Editor’s Note: As the crypto market continues to evolve, Solana and Ethereum are in a fierce competition as the main NFT ecosystems. Galaxy Research analyst Gabe Parker analyzes in detail the performance of Solana and Ethereum NFT in 2023, highlighting the rapid recovery of NFT trading activity on Solana and the challenges facing Ethereum.
Gabe Parker pointed out that driven by Blur and Tensor, Solana's NFT market has performed well in terms of the number of active users and transaction volume. Although Ethereum still dominates the market, it faces the challenge of declining active NFT users.
As the NFT market evolves, the competition between Solana and Ethereum will continue to heat up in 2024. BlockBeats compiled the original text below.
Key points:
NFT trading activity on Solana recovered 2.6x faster than Ethereum;
In 2023, Ethereum contributed more than 90% of weekly NFT transaction volume 67% of the time;
As of January 8, 2024, Solana’s weekly NFT trading volume accounts for 25% of total NFT trading volume;
In 2023, the number of active Ethereum NFT users fell by 73%, while Solana’s number of active NFT users increased by more than 80%. NFT users are identified as unique addresses that mint, buy, sell, or transfer NFTs in a day;
NFT market concentration has changed significantly in 2023 with the increasing popularity of advanced NFT trading platform Blur. Unlike existing players such as OpenSea, Blur relies heavily on incentive programs such as token airdrops to attract users;
In 2023, Blur accounted for 67% of Ethereum's total NFT transactions. Before Blur was launched, OpenSea accounted for more than 80% of NFT transactions, but only accounted for 29% of Ethereum's total NFT transactions in the same year.
introduce
The NFT market saw a meaningful recovery in the fourth quarter of 2023, and as of January 16, 2024, Ethereum NFT trading volume has increased 4x since their respective lows in 2023, while Solana NFT trading volume has increased more than 10x. As NFT trading volume recovers from its historical lows, the reserve prices of the top NFT projects on Ethereum and Solana are also rising.
This research report will highlight the resurgence of NFTs in the Solana and Ethereum ecosystems and provide insights into their growth through 2024. This report will also analyze the characteristics of incentive-driven NFT marketplaces such as Blur and Tensor, which have been consolidating significant market share over existing NFT marketplaces such as OpenSea.
Ethereum NFT Marketplace
Ethereum NFT trading volume bottomed out in September 2023, hitting a monthly low of $143 million, and the week of October 9 to October 16, 2023 was particularly challenging, with Ethereum NFT trading volume plummeting to just $40 million.
However, there was a significant shift after October 9, 2023, when Ethereum NFT weekly trading volume surged an astonishing 380%. This sharp rise was mainly attributed to the Blur Season 2 airdrop that occurred on November 20, 2023 .
Blur incentivizes bidding, listing, and lending of NFTs on its platform through BLUR tokens, and it is worth noting that NFT traders actively participate in trading weeks before such airdrops, as evidenced by a similar trend during Blur’s first season airdrop on February 14, 2023.
Additionally, the aftermath of the airdrop triggered a wealth effect, prompting NFT traders to reinvest airdrop funds into NFTs to maintain their points farming.
Although Ethereum’s weekly NFT transaction volume has increased by 380% from its 2023 low, weekly transaction volume is still down 89% from its all-time high in March 2022, and Ethereum’s NFT market still has a long way to go to recover.
As we head into 2024, the next cycle of the Ethereum NFT ecosystem will likely be driven by advanced NFT trading platforms such as Blur and Blast incentivizing trading activity through airdrops.
OpenSea launched its professional trading platform in April 2023 to compete with Blur, however, since September 2023, OpenSea Pro has only accounted for 9% of Ethereum NFT trading volume, and Blur's dominance in professional NFT trading remains, mainly due to its first-mover advantage and UX/UI design.
For example, Blur’s utilization of the order book system enables NFT traders to assess the depth of an item’s reserve price better than any other marketplace, which combined with Blur’s native NFT lending platform Blend, gives NFT traders the tools to build sophisticated trading strategies.
Looking ahead to 2024, Blur’s position is reinforced by the upcoming Season 3 airdrop scheduled for May 2024, which is expected to further incentivize NFT traders who have previously used Blur, as 50% of the next airdrop will be distributed to existing BLUR token holders. Blur’s strategic advantage is not limited to its first-mover position, but also extends to the comprehensive ecosystem it has developed.
Blur’s proactive approach to token economics is reflected in its recent governance proposal, which advocates for the community to activate a fee switch that would impose a 1% market fee on purchases made with generated funds, which are intended to be used to buy back and burn BLUR tokens, thereby reducing the BLUR supply.
