The ETH Merge Did Little to Energize a Tepid NFT Market

As Ethereum continues its reign as one of the dominant blockchains for launching non-fungible tokens (NFTs), some speculated that its milestone transition from proof-of-work to proof-of-stake last week would help reinvigorate an NFT market that’s been trending downward for the better part of two months. But data shows little movement in either direction despite major improvements to the blockchain’s energy use, speed and scalability.

In the weeks leading up to the Merge, NFT trading decreased overall, and this past week has been just slightly better. One of the industry's top marketplaces, OpenSea, has seen $84 million of volume in the past seven days for Ethereum-based NFTs, a 5.3% increase from the week leading up to the Merge, according to data from DappRadar. The average weekly price for an Ethereum-based NFT on OpenSea stands at $199, a 14.5% decrease from the previous week.

Still, the total number of traders on the platform increased 9% within the past week, totaling 156,000 unique wallets.

The lack of appetite for post-Merge NFTs, for some, has come as a surprise, with many traders believing Ethereum’s transition to proof-of-stake would lure in potential traders previously concerned by exorbitant energy consumption. Salesforce, for example, was scolded by employees who opposed its plans for an NFT cloud platform out of concern for the environmental impact of the technology, despite the fact that the company had emphasized that it would not support proof-of-work blockchains. But post-merge, there have not been any meaningful conversations about how NFTs on Ethereum are now significantly less taxing on the environment and create fewer emissions.

In addition, concerns about forked NFTs – a worry that NFTs would be duplicated and have one version on the main, new proof-of-stake blockchain as well as a version on the forked ETHPOW chain – have been raised, though no such issues have yet materialized.

A report released by DappRadar on Thursday concluded that Ethereum-based NFTs are operating normally post-merge, and holders won’t need to take any additional actions to ensure normal market functionality. The first NFT minted on Ethereum using proof-of-stake happened 26 minutes after the Merge, and it was purchased for 36 ETH. Bloom, which claims to be the first NFT collection minted in Ethereum’s new proof-of-stake era, also experienced a successful launch.

Zooming out, September 2022 is shaping up to be one of the worst months for NFTs at large since its mania in August 2021. The industry is on pace for under $600 million in total sales for September, a fraction of its $5 billion monthly peak last January, according to data from The Block.