Squiggles maker Art Blocks ‘can’t keep art live on the platform’ amid NFT frenzy

Even the operators of the most popular, squiggle-rich NFT platforms are shocked by the rate at which artworks are being hoovered up.

“We just can’t keep art live on the platform,” says Erick Calderon, CEO of Art Blocks, which sells generative — that is, produced at the whims of an algorithm — art in the form of non-fungible tokens (NFTs).

“Now every time we release something it feels like this drop because it just sells out instantly,” he says. “That’s not the goal. It’s a little crazy.”

Art Blocks, which is known for its colorful “squiggles,” offers users an element of mystery. Buyers can select an artistic style and pay up, then wait with bated breath as an algorithm creates their randomly generated piece of art. The artwork can also be bought and sold via secondary marketplaces like Rarible and OpenSea, which just passed $1 billion in monthly volume for the first time. 

The platform has seen summer sales skyrocket amid a broader resurgence in the most pixelated and perhaps most hyped corner of the crypto market.

After exploding in popularity in early 2021 — in line with the price of bitcoin and other major cryptocurrencies — NFT activity fell off a cliff in the middle of the year. The Block Research’s Data Dashboard shows that weekly NFT trade volume for art and collectibles fell to as little as $16 million in May. 

But interest in the space has rebounded in the past few months, with weekly trade volumes hitting a high point of $275 million at the start of August. Art Blocks has swept up a big chunk of that activity.

Of the total NFT trade volume recorded in the first week of August, not far off half ($66.45 million out of $151.59 million) was contributed by Art Blocks. But what is striking is that the average price of an Art Blocks sale is fairly small relative to other popular NFT platforms. It has risen sharply in August to a high point of over $7,000 but still pales in comparison to the price of CryptoPunks, which currently sell for an average of around $180,000.

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The relatively low average price is likely one reason that Art Blocks has dominated primary and secondary art and collectibles sales in the NFT space since June. Calderon says the platform has now minted around 90,000 NFTs.

According to the analytics site NonFungible, Art Blocks currently ranks eighth overall for all-time NFT sales with close to 150,000. Top of the board is CryptoKitties, with nearly 2.9 million. But Art Blocks places second all-time by volume, with $265 million in sales, behind only CryptoPunks’s $705 million haul. 

NonFungible’s data for the same metrics (number of sales and volume) over the last seven days highlights Art Blocks’ hot streak, placing it firmly atop the NFT pile with 9,304 sales equating to roughly $61 million.

Some of Art Blocks’ success has been the product of luck and good timing. But the platform also deserves credit for offering something different, says Calderon — and it has developed a system to protect its users from Ethereum’s notorious “gas wars.”

Consistency of content

Calderon says that a busy platform coupled with a few big tailwinds are behind the surge in volume on the platform.

“Where we hit the nail on the head, and kind of inadvertently, is we have always had consistent content,” he says. That is in part, he adds, because Art Blocks offers a “compelling way of minting” NFTs.

The platform stands out in that it features a “continual flow of content on our platform,” says Calderon, whereas many NFT specialists deal instead in “isolated ‘one offs’ and are successful but lose traction due to the fact that people in the crypto space quickly move on to other projects.”

Hashmasks is a good example of a platform where content creation appears more erratic. The site has to date created 16,384 unique digital portraits, according to its website. But The Block Research’s data dashboard shows that 9,860 of those were minted in a singularly busy week in late January.

Art Blocks got a big boost recently after the $81,900 sale of Natively Digital — a selection of 19 Art Blocks from the collection of Calderon and the firm’s CCO Jeff Davis — on Sotheby’s, the renowned art broker.

On the other side of the platform, the appearance of work by star artists has added to the hype. Fidenza, which generative artist Tyler Hobbs calls his “most versatile algorithm to date,” has proven a particularly popular collection. Fidenza is comprised of 999 works, none of which had been seen before being sold and minted into NFTs. 

Hobbs ordinarily sells physical copies of the images produced by the code he has constructed but chose to flog Fidenza via Art Blocks.

The entire collection sold out in just 28 minutes. One coveted item in the batch, Fidenza #553, was recently resold for 125 ether (around $376,000 at today’s prices).

Navigating Ethereum’s ‘gas wars’

What Art Blocks and Calderon have no control over, but that has also boosted volumes on the platform, are the so-called “gas wars.” Like many NFT platforms, Art Blocks pieces are minted via smart contract transactions on the Ethereum blockchain.

Gas fees are costs associated with processing and verifying Ethereum transactions — a task undertaken by the network’s miners. Highly anticipated NFT drops can have the knock-on effect of driving up gas fees.

The gas wars advertise the scarcity of the given NFTs for sale, says Calderon, and that signal generates even more demand for the art.

To cushion buyers from the impact of high gas prices, Art Blocks recently introduced Dutch auctions. Instead of working up from a low starting point like traditional auctions, Dutch auctions work down from a high asking price to whatever is the highest price a buyer will pay for an item.

Before implementing Dutch auctions, Art Blocks was a more chaotic place.

In a typical example, artwork on the platform would sell out in five minutes, the artist would make $200,000, and miners on the Ethereum network would walk away with $1 million in gas fees. Buyers of the NFTs could then immediately flip them on secondary markets at two to three times what they paid to mint them. This is not the way Calderon envisaged the platform working.

“People were willing to pay way more for the art, and we are not a ‘wholesaler’ with the intention of creating instant profit potential for folks that know how to use the Ethereum blockchain better than others,” says Calderon. “Dutch auctions create price discovery and reduce or completely eliminate the gas wars in a way where the artist receives any surplus from the buyers rather than the miners.”