In recent weeks, there's been a silent explosion of growth across generative NFT art, fueled by experienced speculators looking to consolidate their ETH into safer bets amidst a major crypto retraction. Just recently, we saw Chromie Squiggles, Autoglyphs, Fidenzas, and Ringers, amongst many others, surge to new all-time-high levels. Yet still, this movement has seemingly gone unnoticed when compared to how impressive this feat is amongst current market conditions.
In this report, I'm going to contextualize the growth that has happened, explore why experienced investors see it as a solid bet, and shed light on some of the top collections & artists that are helping to drive growth.
The art sector as a whole is showing strong conviction from investors as its index points just recently reached 1.2K. In terms of a direct performance comparison, the data indicates that the Art sector is currently outperforming the rest of the NFT sector at a 5x rate on a MoM basis. For reference, if you'd have invested in the Art-20 Index a month ago (at the time of writing), you'd have an unrealized 64% gain today.
Source: Nansen.ai (Trends & Indexes)
Generative Art Explained
Out of courtesy, before we dive deeper, I'm going to back up for a moment and start from the top by explaining what generative art is and how it works.
Generative art is art that has been generated using a script that randomly produces colors, patterns, and/or shapes that are organized into a creative piece of digital artwork. In simpler terms, it's art created by a computer script that is programmed by the artist.
The innovation lies in the creative process, where artists can now store this process inside generative scripts on-chain, which then allows collectors to interact with it through smart contracts so they can receive a unique output. This output is the artwork itself, full of randomized properties making it uniquely distinct from all other outputs by the same script. It's kinda like having an artist create instant on-demand artwork for you with the assistance of the blockchain to randomize the outputs.
And while generative art has been around since the early 1960s, smart contract technology has enabled new opportunities for unique creation that could not have been reached before.
But is this just another flash in the pan or is there actual fundamental value to be drawn from here? Let's dive deeper.
The Bull-Case: It's Still About Money
Meanwhile many will claim to buy digital art solely because of its "aesthetically pleasing visuals", there are several bull cases beyond this statement that make it an appealing investment for speculators:
#1: Archeology & Historical Significance
As NFTs and crypto as a whole gain popularity and enter the mainstream, many are looking to place their bets on historically significant pieces that are attributed to being either the first or some of the earliest editions of new subcategories.
Take, for instance, Autoglyphs, established in 2019 by LarvaLabs; this 512-piece collection is widely recognized as the first generative NFT art project with a floor price of 300 ETH at the time of writing.
#2: A More Convicted Collective Mind Share
For a while now, many have been speculating how art assets would fair in a serious downturn given the impact non-fungibility typically has on liquidity. But with the most recent showcase of strength amidst one of the largest crypto pullbacks to date, it's become clear that generative art collectors have different timelines and aren't planning on selling anytime soon.
This is important to note because the problem with inexperienced retail investors is that they most often end up buying into things they don't really understand in hopes of simply riding the waves and making money. But when volume and momentum starts to fade, they end up panicking, with no fundamental value to hinge onto. This causes a rainfall effect, which in turn is largely responsible for the far majority of volatility across the crypto markets.
So while the influx of new retail speculators are still predominantly flocking to social PFP and meme projects to buy into hype and momentum, many experienced and serious long-term investors are hedging their bets in the art sector instead.
#3: More Resistance To Market Volatility
With the previous point in mind, this creates a much stronger resistance to fluctuating market movements. Investors are easier able to rest safe and sound knowing that their fellow ETH & art maxis don't care if there's a 90% ETH retraction, because their conviction lies in the long-term.
*the above assumes that you're also long on ETH
#4: Void Pressure & Execution-Risk
NFTs across the social PFP sector (accounting for 80% of the NFT-500 Index) typically move on an accelerated timeline, meaning that investors expect announcements and catalysts much more frequently than in traditional markets. This creates an unprecedented amount of pressure and risk for even the most experienced founders.
In contrast, across the art sector, this pressure is much more void as these collections simply have to exist amidst a growing ecosystem in order to preserve and increase in value. Founders (artists) are not expected to deliver announcements every second week, but rather to just maintain a positive positioning. This means that nothing needs to be built for the core value proposition to be delivered upon–because it already fulfills on its promise.
#5 Product-Market-Fit Combined With Easy Differentiation
The generative art niche has already found meaningful product-market fit within the NFT sector and continues to draw in world-class talent from various creative realms.
Generative digital art is in itself a fundamentally new medium that offers endless possibilities of automated artworks with every unique iteration. This enables and makes it much easier for world-class talent to differentiate themselves and create something unique and valuable.
As the adoption of these AI generative features become hailed as a new era in art, it also means giving new collectors a chance to mint or collect the coming digital Picassos at much more affordable prices. It's a win-win all-around.
Art Blocks was the first platform to recognize and facilitate an actual market for generative art, and as a result of that, it quickly became the leading and most dominant generative art platform.
The platform was founded by Erick Calderon, aka Snowfro, who saw the need for a native platform where artists could launch and sell their generative artwork pieces to avid NFT art enthusiasts.
Needless to say, since then, the platform has become wildly successful boasting as home to some of the most valuable generative art pieces such as Fidenzas, Chromie Squiggles, Ringers, and many more that were launched on Art Blocks.
