicked the New York-based OpenSea platform. The scammer claimed the artist earned $300,000 in profit but required a $135,000 “fee” to access the funds. The artist ended up liquidating his retirement account by using credit cards, and took out a loan to pay the fee. Unfortunately, the artist soon realized that the promised payout was a scam, which left him financially and emotionally devastated.
District Attorney Eric Gonzalez stated that the case led investigators to uncover a network of fraudulent websites that are specifically targeting artists. His office believes that shutting these domains and raising awareness is crucial to prevent similar scams.
Warning signs of NFT scams (Source: The Brooklyn District Attorney's Office)
The investigation revealed that funds were traced to accounts in Nigeria, where they were then converted to local currency. The fake websites were controlled from Nigeria, and often asked users to input their crypto wallet seed phrases. This allowed scammers to empty the contents of their wallets.
Two other artists from Georgia and California were also victims of the same scam. The District Attorney’s Virtual Currency Unit urged artists to use established NFT marketplaces, avoid revealing their crypto wallet seed phrases, and stay aware of phishing attempts. It also warned that offers that seem too good to be true often are.
Yuga Labs Strengthens Its NFT Ecosystem with New Acquisition
Yuga Labs, the blockchain company behind the BAYC and ApeCoin, acquired the technology and part of the team from Tokenproof, a Web3 tokenization service specializing in verifying NFT ownership in real-world scenarios. Tokenproof’s founder and CEO, Fonz O, confirmed the acquisition on Dec. 3.
Yuga Labs co-founder Greg Solano praised Tokenproof’s contributions, and admires their joint efforts in solving complex problems to enhance the utility of NFTs, like enabling BAYC holders to access global events. As part of the acquisition, Tokenproof’s tech team will join Yuga Labs’ research and development division, The Workshop. The division was established in August during a period of layoffs and company restructuring. The Workshop is focused on advancing projects like Otherside, Yuga’s gamified and interoperable metaverse.
The acquisition is part of Yuga Labs’ strategy to make cryptocurrency tokens and NFTs a lot more accessible and engaging. Community members and developers are also excited about the move and Tokenproof’s role in adding real-world utility to NFTs.
The NFT market faced many mixed developments over the past few months. In November, NFT sales volume exceeded $562 million, reaching a six-month high. However, overall market conditions are still a bit uncertain, which was made evident through the closure of Kraken’s NFT marketplace less than a year after its launch.
According to Kraken, the decision was made to reallocate resources toward new products and services. Kraken also assured its users that they could transfer their NFT collections to Kraken Wallet or a self-custodial wallet.
