NFT on Solana, a "sinking market" in the Red Sea

Written by: 0xLaughing, Rhythm BlockBeats

「SOL Community > ETH Community.」

Orangie sent such a tweets. Orangie is an NFT KOL with more than 160k fans on Twitter. Although he still uses MAYC as his avatar, it is obvious that he has turned his attention to Solana NFT. With the explosion of Okay Bears, more and more NFT players have noticed the Solana public chain.

Solana NFT has emerged on OpenSea

In the NFT market, Solana supporters have always claimed "fast transaction speed" , "almost no handling fee", "low threshold" and other advantages to promote evangelism. But at the same time, there are many criticisms of Solana NFT: "rug pulls everywhere", "frequent downtime", "not as decentralized as Ethereum", etc., and even ridicule it as those who can't afford Gas The “poor man’s blockchain” that NFT players choose next.

So what does the real Solana NFT market look like? This article will start with the changes in the NFT market in recent months, and discuss the potential and prospects of the Solana NFT market by comparing it with the Ethereum NFT market.

NFT market: "The cliff is now"

The popularity of NFT has been going all the way since 2020 Soaring, from the emergence of Cryptopunk and BAYC, to the emergence of PFP NFT projects such as Doodles, Azuki, Moonbirds, etc. At the same time, Neymar, Jay Chou, Eminem and many other stars have entered the circle, allowing NFT to gradually enter the public's field of vision and serve people at an extremely fast speed. well known.

NFT project parties are also trying to innovate in many ways. From the initial avatar NFT project that created social scenes, different styles catered to the preferences of different investors; to the later Pass NFT, which provided analysis tool rights or Alpha community rights; issued tokens, created IP, and continued to create revenue Various new ways of playing such as the "shovel" are constantly being designed.

The total market value and transaction volume changes of the NFT market (source: NFTGO)

During the nearly one-year-long "NFT Summer", the total market value of NFT once exceeded 38.6 billion US dollars at one point. New social narratives and powerful wealth creation effects have attracted various capitals to enter the market. The NFT market It is unprecedentedly hot, and investors want to get a share of this "turning a picture into gold" story.

The volume of ETH-based NFT transactions on OpenSea continues to decline (Source: Dune)

As the time came to April and May of this year, the entire encryption market has become exhausted under the expectation of the Fed’s interest rate hike. At the beginning of May, the release of Yuga Labs’ “Otherdeed for Otherside” series was even more exhausted. The last trace of liquidity in the NFT market, the Luna/UST thunderstorm incident caused investors to panic sell all kinds of investment assets in their hands, and NFT is no exception. The data on the chain on Dune shows that the trading volume of ETH-based NFT on OpenSea continues to increase. The daily trading volume in recent days is not even one-tenth of the peak value.

"The bear market is really coming."

In the process of entering a bear market, asset shrinkage is only one aspect, and NFT investors are more afraid of a sudden drop in liquidity.

It is true that compared with FT (Fungible Token), the liquidity of NFT (Non-Fungible Token) is the most important topic. "Token can at least be sold in the market with one click to return a little bit, and NFT will really return to zero if it cannot be sold." The sudden drop in liquidity is reflected in the current NFT trading market: almost all NFT trading volumes have declined, and unknown NFT projects have only a few transactions a day or even zero transactions, and investors eager to cash out are scrambling to keep prices down. The trend of the price K-line was destroyed, and the consensus established in the early stage collapsed one after another, and the project party had nothing to do about it.

Amid such drastic changes in the environment, optimistic investors are betting on the future of the NFT market, looking forward to potential incremental funds, but the danger The reason is that although the NFT market has high hopes, its user and capital growth rates have slowed down significantly.

Compared to the enthusiasm of investors, the ice-like growth data of the NFT market is like a cliff in front of all NFT projects.

Solana NFT Marketplace: “Slam on the Gas”

NFT Marketplace Growth Insufficient funds make it difficult for most NFT projects to get out of the "red sea" where existing funds are fighting. The top blue-chip projects can still take a breather after eating up the market dividends by virtue of their first-mover advantage and head advantage, while those new projects recently issued on the ETH chain are facing the dilemma of being born or dying. The top NFT projects will also collapse.

Even so, facing the cliff of the NFT market, the NFT project on the Solana chain has not slowed down, but stepped on the accelerator.

Solana-based NFT transactions on Magic Eden increased significantly in April and May (Source: Dune)

< /p>

Solana NFT total floor price has continued to rise in the past few months (Source: SolanaFloor)

From the Dune analysis data, it can be seen that the number of NFT transactions on Magic Eden, the largest NFT trading platform on the Solana chain, increased significantly in April and May. The data on SolanaFloor also shows that in the past few months, the total floor price of Solana-based NFTs has continued to rise. As Solana NFT continues to heat up, Magic Eden's daily transaction volume even surpassed OpenSea at one point.

