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Solana NFT slump forces Formfunction to shut down marketplace

Formfunction to shut down marketplace on March 29, 2023, after only 13 months of operation. The platform cited an inability to continue operating but did not disclose the exact reason for its closure.

Formfunction’s head of community and marketing, known by their pseudonym “Magellan,” tweeted on March 15 on Formfunction to shut down the marketplace that the cofounders and the team will “pivot to a new direction, likely outside of the crypto [and the] SOL space,” but did not provide further details.

Since its launch just over a year ago, on February 3, 2022, Formfunction has conducted $5 million in sales despite a “brutal bear market.” Shortly after its launch, the platform raised a $4.7 million seed round in March 2022, led by venture capital (VC) firm Variant Fund and contributions from other VC firms Solana Ventures, Canonical Crypto, Pear VC, Palm Tree Crew Crypto, and OpenSea Ventures.

However, the wider Solana NFT space has experienced a significant downturn, with floor prices and trading volumes plummeting alongside a drawdown in the price of SOL. Figures from Solana NFT data aggregator SolanaFloor show that its index of the “blue chip” NFTs on the blockchain has seen a 75% price drawdown in dollar terms since early February 2022. The daily number of buyers of Solana NFTs has also seen a slowdown over the past 12 months. According to data from CryptoSlam, daily unique buyers currently hover around 7,000, almost half the amount seen on average at the start of 2022.

SOL’s price has also tanked since Formfunction’s launch. At the start of 2022, SOL traded at around $100; it has now fallen over 80%, trading around $19 at the time of writing. The price of SOL took a significant hit in the November 2022 collapse of FTX and has struggled to regain traction since. FTX founder Sam Bankman-Fried was an early investor in the Solana blockchain.

Notable NFT collections that were first native to Solana are also seemingly abandoning the platform. In December last year, DeGods and y00ts, two top-performing Solana NFT projects, announced that they were bridging to Ethereum and Polygon to “explore new opportunities” and to allow for the continued growth of the collections.

The co-founders of Formfunction, Matt Lim and Katherine Liu have yet to comment on the platform’s closure. Cointelegraph has reached out to them for comment.

The closure of Formfunction highlights the challenges that NFT marketplaces and projects face in a volatile market. Despite the initial hype and excitement around NFTs, the market has faced significant fluctuations and challenges, with many projects failing to gain traction or maintain momentum.

As the NFT market continues to evolve and mature, it remains to be seen which platforms and projects will thrive and which will fall by the wayside. However, the market is still in its early stages, with plenty of room for growth and innovation.

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