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In less than a year of its launch, Meta decided to pull the plug on their NFT venture. Last week, Head of Commerce and Financial Technologies at Meta, Stephane Kasriel, announced that the company will wind down its NFT platform on Facebook and Instagram. The company claims to shut NFT to focus on “other ways to support creators, people, and businesses”.
The focus now falls on the fate of the companies that had provided NFTs for organisations that aggressively invested in Web3 platforms when the now-subsided NFT wave peaked. One such company is Polygon.
Polygon is one of the most widely recognised platforms for Ethereum Level 2 scaling and infrastructure development. Facebook and Instagram had integrated with Polygon to help creators mint NFTs. With Meta’s announcement on shutting NFTs, Polygon’s future with the big tech is now uncertain.
When AIM reached out to Polygon, the company refused to comment, on record, about Meta’s decision. However, they insisted, as confirmed on tweet, that the company will continue to support and empower the creator community to “leverage the vast options within the Polygon Ecosystem”.
Has Polygon’s Growth Become Stagnant?
In September 2022, Dalip Tyagi, the then SVP and Head of Developer Relations, Polygon, spoke to AIM about how Polygon invests in technologies that are “future leaning” and that they invest “ahead of the curve”. Polygon also believed that they would become the “AWS of Web3” and would get there “sooner than most of their competitors”. However, the forward vision seems to be facing turbulence in the light of one of the biggest social media platforms having retracted their NFTs.
When plans of launching NFT on Facebook were abuzz last year in July, Polygon and Ethereum saw their token prices rise over 17%. The former has so far raised a total funding of $451.5M over eight rounds. In February 2022, Polygon raised $450M from three players—Sequoia Capital India, SoftBank and Tiger Global.
Source: Blockchain Council (January 2023)
However, after the burst of NFT hype, the company did not receive any major fundings. The last funding they received was from a non-equity assistance round in July 2022. The impact of this downturn was further highlighted last month when Polygon laid off 20% of its workforce. The layoffs were across teams, affecting about 100 employees and were said to have been a part of their efforts to consolidate multiple business units.
Future of Polygon and NFTs
The announcement of NFT closure by Meta comes at a time when NFT markets are facing a volatile decline. It was reported that volume of NFT sales have dropped 83% year-on-year. From $2.8 billion in January 2022, the monthly sales dropped to $492 million in January 2023. However, NFT is not on its way out and neither is Polygon.
Polygon and Salesforce recently announced their partnership to create NFT-based loyalty programmes. Clients of Salesforce, a CRM software company, will be able to create token-based loyalty programmes using Polygon’s platform. They would be able to mint, manage, and sell NFTs.
Collaborating with Polygon, Reddit introduced NFT avatars in July last year and is still going strong. According to a report published last month, the market capitalisation of Collectible Avatars has crossed $36 million with over 10.6 million items minted since its launch.
Polygon has also announced partnership with video game maker ‘Square Enix’ to bring NFT games into its ecosystem. Additionally, Polygon has been partnering with several web3 gaming projects, including PlanetIX, Zed Run, Crazy Defense Heroes and Karmaverse.
Polygon has been playing safe bets by diversifying its portfolio to cater to companies from different industries. The company’s partners belong to sectors ranging from consumer products and sports to social media, gaming, and more. This approach helps reduce Polygon’s risks and safeguards the company against any form of downfall faced by a particular industry.
Other Players
New entrant Amazon is working on its NFT marketplace and is expected to release it next month. Although a late entrant, Amazon will pursue its NFT ambitions without concerning itself too much with the established players it will be going against in this space. Twitter also entered the NFT market in January this year with ‘NFT profile pictures’ that are available for Twitter blue subscribers only.
The Pokemon Company, maker of Nintendo video games, similarly hinted at its possible entry into the Web3 space. The company recently posted an opening for an expert in NFT, blockchain and metaverse implying its possible foray into NFT platform. However, the company is yet to make an official announcement.
While the initial NFT wave might have subsided, companies’ increased partnerships with Web3 platforms might be directing attention towards a possible NFT renaissance.