There is no doubt that these data are rare positive signals in the cold winter of NFT, which can at least prove to some extent that the NFT market is on the Solana chain There is still a certain heat, and this heat is still rising. Among them, an NFT project called Okay Bears performed very well.

The floor price of Okay Bears has skyrocketed since its release (Source: Sol Sniper)

On April 27th, Okay Bears was publicly sold on the Solana NFT market Magic Eden at a price of 1.5 SOL. Since then, the price has been soaring, and the floor price once exceeded 260 SOL. In the past less than a month, Okay Bears has created amazing transaction data: the cumulative number of transactions has exceeded 20,000, the cumulative transaction volume has exceeded 1.4 million SOL, and the total market value ranks second among Solana NFTs.

Okay Bears' huge wealth effect in a very short period of time made it explode quickly, and it added fuel to the heating up of the Solana NFT market. It proves that there is also a "rich machine" here.

Solana vs Ethereum: "Battle of Public Chains"

As one of the earliest public chains First, Ethereum (Ethereum) was once dubbed the "King of Public Chains", with a prosperous ecology and various DAPPs blooming. There are many challengers in other public chains, and many "Ethereum killers" take turns, and Solana is one of them.

Transaction speed and transaction fees

Solana has been committed to Become "the fastest high-performance public chain".

It uses Proof of History (PoH), Tower BFT algorithm, Turbine propagation protocol, Sealevel engine (Sealevel) and other technologies A completely different system architecture has been built, which allows it to have higher speed and lower cost than other blockchains.

Bitcoin can process about 7 transactions per second (7 TPS), Ethereum can process 30 transactions per second, and Solana can currently process 65,000 transactions per second Its TPS rivals that of Visa and Mastercard, making it an industry leader in speed and global scalability. Although Eth 2.0 may greatly improve performance in the future, its launch plan has been repeatedly delayed.

The average transaction fee of each chain (source: A16Z)

In addition to transaction speed, Solana’s transaction fees are much lower than Ethereum’s. A transaction on Ethereum usually costs more than $10 in Gas Fee, while a transaction on Solana only costs $0.00001.

More than 70,000 ETH were burned on May 1st (source: glassnode)

Taking the sale of Yuga Labs Otherside project as an example, Data shows that during the sale of Otherside on May 1, about 227 million US dollars in transaction fees were spent on Ethereum on that day, more than 70,000 ETH were burned, and the average transaction fee for users was 197 Dollar.

Yuga Labs said it will refund the Gas Fee spent by users due to transaction failure

After the release of Otherside, Yuga Labs tweeted a tweet, saying that it will refund the gas fee that the user spent due to the transaction failure. "Obviously, ApeCoin needs to be migrated to its own chain in order to expand properly." It can be seen thatfaced with the high transaction fees on Ethereum, even a leading project like Yuga Labs is unbearable, NFT players It's even more unbearable.

Decentralization Degree

The "trilemma" of blockchain

Ethereum founder Vitalik Buterin once proposed that there is a "trilemma" (Trilemma, also known as the impossible triangle) in the development of blockchain. It refers to: It is difficult to guarantee decentralization, security, and scalability at the same time. Compared with Ethereum, Solana sacrifices a part of decentralization while ensuring security and high performance.

From the perspective of validator node development, Solana can currently process up to 65,000 transactions per second, and the high throughput means that the hardware requirements for running validators are extremely high. high. The high barrier to entry makes the Solana Foundation the only entity developing a core node on the Solana blockchain, which means it can control the network, reducing its degree of decentralization. The Solana network has been down several times, and the top-down solution has attracted a lot of skeptical voices: It seems to be a "centralized bank with a more advanced database" rather than a so-called decentralized block chain.

Messari announced the public chain initial token distribution

in different On the blockchain, delegating tokens to validators is an intrinsic driving force behind securing the network. Therefore, when comparing the degree of decentralization of the Solana and Ethereum networks, it is also important to compare the token distribution of the two.

Compared to Ethereum, the number of tokens held by Solana insiders is high. According to Messari, around 48% of Solana’s tokens are owned by insiders Owned, including Solana Labs team members and VCs. Additionally, another third of the supply has been allocated for ecosystem development, with relatively few tokens allocated in Solana’s public sale. Whereas Ethereum distributes about 80% of its tokens through a public sale, insiders hold only 15% of the total supply.

The Prospect of Solana NFT: "Curve Overtaking"

Nobel Prize Winner Herbert Alexander Simon once pointed out:"In today's era of rapid information development, the value of attention will exceed information."

It is true that for the dazzling new NFT projects that emerge every day, whoever attracts the attention of capital will win the opportunity.

