NFTs exploded onto the scene in 2021, generating $17 billion in sales for the year. This year, this report from Chainalysis shows that despite extreme de-risking, volume in the NFT space is stabilizing with consistently red readings.
With all long-term indicators pointing to longevity in this space, I thought it would be interesting to explore where these sales are taking place and if Ethereum is still king.
OpenSea
In the short history of NFTs, most of the volume has occurred on Ethereum, mostly on OpenSea, the marketplace originally built for Ethereum. However, that is beginning to change. OpenSea was recently integrated into Solana, a game changer for Solana's NFT collections, which were previously limited to Solana collections-only marketplaces such as Magic Eden and Solanart.
In another poignant moment, a derivative collection called Not Okay Bears was removed from OpenSea yesterday after complaints from Okay Bears collectors. Traditionally it was the other way around – fake collections launched on Solana, but a high-profile imitation on Ethereum feels like a landmark moment for Solana.
Okay Bears are currently the hottest collection on Solana, trading at a reserve price of 222 SOL ($11,500) and a whopping 1.5 million SOL ($77 million) in volume over the last month - all on Magic Eden alone. On OpenSea, they've made almost the same amount of volume over the last month, taking seventh place on the leaderboard - with just six collections of Ethereum above them.
Ok Bears Floor price and volume (in SOL) has been in an uptrend all month
Bored Ape Solana Club
Staying in the derivatives realm, another poignant case is the Bored Ape Solana Club (BASC) – the Solana version of the Bored Ape Yacht Club (BAYC) on Ethereum. This differs from the not-okay-bear situation in that the derived collection here is homage rather than fake. BASC was even verified on OpenSea, shortly after that volume and reserve price skyrocketed.
Last month, following the chaos of the Otherside launch by Yuga Labs, the creators of BAYC, I wrote here about how exclusive Ethereum's NFT world has become. It felt like a bored ape 1% club as sky-high prices and pesky gas fees discouraged ordinary investors from getting involved.
The concentration of wealth in the NFT space has become worryingly high, while centralization of the space has been a real problem - Yuga Labs have the three largest collections on OpenSea and also own the IP rights to CryptoPunks, not to mention their tweets over the last month that they want to start their own blockchain.
Solana brings the world of NFTs to the ordinary investor by breaking down the barriers to entry with its low gas fees and user-friendly interface. I even bought the Ape pictured below from the BASC, just for fun, to overcome my dissatisfaction with Yuga Lab's fallout. The fees I paid were a fraction of a cent, and the whole process couldn't have been more different from the ultra-exclusive BAYC counterparts on Ethereum.
This week also broke news that Meta-owned Instagram will be testing a feature that will allow users to display NFTs as their profile pictures. Meta confirmed that while the initial test launch will be limited to Ethereum and Polygon, Solana will be added at a later date. Coinbase also announced its intention to expand to Solana once its Ethereum NFT ecosystem is up and running.
growth
This mainstream approach that Solana offers is beginning to catch on. More and more new investors are choosing Solana over Ethereum when first getting into NFTs for the same reasons I bought my Ape on Solana above. According to this report, last month there were 9.2 million transactions on Magic Eden versus 1.67 million on OpenSea.
However, it should be noted that this gap in transactions is largely due to bot activity. However, the growth trends are clear – Solana is expanding at a rapid pace, with the minimum prices of the main collections increasing in the last month, in contrast to what is happening with Ethereum.
Perhaps more accurate than transaction count is volume, and according to DappRadar, the Solana NFT market surged 91% in April to $295 million in volume. Looking back over the past 30 days, the meltdown has reduced dollar volume, but SOL volume has increased significantly. Considering the pullback in the broader market, the fact that volume over the last 30 days across the top 14 marketplaces has been $274 million (at the current SOL price of $52) is an extremely bullish sign.
The chart below shows that the majority of this volume occurred on Magic Eden and OpenSea.
Conclusion
In summary, it has been a massively bullish period for Solana NFTs. While the crypto market has seen a bloodbath - and the Solana token has not been spared - the long-term trajectory for the ecosystem remains bullish.
Ethereum simply cannot compete with the near-free entry points that Solana offers for NFT investors. Flipping NFTs, messing around with different collections, and buying on a whim is all possible on Solana, with fees only a fraction of a cent per transaction. This simply isn't possible on ETH, which is made worse by the dominance of the top collections, which command huge prizes on top of pesky gas fees.
On the other hand, Ethereum isn't viable unless you're spending a lot on a very expensive NFT since you're losing so much gas - meaning it continues to solidify as the blockchain for the elites, at least when it comes to NFTs. For the casual investor looking to invest amounts that move very heavily in the non-life changing numbers, Solana just makes more sense.
The market is beginning to recognize this.
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