NFT traders moving to Solana to avail of low barriers to entry
Solana NFTs saw $295 million in volume during April
Integration with OpenSea has boosted entire ecosystem
Near-zero gas fees and low barriers to entry mean new NFT traders increasingly flocking to Solana
Not Okay Bears derivative on Ethereum highlights how far Solana has come
NFTs exploded onto the scene in 2021, with $17 billion in sales throughout the year. So far this year, despite the extreme risk-off environment with assets red across the board, this report from Chainalysis shows that volume in the NFT space is stabilising.
With every long-term indicator pointing towards longevity in the space, I thought it would be interesting to assess where these sales are taking place, and whether Ethereum still remains king.
One trend jumped out pretty swiftly – the growth of Solana.
In the short history of NFTs, the vast majority of volume has occurred on Ethereum, mostly on OpenSea, the marketplace built originally for Ethereum. That is beginning to change, however. OpenSea recently integrated with Solana, a watershed moment for Solana NFT collections that to date had been limited to marketplaces exclusively for Solana collections, such as Magic Eden and Solanart.
In another poignant moment, a derivative collection called Not Okay Bears was removed yesterday from OpenSea, after complaints from Okay Bears collectors. Traditionally, it has been the other way around – knock-off collections launching on Solana, but a high-profile imitation on Ethereum feels like a seminal moment for Solana.
Sticking with Okay Bears, they are currently the hottest collection on Solana, trading at a floor price of 222 SOL ($11,500) and with a stout volume of 1.5 million SOL ($77 million) over the last month – and that’s on Magic Eden alone. On OpenSea, they have done almost an identical amount of volume in the last month, placing seventh on the leaderboard – with only six collections from Ethereum above them.
Okay Bears floor price and volume (in SOL) has been on an upward trend all month
Bored Ape Solana Club
Staying within the sphere of derivatives, another poignant case is that of Bored Ape Solana Club (BASC)– the Solana version of Bored Ape Yacht Club (BAYC) on Ethereum. This is different from the Not Okay Bears situation in that the derivative collection here is more of a homage than a knock-off. BASC even became verified on OpenSea, seeing volume and floor price rocket shortly afterwards.
Last month, following the chaos of the Otherside launch from Yuga Labs, the creator of BAYC, I wrote here about how exclusive the Ethereum NFT world had become. It felt like a Bored Ape 1% Club, as sky-high prices and onerous gas fees priced ordinary investors out from getting involved.
The concentration of wealth in the NFT space was getting worryingly high, while the centralisation of the space was a real concern – Yuga Labs have the top three collections on OpenSea and also own the IP rights to CryptoPunks, not to mention their tweets last month that they want to start their own blockchain.
Solana gives the ordinary investor access to the NFT world, tearing down barriers to entry with its basement-low gas fees and easy-to-use interface. For fun, I even bought the below Ape from the BASC to quell my dissatisfaction from the Yuga Lab fallout. The fees I paid were a fraction of a cent, and the entire process couldn’t have contrasted more with the ultra-exclusive BAYC counterparts on Ethereum.
Instagram and Coinbase
This week also brought the news that Meta-owned Instagram is to test a feature allowing users to display NFTs as their profile pictures. Meta confirmed that while the initial test launch is limited to Ethereum and Polygon, Solana is to be added at a later date. Coinbase also announced their intention to expand to Solana once their Ethereum NFT ecosystem is up and running.
This access for the little guy that Solana offers is starting to catch on. More and more new investors are choosing Solana rather than Ethereum for their first foray into NFTs, for the same reasons I went to Solana to purchase my above Ape. There were 9.2 million transactions on Magic Eden vs 1.67 million on OpenSea over the past month, according to this report.
It should be caveated, however, that this chasm in transactions is skewed largely due to bot activity. However, the growth trends are clear – Solana is expanding at a rapid pace, with floor prices of the main collections increasing over the last month, in contrast to what is happening on Ethereum.
Perhaps more accurate than transaction count is volume, and according to DappRadar, the Solana NFT market jumped 91% in April, with volume of $295 million. Looking back over the last 30 days from today, the meltdown has reduced the dollar volume, but the SOL volume is up significantly. Indeed, when considering the pullback in the wider market, the fact that volume over the last 30 days across the top 14 marketplaces is $274 million (at the current SOL price of $52) is an extremely bullish sign.
The below graph shows the bulk of this volume has been taking place on Magic Eden and OpenSea.
In conclusion, it’s been a massively bullish period for Solana NFTs. While the crypto market has been a bloodbath – and the Solana token has not been spared – the long-term trajectory for the ecosystem remains upward.
Ethereum quite simply cannot compete with the almost-zero barriers to entry that Solana offers to NFT investors. Flipping NFTs, playing around with different collections and buying on a whim is all possible on Solana, with fees a fraction of cent per transaction. This is simply not viable on ETH, exacerbated by the dominance of the top collections, which layer in huge prices on top of the onerous gas fees.
Then again, unless you’re spending a lot on a very expensive NFT, Ethereum is not feasible to use given you lose so much on gas – meaning it continues to solidify itself as a blockchain for the elites, when it comes to NFTs at least. For the ordinary investor looking to invest amounts that are very much in the non-life-changing numbers, then Solana simply makes more sense.
The market is starting to realise this.