Ethereum’s NFT volume share declines as high gas fees and congestion make room for alternative platforms like WAX.

1 min read

According to JPMorgan, high gas fees and congestion have kept NFT applications looking for an alternative to the Ethereum network.  In 2021, Ethereum’s share of NFT volume fell from 95% to around 80%, said the bank’s analysts.  The JPMorgan team indicates that if this trend continues, it could begin to affect Ethereum’s price.

Ethereum is losing ground to rivals such as Solana and WAX in the NFT sector of the cryptocurrency universe, due to sky-high transaction fees on the network, JPMorgan has said.

Ethereum’s volume share of non-fungible token trading has fallen from around 95% at the start of 2021 to around 80%, according to JPMorgan’s analysts, led by Nikolaos Panigirtzoglou.

“It looks like, similar to DeFi apps, congestion and high gas fees has been inducing NFT applications to use other blockchains,” Panigirtzoglou said in a note sent to clients last week, referring to apps built for decentralized finance.

The bank’s global markets team found that the solana network in particular had been seizing market share from ethereum in recent weeks.

“If the loss of its NFT share starts looking more sustained in 2022, that would become a bigger problem for ethereum’s valuation,” Panigirtzoglou said.

Non-fungible tokens, or NFTs, are crypto assets that represent ownership of items such as pieces of digital art, video clips, and virtual clothing.

The now roughly $12 billion NFT market has boomed over the last year, with one digital art NFT selling for $69 million in March 2021. Bored Apes and CryptoPunks, two types of digital avatars, are some of the most popular NFTs.

The Ethereum cryptocurrency network, founded in 2015, is the technology that underlies the vast majority of NFT buying and selling. Yet traders are becoming increasingly frustrated with congestion and very high transaction or “gas” fees on the network, which often add more than $80 to a purchase.

Newer blockchains such as Solana are now muscling in, attracting NFT developers with much lower transaction fees. Other networks, such as WAX or Tezos, are also jostling for position, JPMorgan said.

Ethereum has also been ceding market share in the world of decentralized finance. DeFi apps allow people to carry out financial transactions, trade or sign “smart contracts” without the need for intermediaries such as banks and clearing houses.

Cardano, one of a number of rival networks sometimes dubbed “ethereum killers”, has been a particular beneficiary in the DeFi space.

However, Ethereum remains by far the dominant blockchain when it comes to both NFTs and DeFi. The total value of projects locked on the Ethereum network stood at around $156 billion — almost double that of the next 10 networks combined — analysts at the Coinbase exchange estimated last week.

Ethereum developers are racing to try to solve the problem of high gas fees. But a crucial network upgrade known as “sharding”, intended to add more capacity to the network, is not due until early 2023.

Ether, the cryptocurrency on the Ethereum network, was down 3.4% to $3,162 on the Coinbase exchange Tuesday. It’s been hit by a broad sell-off that has whacked tech stocks and digital assets.

Via this site

WAX gets boost from NFT partnerships and protocol integrations

NFT-related partnerships and integrations with DeFi platforms drove the price of WAX (WAXP) higher over a 24hr period. The roller coaster ride that is...
Stephen Smith
2 min read