As NFT sales expand beyond Ethereum, we can see the first signs of the NFT space maturing because of the growth of alternative NFT blockchains. This will help the adoption and long term survival of this ecosystem
Ethereum: Imperfect by design?
The primary reasons people despise the Ethereum blockchain for NFT transactions include the followings; it’s slow, it costs a lot, and the blockchain has other priorities. The public’s issues with Ethereum have led to the growth of different blockchains.
When we look at the alternative NFT blockchains, a considerable amount of them are associated with the Ethereum blockchain via layering. Over the last few months, the growth of Layer 2 Ethereum blockchains has led many people in the NFT ecosystem to question if this was Ethereum’s plan all along.
It’s not out of the ordinary to deduce that the Ethereum blockchain may be challenging to use as part of a long-term plan to drive users to affiliated NFT blockchains. Whether this is the case or not, the NFT ecosystem has cause to celebrate. Why? Because we are beginning to see some of the first signs of the NFT ecosystem maturing.
The growth of blockchains other than Ethereum might be the first sign that the NFT ecosystem is evolving to a point where it transcends one blockchain. After a historical Q1 of 2022, where NFTs generated the equivalent of $12 billion in trades, we’re beginning to see a faster consolidation rate than before.
What’s driving the growth of NFT sales?
Over the last few weeks, more companies and individuals have stepped up to shed more light on the issue of wash trading in the NFT ecosystem. Wash trading is illicit trading between wallets you control in order to influence the value of a Token or project. However, in more sinister instances, wash trading can be used as a tool for money laundering.
LooksRare is one of the blockchains people focus on when they talk about wash trading, and for Q1 trade volume, if you consider LooksRare, the number jumps considerably. According to DappRadar, “To make a more accurate comparison, the NFT market excluding activity on LooksRare generated [USD] 12 billion in Q1, decreasing slightly by 2% from the volumes recorded in Q4 2021.”
Generally, NFT activity on blockchains including Flow, Avalanche, Solana, Polygon, and more is on the rise. This suggests that the NFT ecosystem has made considerable headway in becoming a mature and stable space.
What will a mature NFT ecosystem look like?
When we consider Avalanche, NFT sales on the platform rose by 582% from Q4 2021 to Q1 2022. While for Polygon and Solana, the figure is a 34% rise in the same time period. As more NFT marketplaces adopt a more comprehensive array of NFT blockchains, we’ll begin to witness an NFT space that has a more diverse selection of projects and blockchains.
Eventually, a mature NFT ecosystem will feature NFT marketplaces supporting as many blockchains as possible. Moreover, we will see successful NFT projects outside the major blockchains.