NFTs are the hottest craze in the crypto space, and a third of the projects take advantage of the Ethereum protocol.
Ethereum is the standard in smart contracts platforms and is utilized in various functions, from NFTs to Decentralized Finance. Solana is the closest competitor in the NFT space. Nevertheless, Ethereum remains king.
As Ethereum is the first smart contracts platform, it positioned itself as the undisputed king of DeFi and also did the same with NFTs. Often new protocols come along dubbed as “The Ethereum Killer”, but none have ever challenged ETH’s dominance.
The recent Ethereum merge changed the consensus mechanism from Proof of Work (POW) to Proof of Stake (POS). The change has reduced the blockchain’s carbon emissions by 99%, but on the other hand, it makes Ethereum more centralized.
In light of the news of the Ethereum merge, new NFTs will be minted on either the ETHPOW or ETHPOS. Current NFTs before the merge will be duplicated on both blockchains.
Relationship Between Ethereum and NFTs
Many celebrities and sports teams have launched an NFT. Snoop Dogg and Billy Ray Cyrus are the latest celebs to drop an NFT collection, with holders receiving great artwork, as well as other freebies.
As NFTs are often a collectors’ item, the future is bright. In addition to NFTs, Ethereum is the standard smart contract platform in a whole host of different industries, from Ethereum gambling at online casinos to decentralized exchanges. The Metamask plugin aids in making payments and collecting ETH by using your browser, thus, the simplicity of the ETH product has helped in further mainstream adoption.
NFTs are the latest way for artists and sports stars to connect with their fans, and Ethereum is the protocol of choice because of its highly secure network, data architecture, and brand recognition.
Why Ethereum is a Favorite for NFTs
Many wonders why Ethereum is used for NFTs and how the protocol has such a huge market share. As the Ethereum blockchain is now 8 years old and has the highest number of active monthly developers (220), Ethereum has all the ingredients to make NFTs mainstream.
Some of the biggest names in sports have even partnered with Chiliz, a decentralized app that uses the Ethereum blockchain. The Socios app allows fans to purchase fan tokens which, in turn, gives them access to the latest NFTs at their favorite clubs, from PSG to Juventus.
In the sports space, the most popular type of NFT are trading cards, and these continue to grow exponentially. The current record is the Lionel Messi Golden One trading card sold for $1.1m. In fact, during the auction, the artist, Bosslogic, only set a reserve of $50K, but a bidding war ensued.
At present, the relationship between Ethereum and NFTs is synonymous, but with Solana challenging the ETHs crown, the future is unpredictable. Nonetheless, it can be argued that competition is good for Ethereum, as it will motivate the protocol to improve further.
Threats to Ethereum as NFT King
The latest threat to Ethereum, Solana, claims it’s able to perform 50,000 TPS, and because of this, many NFTs are switching to the SOL platform. Examples of this include the famous artwork Degenerate Ape Academy and Degen Trash Pandas. However, Ethereum still remains the first choice for NFTs, with Vitalik Buterin’s blockchain commanding a 76% market share.
The major disadvantage of Ethereum currently is the speed, with the protocol only able to perform 18.93 transactions per second (TPS). Compared to the gold standard of transactions, Visa, the TPS at Ethereum is tiny. Visa can execute 24,000 TPS, nevertheless, with Ethereum’s recent merge, Vitalik Buterin announced that the protocol would be able to do 100,000 TPS in the near future. Only time will tell if this is the case.
In the next decade, we will see NFTs enter the mainstream, and if the metaverse becomes a thing, the demand for NFTs will skyrocket. The rosy future is only good news for Ethereum, and if it can keep its market share and continue to innovate, ETH will be in an excellent position going forward.