Report: Blockchains vie for NFT market, but Ethereum still dominates

This month, Cointelegraph Research will publish a comprehensive report on NFTs, discussing NFTs in detail and providing a detailed guide for entering this market.

This report will work with multiple partners (including Enjin, NFTBank, The Sandbox, etc.) to assess the technology behind NFTs, the regulatory challenges they face, their expected growth and current market position. The report will also outline hurdles that the market is likely to encounter in the future, and potential ways to overcome them.

At the beginning of 2021, people's interest in NFT increased, and OpenSea, the largest NFT market, experienced a hundred-fold sales growth within half a year. In the first half of 2021, the total sales of NFT reached 2.5 billion US dollars, almost 8 times the total in 2020.

The market leader, OpenSea primarily uses Ethereum, although Polygon and Klaytn also work. Other NFT marketplaces allow the use of other blockchains, but Ethereum has dominated the space over the past few months, accounting for at least 97% of every NFT marketplace on a weekly basis, including games, collectibles, and marketplaces.

However, despite Ethereum's current advantages, there are still a series of serious competitors in the market. As can be seen in the chart below of total NFT sales and traders, Worldwide Asset eXchange (WAX), Polygon, and Flow represent powerful opposites. So far in 2021, one in three traders uses Flow and one in four uses WAX, even though nearly 90% of total sales this year have occurred on Ethereum.

Importantly, the decline in transaction volume on Ethereum at the beginning of the year was largely caused by NBA Top Shot, Dapper Labs’ Flow blockchain-based NFT collectibles project, which generated approximately $500 million in sales in the first quarter Well, it has attracted more than 800,000 users. However, despite Flow’s lower gas fees and higher number of transactions per second, it has not managed to gain significant market share in the long run.

While WAX only accounts for about $100 million in sales in 2021 (a little over 1%), its website says it is backed by a number of top companies, including Google, Atari, Funko, Topps, and others.

Activity on the WAX Blockchain is likely to increase in the future, given the large number of unique traders in the industry and the potential for growth through partnerships with established companies to release new NFT collectibles and games. Additionally, the simplicity of NFT trading on WAX may attract new traders to increase sales on the WAX Blockchain. However, the peak of its activity -- $15 million in weekly sales -- occurred in mid-April. Since then, the WAX Blockchain has processed between $2 million and $3 million in sales per week, and it's unclear if those numbers will rise anytime soon.

Unlike Flow and WAX, Polygon has enjoyed steady and rapid growth over an extended period of time, most recently selling through marketplaces such as OpenSea and Aavegotchi's Baazaar. Polygon’s popularity outside of the NFT market, combined with low gas fees ($0.01 to register an NFT on OpenSea vs $230 with Ethereum), may spur NFT market activity on the Polygon blockchain in the long-term .

Other notable blockchains — such as Waves (famous for the Waves Ducks game), BSC, and Tezos (famous for Hic Et Nuc, a crypto art NFT platform) — are already on the market, but will account for 2021 Less than 1% of all NFT sales. There are other blockchains that are just entering the space, such as the Devvio blockchain, which focuses on play-to-earn games.

Nonetheless, activity on a blockchain is highly dependent on the appeal of collectibles and games launched on it. This factor can be difficult to predict and should inevitably be considered before making any investment.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.