The NFT market continues to grow, generating interest from many blockchains. The main network on which it is based is Ethereum, but competitors have arguments in their hands that effectively threaten the dominance of the largest of altcoins. So is Ethereum’s position under threat?
Ethereum is increasingly looking over its shoulder
While the public debate is full of hypotheses of an alleged flip-flopping by Ethereum over Bitcoin, the second largest network, is struggling to compete in its sector.
The NFT market, as well as DeFi, which were and still are overwhelmingly owned by Ethereum are starting to find their outlet towards smaller blockchains such as Solana. JP Morgan analyst Nikolaos Panigirtzoglou says that the high fees found in Ethereum are a major factor in existing developers moving to cheaper networks, and new ones from the range of opportunities the market offers are also choosing those.
As he comments:
“It seems that, as with the DeFi app, congestion and high gas fees have driven NFT apps to other blockchains. If the loss of NFT share starts to look more permanent in 2022, this will become a bigger issue for ETH valuation.”
Ethereum still dominates
Analysts at the Coinbase exchange, released data in mid-January indicating that the total value of projects locked into Ethereum is nearly $156 billion. This is almost double the assets held in 10 consecutive networks. These numbers clearly show that Ethereum is still the blockchain that is most in demand, despite its scalability issues.
Developers of the largest altcoin are currently working on solutions that can solve the problems of high fees. This is to be based on sharding. However, its launch is not scheduled until early 2023.
Solana and Tezos among attractive alternatives
Despite Ethereum’s significant dominance, its market shares in NFT as well as DeFi may be slowly declining. As we already know, Solana, which is the main beneficiary of this situation, has a faster network and much lower fees. However, as it turns out, also behind its back there are interesting alternatives. One of them, which has been recording high volumes recently, is Worldwide Asset eXchange (WAX).
Panigirtzoglou also highlighted blockchain Tezos in his review. Tezos recently partnered with clothing brand Gap, for which it launched an NFT line. The network’s advantage could be its energy efficiency, in his opinion:
“Tezos uses a more energy-efficient approach to securing its network, which allows it to operate with minimal energy consumption and a low carbon footprint.”
Ethereum’s position still stable
The growth of cryptocurrencies, and with newer networks constantly solving the problems that exist around them, will always lead to a decrease in the giants’ share of the global market. Having competition often enhances development. The situation Ethereum finds itself in may end up being beneficial to it in the long run.