DeGods founder Frank thanks Okay Bears for making more people notice Solana NFT

The explosion of Okay Bears has made more people understand that Solana NFT also has a strong wealth-creating effect. Frank, the founder of DeGods, the No. 1 project in Solana NFT market value, even tweeted his thanks: "DeGod holders would like to express their gratitude to Okay Bears, they have brought more attention to Solana."

NFT on Ethereum has taken advantage of the first-mover advantage and attracted most of the attention in the market, but facing the Matthew effect of Ethereum’s “winner takes all”, Solana NFT still has a chance Realize "curve overtaking".

Magic Eden Helps Solana NFT Development

Magic Eden leads "SOLANA SUMMER"

As the largest NFT exchange on Solana, Magic Eden and Solana There are a lot of NFT exchanges. There were "DeFi SUMMER" and "NFT SUMMER" before. Magic Eden took advantage of the popularity of Okay Bears and even wanted to launch "SOLANA SUMMER".

Comparison of the trading volume of the three major ETH NFT exchanges (source: Dune)

At In the article "ETH or Solana's NFT: The Chicken-and-Egg Problem", the author Mr.Fox believes that even NFT trading platforms such as LooksRare and X2Y2 use "vampire attacks" such as low fees and token rewards to compete with OpenSea The main reason why they still can't win is that the same NFT has higher liquidity on OpenSea. This is indeed the case. From the data on Dune, we can see that OpenSea's share of ETH NFT's transaction volume has always remained above 50%.

But for Solana NFTs, can OpenSea still win? But in fact, it's not.

Okay Bears trading volume comparison between OpenSea and Magic Eden (source: Dune)

From April, OpenSea began to support transactions based on NFT issued by Solana. When Okay Bears became popular, it once rushed to the top of OpenSea's transaction volume. But even so, the vast majority of Okay Bears are traded in Magic Eden, as can be seen from Dune's data.

Magic Eden’s share of Solana NFT market trading volume (source: Dune)

Not just Okay Bears, Magic Eden accounts for more than 95% of the entire Solana NFT market trading volume, that is to say, For all Solana-based NFTs, the liquidity on Magic Eden Absolute domination.

It can be seen that in the "chicken and egg problem", the "ETH network effect" has brought many NFT users to Ethereum, while Solana NFT is temporarily behind Just because it has less first-mover advantage than Ethereum. In terms of liquidity, Magic Eden, Solana's native NFT trading market, only focuses on the development of Solana NFT, which is more like a potential "OpenSea killer". One step further, it seems to be challenging the entire Ethereum NFT.

The "sinking market" may be the mainstream market

Pinduoduo makes the "sinking market" The concept of "market" broke into the public eye. Looking back on 2018-2019, Pinduoduo first tore out a crack in the e-commerce industry dominated by Ali and JD.com, and then used rapid growth again and again to turn this crack into a territory. Today, Pinduoduo has become a heavyweight player that cannot be ignored in the e-commerce market.

What did Pinduoduo do right? Obviously, there is definitely more than one reason, but the sinking market has played an absolutely important role in this.

The low price of Solana NFT and low transaction fees also seem to be developing a "sinking market" belonging to Web 3.0.

More and more NFT KOLs invest in Solana NFT (Source: Inspect)

< /p>

Many Ethereum NFT fans believe that those who invest in NFT players on Solana are because they cannot afford the high transaction fees on Ethereum, and even ridicule Solana as a "poor blockchain". Saving more handling fees to invest in your favorite NFT has become a disadvantage, which is really puzzling. In fact, many well-known NFT KOLs and giant whales are also investing in Solana NFT.

It is true that NFT has certain social attributes and luxury attributes. People can guess the value of the person on the opposite side of the screen as long as they use the hexagonal avatar on social media . NFT is trying to create a new class ladder, but for those who stand at the gate of the Web 3.0 world and look inside, the entry threshold of hundreds or even thousands of dollars is not conducive to NFT getting out of the circle. If you bet on the future NFT will It is the standard configuration of every Web3.0 member, and the low-priced NFT will also be a necessity in the market. NFT should not just be a game for the rich or capital, the artistic value behind them also needs to be touched by the public.

The public and civilian "sinking market" represented by Solana NFT may be the mainstream market of Web3.0 in the future.

Summary

The competition of the public chain is "a thousand troops Ten thousand horses cross the single-plank bridge", the development of NFT essentially depends on the development of the public chain it is based on. Compared to Ethereum, Solana is currently not as decentralized as many would like, but I believe this problem will improve over time. For Solana NFT, the concept of parity has been deeply rooted in the hearts of the people, but more "explosive items" like Okay Bears are still needed to prove that they also have amazing wealth-making capabilities.

It takes time for the consensus to build up, let the bullets fly for a while.  

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia