THE NFT space was in full swing last March when Formfunction – a Solana market focused on unique works of art in a single edition – announced that it had raised nearly $5 million in funding from leading donors. A year later, however, amid shifting tides in the NFT world, Formfunction revealed it was closing up shop.
The company announced the decision todaywriting that it will close its NFT market on March 29. In a blog post, the founders didn’t give many details about what prompted the decision.
“We’re proud of what we’ve built as part of our mission to help creators earn a living, and we’re grateful for the support and love we’ve found in this community,” the post reads. “It was an extremely difficult decision; However, after much discussion and careful consideration, we have come to the conclusion that we cannot continue to use Formfunction.
We’re proud of what we’ve built as part of our mission to help creators earn a living, and we’re grateful for the support and love we’ve found in this community.
To all the creators and collectors who have used Fofu over the past year, you are what really made our platform shine.
— Formfunction (@formfunction) March 15, 2023
Decrypt reached out to Formfunction co-founder Katherine Liu for further comment, but did not immediately respond.
Formfunction launched in February 2022 and announced its $4.7 million seed funding the following month. The round was led by Variant Fund with backers like OpenSea Ventures, Solana Ventures, Pear VC, Canonical Crypto, and Palm Tree Crew Crypto also in the mix. Decrypt also contacted Variant Fund but had no response as of press time.
The NFT market has changed dramatically since last spring. At the time, the broader market was generating billions of dollars in organic NFT trading volume each month, with soaring prices for “blue chip” projects as the Bored Ape Yacht Club and successful NFT mints that have brought in dozens or even hundreds of millions of dollars in sales.
But the demand for high-value NFTs dropped sharply from last May as the broader crypto market struggled, leading to lower trading volumes and lower asset prices. According to data from DappRadar, monthly organic NFT transaction volume remained below the $1 billion mark each month from July 2022 to January 2023.
Sales surged again last month, with DappRadar pointing to over $2 billion in sales– more than double the January tally. However, much of this additional activity comes from traders on the market upstart Ethereum NFT Blur that quickly flip assets to yield token rewards. A data startup, CryptoSlam, has classified these transactions as “fictitious transactions”, although he recognizes that the activity does not meet the classic definition of laundry professions.
There are fewer organic NFT transactions in the market, but emerging markets have also taken market share by reducing their own platform fees while reducing the amount of royalties paid to artists and creators on secondary sales. And historic marketplaces have had to follow suit For keep competitive distance.
In other words, it is harder to mine an NFT market. Even so, it’s not yet clear why Formfunction chose to close now.
Just four months ago in November 2022, Formfunction boasted of having the third highest weekly trading volume of all Solana NFT marketplaces. He claimed to have managed 34,210 SOL in sales this week, or $491,000 at the time of the tweet. Formfunction takes a 3% reduction in secondary sale prices and a 5% share of primary mints on the platform.
But the Solana NFT cake, in all markets, has gotten smaller. Solana NFTs generated approximately $76 million in total trading volume in February 2023, according to CryptoSlamdown more than 50% from January and down sharply from the March 2022 total of $209 million when Formfunction announced its funding.