Ethereum is the largest ecosystem of the DeFi (decentralized finance) sector, so it’s no surprise that this is where you’ll find the majority of NFTs being minted. Ethereum also takes the lead with a much bigger pool of buyers and sellers, which is why Ethereum-based OpenSea, a very popular NFT marketplace, is often the first stop for many NFT producers, because that’s where they potentially get more exposure and people willing to buy or place bids on their NFTs.
Ethereum’s data architecture and security components are the reason why so many developers are building on top of its blockchain. But there are some ‘cons’ to the network. Rather frequently, the network suffers a major transaction backlog, which leads to an enormous spike in transaction fees, and this limits the number of users who can afford to mint NFTs. On the other hand, whilst paying elevated gas fees can be a crippling experience sometimes, the upside is there’s more money flowing in Ethereum, so the flipping ceiling is way higher.
The move to Solana
In response to this, NFT creators and collectors look to alternative blockchains with higher throughput, scalability, and lower gas fees. So far, Solana seems to be Ethereum’s most serious competitor, due to the fact that it’s a high-performance blockchain that leverages different cryptographic mechanisms to scale its network.
But it is still chasing Ethereum. Data from CryptoSlam shows that Ethereum has had a whopping selling volume of over $1.8 billion in the last 30 days, compared to $120 million from Solana-based marketplaces. Plus, the most popular NFT collections in the market exist on the Ethereum blockchain, i.e. Bored Apes and CryptoPunks.
But Solana takes the lead in terms of technology, functionality, and versatility. It uses a consensus mechanism called Proof-of-History, which leverages a set of protocols to execute transactions with high throughput. Its transaction fees are less than one dollar, and there appears to be some migration to Solana amongst NFT projects and collectors in order to benefit from the scalability and cheap transaction fees. It also appears that Solana is becoming the preferred blockchain for more general and utility-focused NFTs.
In conclusion, whilst Ethereum still has the major market share, Solana’s share is growing. In fact, Solana’s user base has been growing at a much faster pace since the beginning of 2022, and even JP Morgan believes it could overtake Ethereum in the long term.