While this governance proposal is currently still pending, it demonstrates Blur’s continued focus on refining the platform’s token economics to position itself as a key player in the evolving NFT market landscape.
While the recent surge in NFT trading volume has been attributed to crypto-native users re-engaging in NFT markets such as Blur, there are still a large number of NFT traders remaining on the sidelines, notably OpenSea’s weekly trader count is down 86% from its all-time high in January 2022, suggesting that a large number of retail users have yet to re-enter the market.
Although Blur is the most popular NFT marketplace in the cryptocurrency community, it primarily caters to a more mature and affluent group of NFT traders. Against this backdrop, monitoring OpenSea’s volume share is critical to gauging the resurgence of retail interest in NFTs.
Solana NFT Marketplace
Solana’s NFT trading volume also bottomed out in September 2023, with trading volume reaching $30 million that month, and from October 9 to October 16, 2023, Solana NFT trading volume experienced its worst week, generating only $4.3 million in trading volume.
Since October 16, 2023, Solana’s weekly NFT trading volume has increased more than 10x. The significant increase in Solana’s weekly NFT trading volume can be attributed to two main factors:
An announcement of an upcoming airdrop by Solana’s advanced NFT trading platform Tensor;
Due to the massive increase in SOL tokens, there has been a significant repricing and additional attention for all Solana NFTs.
Tensor is the Blur version of Solana, launched in 2022, where NFT traders can develop complex trading strategies, the second season of Tensor airdrops ended in August 2023, and the next airdrop is expected sometime in January 2024, so Solana NFT collectors are increasing trading activities at the farm point.
A more critical influence driving the Solana NFT ecosystem is the wealth effect that Solana holders are experiencing, with SOL rising 615% throughout 2023 and generous airdrops distributed to the community by other Solana applications, activity across all types of applications on Solana (including NFTs) is increasing.
Although Solana’s NFT ecosystem has recovered faster than Ethereum, weekly Solana NFT trading volume is still down more than 60% from its all-time high in May 2022. Like Ethereum, Solana has a robust NFT ecosystem that provides users with a cost-effective, user-friendly experience to trade NFTs.
Additionally, Solana’s NFT infrastructure is maturing rapidly as wallets and other NFT applications gain features such as displaying NFTs alongside fungible tokens to better support the growth of the digital collectibles ecosystem.
Overall, Solana’s next NFT market cycle, like Ethereum’s, will likely be driven by trading activity on advanced exchanges like Tensor.
Market concentration
Advanced trading platforms such as Blur and Tensor have grown rapidly and captured a large portion of NFT trading volume on their respective chains. NFT market concentration is a mutually beneficial outcome for active NFT traders who rely on ample liquidity to enter and exit extremely volatile assets.
Blur and Tensor incentivize users to add liquidity to their markets by rewarding airdrops. Sellers can use airdrops to measure the market depth of a given NFT. Before Blur and Tensor, traditional NFT markets such as OpenSea used a quotation system without incentives. Buyers lacked the incentive to submit competitive bids, resulting in scattered bids that were significantly lower than the asking price of the NFT.
In 2023, Blur accounted for 67% of all NFT transactions on Ethereum. Before Blur was launched, OpenSea accounted for more than 80% of NFT transactions, but currently only accounts for 29% of all NFT transactions on Ethereum.
Magic Eden dominated the Solana NFT trading space in 2023, accounting for an impressive 51% of total trading volume, however, a solid second place was taken by Tensor, which accounted for 41% of Solana NFT trading volume in the same year.
Although Magic Eden is ahead of Tensor in 2023, there have been days this year when Tensor's trading volume exceeded Magic Eden, especially during the NFT market recovery in October 2023, from October 1, 2023 to January 1, 2024, Tensor surged ahead, with trading volume 50% higher than Magic Eden.
Tensor is expected to surpass Magic Eden’s market share in the NFT market by 2024 as advanced trading platforms prepare for the third quarter airdrop and other incentive-driven programs to attract liquidity.
Blur and Tensor’s impact on NFT market concentration suggests that advanced trading platforms are finding clear product-market fit, and despite being launched in a bear market, these platforms have successfully taken market share from well-known traditional marketplaces such as OpenSea and Magic Eden.
Ethereum vs Solana: Weekly NFT Transaction Volume and Active Users
In 2023, Ethereum dominated the NFT space, accounting for over 90% of weekly NFT trading volume for 60% of the year, a metric that excludes Ordinals and BRC-20 volume on Bitcoin, which notably generated $1.8 billion in volume in 2023, making Bitcoin the second most popular digital collectibles network during this period.
