Evolution of NFT Communities: From Community Focus to Financialization

The world of NFTs has witnessed a significant transformation in recent times, particularly in the realm of community-driven projects. Initially, profile picture (PFP) NFT projects placed great emphasis on fostering vibrant and engaged communities. However, as the NFT landscape evolved, a shift towards financialization occurred, with users prioritizing financial returns over community engagement. This article delves into the decline of PFP communities, the emergence of a new dawn for NFTs, and provides insights into the future of NFT Web3 communities.

In the past year, many prominent NFT projects have transitioned from community-driven initiatives to focusing more on financialization. The shift can be attributed to the entry of new financially motivated users or a change in values among existing users. However, it is more likely that the influx of financially motivated users replaced the initial community-oriented users. This shift raised questions about the destination of community-driven users once financialization took hold.

The decline of community-centric PFP projects led to the migration of users to new consumer platforms that prioritize Web3-based community engagement. These platforms, encompassing decentralized social media, digital identity solutions, and blockchain-based domain names, not only filled the void left by the shifting NFT landscape but also ushered in an era of inclusive participation. Studying user behavior across different aspects of NFT-based applications on EVM chains provides valuable insights into user migrations and the emergence of sub communities within this rapidly evolving sector.

PFP projects, which were once the primary entry point for newcomers to the Web3 world, have experienced a decline in attracting new users. Platforms like Blur have contributed to this shift by focusing more on catering to traders rather than collectors, creators, and community members who initially fueled the growth of PFP projects.

The development of consumer applications across EVM chains has revitalized the Web3 space, offering users opportunities for meaningful connections, self-expression, and collaboration. These applications enable individuals to curate their online presence, engage with like-minded peers, and foster a sense of community in a more inclusive manner.

To deliver a seamless user experience, consumer applications beyond traditional NFT marketplaces have sought refuge on Layer-2 scaling solutions and side chains. This shift has prompted Ethereum-based PFP traders to explore new chains, with a significant number of users exhibiting nomadic behavior across different networks.

Emerging consumer applications have attracted both previous crypto users and an entirely new user base. Gateway apps like ENS, Galxe, Lens, and CyberConnect have become primary entry points for users to experience their first NFT interactions on their respective chains.

Despite the evolving narrative around PFPs, users still seek to establish online personas. Users who engaged with PFPs during the community-centric era comprise a significant segment of new consumer app users compared to early NFT traders or participants in the financialized era.

Nomadic users tend to engage with similar-purpose platforms on different chains, showcasing the overlap between decentralized social platforms on different networks. Additionally, a significant portion of new-era Web3 users, who had not previously engaged with PFPs, have interacted with other new consumer applications.

The prevailing trend among early NFT users centers around the desire for online identity and community. Platforms that facilitate user connections and identity are likely to thrive as consumers continue seeking meaningful connections and distinctive identities.

To be competitively successful, protocols should prioritize the establishment of natural network effects through user connections. By incorporating profile NFTs and follow NFTs, protocols like Lens integrate the network effects of user connections within the platform itself, unlike traditional PFPs or standalone identity protocols.

New consumer applications offer promising opportunities by capitalizing on natural network effects and market positioning. They provide valuable experiences and services to community-centric users, fostering engagement and potential long-term growth. As the dynamics of the PFP NFT trading market continue to evolve, these applications play a vital role in offering alternative avenues for users to connect, collaborate, and curate their online presence in a more meaningful and inclusive manner.

The evolution of NFT Web3 communities has witnessed a shift from community focus to financialization and subsequent user migration. While the decline of PFP communities presented challenges, it paved the way for a new dawn in the NFT space. Emerging consumer applications have revitalized the Web3 space, attracting new users and providing platforms for meaningful connections and self-expression. As the future unfolds, protocols that prioritize user connections and establish natural network effects are poised to thrive. The quest for online identity and community remains strong, and NFT communities will continue to evolve and adapt to meet the needs of their users in this rapidly changing landscape.