Feb 22, 2022 2:02 PM

An NFT Bubble Is Taking Over the Gig Economy

Two-thirds of US freelancers told Fiverr they’re servicing the NFT industry. But is it sustainable?

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Argentinian musician Frank Tavis had the life he always dreamed of. The 26-year-old was traveling the world and performing on the streets and in bars in more than 20 countries—each coin dropped in his guitar case helping pay his way to the next country for five years. Then the pandemic hit, bars shut down, and Tavis’ income dried up. A friend recommended he join Fiverr, a freelance gig economy website where people are paid for a variety of digital services usually offered by contractors. Tavis began writing songs for small sums of cash in mid-2020.

The earnings helped him live, but he saw a bigger opportunity. “I watch a lot of YouTube, and I started to see a lot of different stuff about NFTs,” he says. Tavis knew artists who he could pay to design artwork that others would use to make NFT collections. So he pivoted his Fiverr business to design the artwork used for NFTs.

He worried about competition at first, because Fiverr filters gig workers based on the number of jobs completed and reviews on their work, and he had no experience designing NFTs. It wasn’t an issue. “I have [music] gigs on Fiverr with more than 100 five-star reviews, but with this [NFT] gig with no reviews I was getting more attention,” he says. In January 2022, when he first sold NFT services on Fiverr, he made more than $10,000. As a middleman selling artists’ work to NFT enthusiasts, he’s expecting to make $40,000 from NFT design sales in February 2022. He has done 40 NFT collections—and doesn’t see them slowing down.

Tavis came in at the height of a boom period for NFT projects on freelance sites like Upwork and Freelancer. Two in three US-based freelancers have profited from servicing the burgeoning economy around NFTs, according to a survey by Fiverr. Huge numbers of people are buying NFTs as investments, lured in by celebrities like Paris Hilton who endorse their own items on social media and the eye-poppingly large prices for them listed on platforms like OpenSea, and enhanced by the drumbeat of media coverage of the space—including stories like this one. As more people buy in, there’s an increase in demand for new projects from artists on Fiverr and competing platforms who are able to produce low-cost, high-quality, quick-churn work.

The number of people listing NFT-related services on Fiverr rose 278 percent from the third to the fourth quarter of 2021; at the same time, the amount those freelancers earned for their NFT services rose 374 percent.

“We are growing at a similar trend to NFT marketplaces out there,” says Yoav Hornung, creative verticals group manager at Fiverr. Hornung declined to share absolute numbers about gig workers and the amount they earned—but a search on the platform for “NFT” turns up nearly 50,000 services offered. “If I think back six months ago, I don’t even think it was five digits,” he says.

The freelance community is in the throes of the NFT bubble, pivoting away from other gig work toward making NFT art all day long—or finding people to do it for them.

Jose Fernando Rico Mercado, 34, who co-owns three childcare facilities in Mexico, has always run side gigs, including designing notebooks sold on demand on Amazon. During the pandemic, his monthly earnings fell from $17,000 at their peak to almost zero. He joined Fiverr and set up a team of illustrators fulfilling orders for new NFT collections in mid-2021 to work on that full time. Since then, he has earned $268,000 from NFT collectors.

The amount of money these freelancers are earning appears astronomical, until they’re put into their full context. The NFT market was worth $44 billion in 2021, according to blockchain research firm Chainalysis. At the close of the year, the average value per NFT transaction was around $1,000, Chainalysis data shows—which is more than what three-quarters of those selling their wares on Fiverr are offering freelancers, often for designing an entire collection.

“There’s a bigger problem here in the whole structure of how these economies build up,” says Catherine Flick, a computing and social responsibility academic at De Montfort University. “You’ve got to have somebody who’s doing the labor at the bottom, who creates these 15,000 pieces of art.”

The NFT world’s inequity in distribution of wealth can best be seen through the Bored Ape Yacht Club, its billboard collection. The 10,000 apes are beloved by major celebrities and those who were early to “ape in” to the collection, which is now worth $2.5 billion based on the current floor price. You can’t buy a Bored Ape for less than $250,000 now. Seneca, the pseudonymous Asian-American artist who was approached to design the apes in 2021, has since said the amount she was paid for her work was “definitely not ideal.”

“It has become common to read how many high-ticket projects rely on low-paid artists and designers to make their NFTs,” says Andres Guadamuz, an intellectual-property-law academic at the University of Sussex. “In some instances the artist is at the forefront of the project, but for the most part the art is irrelevant, and the value is in the white paper and the roadmap.”

Flick likens the NFT sector to a “colonialism project,” where the people at the top of the chain are the ones dictating the rules and have the capital and wealth to demand that those beneath them carry out their orders. “The whole system was supposed to be decentralized to free up the economy from these centralized institutions like banks, but what it’s actually doing now is creating a new set of institutions that have almost the same function,” says Flick. “They gate-keep and capitalize on people’s labor.”

Seneca’s thoughts on being taken advantage of when artwork is transformed into a high-selling NFT are shared by others in the community. Tavis—who offers his illustrators a cut of the profits he makes from his clients, including around $20 per trait or accessory they draw—is working on his own NFT collection in an attempt to cut out the gig platform clients and increase profits. “I know right now I’m making only a certain amount for each collection, but if I make my own collection, the amount we can gain from it is much more,” he says.

As quickly as gig economy workers rushed in to service the fast-expanding NFT space, they could be forced to adapt to the next big thing if—as some predict—the NFT bubble is about to burst. If that were to happen, the prognosis isn’t good. “I think they’re probably a bit screwed,” says Flick.

Rico Mercado doesn’t believe the heyday of NFTs will continue for long, but he is preparing for a shift: to the metaverse. “Half the messages I receive daily are related to 3D” avatars and design, he says, both of which will be crucial to the metaverse. “Everyone needs 3D now.”

Updated 2/23/2022 11:00 am ET: This story has been updated to clarify that the freelancers surveyed by Fiverr were across the US, not just on its own platform.