This report focuses only on the NFT market on Solana and Ethereum, to learn more about Ordinals, read a separate Galaxy Research report.
Between May and September 2023, Solana NFTs faced intense competition with Ethereum NFTs for market dominance, with Solana NFTs accounting for less than 10% of total NFT trading volume (including Ethereum and Solana NFT trading volume) during that period.
However, Solana NFT finally hit its stride in November 2023 and has rapidly gained NFT transaction volume market share since then, with Solana NFT weekly transaction volume accounting for at least 22% to 37% of total NFT transaction volume in December 2023.
In 2024, Solana NFT trading volume will continue to compete with Ethereum’s NFT trading volume, and since December 1, 2023, $50.5 million has been bridged to Solana from other blockchains such as Avalanche, BNB Smart Chain, Arbitrum, and Ethereum.
While new capital flowing into Solana may be driven by airdrops and yields offered by Solana decentralized finance (DeFi) applications, which can exit the ecosystem as soon as they enter if incentives change, we can expect some of this new capital to flow into Solana NFTs.
Depending on how quickly Ethereum NFTs recover, Solana NFT volume could reach 30%-50% of total NFT volume in 2024, based on the amount of new capital flowing into Solana as of December 2023.
By observing the on-chain activity of wallets that buy, sell, or mint NFTs in a single day, it is clear that the Ethereum NFT market lacks new users. In 2023, the number of active Ethereum NFT users fell by 73%, while the number of active Solana NFT users increased by more than 200% during the same period.
Solana’s number of active NFT users surged on December 19, 2023, surpassing Ethereum’s number of active NFT users. Applying a 30-day moving average to the number of active NFT users on Ethereum and Solana, we can see that Solana now has more daily active NFT users than Ethereum.
What’s important to note about the data in the above chart is that active NFT users are identified as unique addresses that mint, buy, sell, or transfer NFTs in a day. Unique addresses may be owned by a single individual or entity, and the number is likely larger on Solana because the cost of transacting on the network is cheaper than on Ethereum.
in conclusion
The upcoming NFT cycle will be driven by advanced NFT trading platforms, novel airdrop incentives for NFT holders, and the wealth effect brought about by the broader crypto market recovery. Advanced NFT trading platforms have already consolidated their position in the market, and their market dominance will continue to be between 50%-60% as liquidity will be consolidated to these types of platforms.
Overall, as Solana’s NFT ecosystem experiences its first repricing moment, one of the most noteworthy developments to watch in 2024 will be the repricing of Ethereum NFTs if ETH price also rises significantly.
2024 Hong Kong Web3 Carnival Community Exclusive Ticket Offer
"Hong Kong Web3 Carnival" is a Web3 event brand jointly launched by Wanxiang Blockchain Lab and HashKey Group and hosted by W3ME. The 2024 Hong Kong Web3 Carnival will be held at FG on the 3rd floor of the Hong Kong Convention and Exhibition Center from April 6 to 9, 2024. The event will last for four days and include 4 venues with a venue area of nearly 9,000 square meters.
In order to give back to our readers and fans for their long-term support, the editor has specially secured an exclusive 12% discount on tickets for everyone (12% discount ticket discount code: DFINITYCN)!
ticket price:
Early Bird Ticket (January 1 - January 31): 399 USD
2-month pass (February 1 - February 29): 499 USD
3-month pass (March 1 - March 31): 599 USD
April Pass (April 1 - April 7): 699 USD
Please purchase tickets at the event site after April 8. This offer is not available when purchasing tickets on site.
❶ If you need to purchase tickets with fiat currency, please click on the following ticket purchase link and enter the exclusive discount code (DFINITYCN) to enjoy the exclusive ticket discount. Ticket purchase link:
https://lu.ma/hkweb3festival2024
❷ If you need to purchase tickets with USDT, please click the following link to go to the PortUS official store to purchase NFT tickets:
https://portus.world/store/0xA80Fd8985165e331Bf933d27318B2b938B839F26/project/4
After clicking to enter, please first connect to the web plug-in wallet, select the Polygon network, click the "Buy Now" purchase button, fill in relevant personal information and complete the standard NFT casting process, you can get the NFT ticket, and the payment method is USDT on the Polygon public chain.
OpenSea content you care about
Explore | Collect | Sell | Buy
Bookmark and follow OpenSea Binance Channel
Get the latest news
