Scaling networks like Solana are winning over Ethereum NFT developers with their high level of performance.
According to a report by analysts at JP Morgan, one of the oldest and most prestigious financial firms in the United States and the world, the blockchain Solana is attracting NFT developers from Ethereum, motivated by the high degree of scalability and performance that this blockchain offers. According to data, in the last year, NFT developers using Ethereum are abandoning this blockchain to start creating their projects on Solana and other networks focused on scalability.
The high demand that exists for decentralized finance protocols (DeFi), NFT y Metaverses and the low scalability that Ethereum offers, have congested the network and raised the fees. gas to levels unimaginable just a few months ago. Currently, the costs of transacting on Ethereum can exceed $30 for simple transactions and $200 for NFT transactions, according to calculations made through the portal ETH Gas StationAs a result, Ethereum is beginning to lose ground to rivals like Solana, which promise to boost the NFT market to new levels.
According to JP Morgan analysts, Ethereum has lost 15% of its NFT market share since January 2021. Most non-fungible token projects that have left the network have moved to Solana, primarily, and other scalability-focused blockchains such as WAX and Tezos.
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Solana can catch up with Ethereum
Nikolaos Panigirtzoglou, director of global market strategy at JP Morgan and who led the report that the firm presented to its clients and investors, highlighted that the unit value of Solana could reach the current value of Ethereum, if the trend of NFTs within this blockchain continues.
SOL, Solana’s native cryptocurrency, is trading 95% below the current price of ETH. However, JP Morgan believes that this cryptocurrency has the potential to grow exponentially in the future, driven by the mass adoption of NFTs, DeFi, and blockchain-based Metaverses.
“If the loss of NFT participation starts to become more sustained in 2022, that would become a bigger problem for Ethereum’s valuation.”, Panigirtzoglou said.
Ethereum dominates DeFi and NFTs
Although high gas fees on Ethereum have made this network unusable for many investors and users, especially retailers, the blockchain continues to lead the DeFi and NFT ecosystem. data On-chain data shows that Ethereum accounts for 60,4% of the total value locked or TVL that exists in DeFi, while rivals such as Solana and Tezos hold 4,3% and 0,4% of this value, respectively.
Similarly, in the NFT market, Ethereum still ranks as the leading blockchain, with over 2.600 NFT and crypto-collectible projects developed on its chain; while Solana, Tezos, and WAX add up to about 109 projects combined, according to data by DappRadar.
Certainly, although Solana is seen as a potential rival to Ethereum, it should be remembered that the protocol that implements this blockchain, which combines PoS and PoH, is little known in the industry, which has led to concerns about its stability and security. In the last 4 months, Solana has suffered 3 outages due to network congestion, caused by excessive spam and possible attacks. DDoS.
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