Clearly, the art Blocks model is working, but what is that model exactly? Let's dive a little deeper.
Art Blocks vets and ensures that you'll only find top-tier creative talent on its platform. Each project on its platform is placed within one of three collections:
- Curated - Hand-picked collections/projects by Art Blocks' own team
- Playground - Artists who were previously featured in the Curated collection
- Factory - Artists who don't want to wait for acceptance into Curated
The Curated collection is considered, more or less, the creme de la creme of the generative art NFT world. Many of its pieces trade for thousands of times more than what they were originally minted for and account for the far majority of total volume on the platform.
With this in mind, let's zoom in on some of the most sought-after Curated collections, and present their surrounding unique value propositions and what makes them appealing in the eyes of speculators and art enthusiasts.
Chromie Squiggles by Snowfro
Chromie Squiggles is the first Curated drop to ever launch on Art Blocks (Collection #0) and is arguably the most recognizable Art Blocks Project. The project was launched by Snowfro, the founder of Art Blocks, and serves as "his personal signature as an artist, developer, and tinkerer." Just recently, the collection has hit new ATH FP levels of 14.4 ETH and continues to push higher as volume seems to persist.
Many believe that as Art Blocks and the subcategory as a whole continue to gain popularity and attract talent, it will increase Art Blocks' historical significance and carry its value proportionally. Outside of this, the collection size of 10,000 also provides liquidity and daily buyers which makes it one of the best opportunities for trading as well.
Fidenza by Tyler Hobbs
Fidenzas have become what many consider to be one of the flagship generative art collections given its high degree of complexity that gives every individual piece a perception of a highly sought-after work of art.
The case for Fidenzas is that they've already cemented their position as incredible pieces of generative art that will go down in history as having one of the most versatile algorithms that helped showcase what was possible through algorithmic art.
Ringers by Dmitri Cherniak
Ringers was conceptualized from a curious thought of the infinite ways a simple string could wrap around an assortment of pegs. With just 1,000 pieces, the result was more possible configurations than the number of atoms in the universe. Because of this, Ringers very quickly became a study in geometric minimalism and captivated most of the art community.
Its significance as the first project with that many permutations makes it one of the most exciting case studies across the entire sector. The collection also holds the highest record for a secondary market sale (2,100 ETH) of any Art Blocks collection piece.
Archetype by Kjetil Golid
Archetype is a collection that is built on the concept of rectangle partitioning, which is the act of splitting a rectangle into smaller rectangles. Kjetil describes the collection as "the use of repetition as a counterweight to unruly, random structures. As each single component looks chaotic alone, the repetition brings along a sense of intentionality, ultimately resulting in a complex, yet satisfying expression."
This perfect balance between chaos and order has made the collection become an integral part of any serious art connoisseur's collection and helped put Kjetil on the map as one of the incredible early creatives of Art Blocks.
Subscapes by Matt DesLauriers
Subscapes is a collection that seamlessly blends the characteristics of Matt DesLaurier's own studio apartment with 3D animated artistic landscapes. From multi-colored psychedelic geometric renderings across the edges of an imaginary landscape to black and white luxury land chunks, it's highly likely that these beautiful renders perhaps sparked the ideas for many of the Metaverse land projects we see today.
The value proposition is similar to many other projects mentioned on this list, as Subscapes was one of the earliest projects to launch on Art Blocks. This, combined with the fine minimalistic edges and the wide range of possible combinations, makes collectors feel like they have something truly special.
Now meanwhile there are many other exciting projects on Art Blocks, I want to step outside of our outlined bubble and take a look at some of the other prominent generative art projects that launched outside of the platform:
Autoglyphs by LarvaLabs
Autoglyphs is the first 100% on-chain generative art on Ethereum. It was an experiment in generative art dating back to 2019 by anyone who was willing to donate the creation fee of 0.2 E (around $35 at the time) to LarvaLab's chosen charity, 350.org. After 512 glyphs were created, the generator shut itself off forever and the glyphs became available only on the secondary market.
The bull case for Autoglyphs is that it holds the most significant archeological value of all: that it was first. The only preface for its future increase in valuation is that NFTs, herein the generative art sector, simply have to persist and not fade.
Series 0 - 5 by DEAFBEEF
DEAFBEEF is a generative audiovisual artist who pushes the limits of what can be generated using nothing but a 10-year-old computer, a C compiler, and the human imagination. Each piece is generated at the time of minting from a random hash value, influencing musical elements including tempo, timbre, pitch, and time signature. Simple rules lead to surprising variation, giving each piece its own distinctive personality while retaining a common theme.
Deafbeef is the first to explore audiovisuals on-chain and carries that historical significance with him throughout his art. Many prominent collectors have invested in his pieces and consider him an innovative OG artist in the space.
There's no doubt that generative art is a shining light amidst the darkness of the markets right now, and that Art Blocks has proven that it's here to stay. However, despite Art Blocks and generative art showing immense strength and cementing itself as a sound asset class, liquidity continues to remain a missing factor from the equation.
But with a pool of world-class talent and a collective of serious art connoisseurs showing demand, it's hard to argue that the generative art vertical isn't an excellent opportunity for long-term-minded speculators. Whether or not that kidney you got rid of to buy a grail is worth it will rely on whether people will look back on these collections with the same reverence as we do with Baroque art.