Last month, NFT sales hit a record high of almost 7.4 billion dollars, an insane amount compared to 2021’s total of $25 billion in NFT sales. As expected, this sales volume did not come from just a single marketplace, or blockchain, alone.
Coming in first as usual was OpenSea, the market leader of NFT marketplaces targeted towards the Ethereum blockchain. Trailing not far behind was the “OpenSea Killer” marketplace LooksRare, which is doing exceptionally well despite being launched just 2 months ago.
However, yet another competitor is eyeing OpenSea and LooksRare’s market share. No, it isn’t Ethereum marketplace 3.0. It is called Magic Eden, an NFT marketplace made for the Solana blockchain. Wait… NFTs are not just on Ethereum now?
Yep, in fact, there are tons of other blockchains supporting NFTs now! Well, in this article we will be discussing the NFT aspects of both Solana and Ethereum. Who will be NFT King? That’s for me to speculate, and you to find out!
Aren’t NFTs Only On Ethereum?
While the godfather of cryptocurrencies is Bitcoin, Ethereum is surely the mastermind that made NFTs possible.
Without going too much into the details, Bitcoin’s blockchain is too simple or basic to store massive collections of NFTs on. While Ethereum has much more complex tools and integration levels to make NFTs possible.
One crucial aspect of Ethereum that allows NFTs to exist on its blockchain is smart contracts. When somebody wants to “mint” an NFT(upload it to the ETH blockchain), they have to execute a smart contract. The code in the smart contract adheres to specific standards, most commonly ERC-721, and thus allows NFTs to exist.
With Satoshi MIA, it will be nearly impossible for anyone to change the Bitcoin blockchain to start mass-minting NFTs as Ethereum does.
But, that doesn’t stop newer blockchains from doing so. As more and more blockchains are invented by brilliant minds, almost all of them have some sort of smart contract integration in their blockchain, thus making NFTs possible on them too.
Hence, NFTs aren’t just exclusive to Ethereum anymore. They’re everywhere.
The Dark Horse: Solana
2021 was a year of the crypto boom, bull runs price-wise, and tons of projects that overpromised but underdelivered. Solana was not one of them.
Instead, the Solana ecosystem rose the ranks quickly, from a rather unknown blockchain to having their native token (SOL) in the top 10 of crypto market caps; this was no easy feat. But how did they do so?
While there are many reasons to explain the success of Solana, one important factor which accelerated their growth is quick transaction speeds.
You see, Ethereum has been the biggest, most widely integrated, and overall most popular blockchain for quite a while. Yet all this attention resulted in one negative for Ethereum — a highly congested network. And oh boy… did this one problem lead to dozens of other nuisances in the Ethereum network.
Solana on the other hand, proposed a whopping 710,000 TPS (Transactions per second) solution, as shown in their whitepaper. Of course, Solana is still shy of their goal by quite a bit, currently standing at around 2,500 TPS. At least that’s still way better than Ethereum: its maximum speed so far was just around 100 TPS. This definitely makes a difference when it comes to NFTs (which we’ll discuss in a bit!).
Other than being one of the quickest blockchains in the world, Solana also has a revolutionary proof-of-history concept. As implied from the name, this concept uses a historical record from the ledger to validate that a certain transaction happened at the recorded time. Using cryptographic technology to place events of the blockchain in order of history, allows for a more efficient and quicker blockchain. You can read more into the technicals here.
So, besides the massive funding of Solana and other influential figures behind the project, this is probably why the blockchain has soared to such heights. Now, does this spell “Danger” for Ethereum?
The Current NFT Scene
A year ago, Ethereum was the undisputed King of NFTs. Currently, the Ethereum blockchain still holds the vast majority of the NFT market share, but this could change soon. Here is the current outlook of Solana vs Ethereum NFTs.
Well, popularity is a crucial swing factor of NFT market share. In this aspect, Ethereum is definitely the winner.
First movers get the first advantage. One of the benefits that come with being the first NFT-possible blockchain is the extra confidence people have in the system. Well, it was the first-of-its-kind blockchain, sure, Ethereum is here to stay!
In a way, Ethereum has already made its name and doesn’t have to “prove its worth” to anyone else, it simply is the most reliable blockchain at the moment. As such, more people are willing to buy expensive digital assets on a more trustworthy blockchain.
But Solana has a different story. Remember, it was literally popularized just last year, so it is perfectly logical for people to not trust it as much as Ethereum. And even if Solana continues to prove itself over the years, people will still acknowledge the “first-rights” of Ethereum.
In a nutshell, think Apple vs Samsung here. Guess I should’ve said that at the start.
Gas & Speed
As we discussed earlier, the Ethereum network is extremely congested thus causing it to have low TPS. Well, this also leads to two major problems; transactions staying in the mempool too long and gas fees.
The mempool is like the void between starting a transaction and confirming it. It is the area where transactions “live” while waiting for a miner or validator to come along and add it to the string of blocks in the blockchain.
So how does this impact NFTs?
When a popular NFT project is in mint mode, their initial launch, thousands of people could be vying for NFTs from a single collection in a matter of seconds. Hence, high TPS is required for the blockchain to process so many transactions at once. However, since Ethereum has low TPS, most of the transactions will inevitably get stuck in the mempool, resulting in even more congestion and many unable to mint the hyped NFT.
With Solana’s higher speeds, increased TPS, and proof-of-history concept, this should be less of a problem.
Next is gas. Gas is the transaction fee one has to pay for sending out a transaction, simply because miners or validators need to be rewarded for facilitating your transaction. With the Ethereum blockchain having a high number of transactions, this makes gas fees higher and overall more expensive for people to mint NFTs.
This is due to miners having an abundance of transactions to work with… and the logical choice will be the ones with the highest block rewards (or fees in your case). That results in hundreds of dollars just to mint an Ethereum NFT; not an economical move at all.
In comparison, Solana just takes anywhere from 10 cents to $5 to mint an NFT, way under Ethereum’s gas! And if you buy NFTs off secondary marketplaces, you won’t have to “mint” the NFT, and your costs go down to just a fraction of a cent!
Faster speeds and lower gas surely make Solana a strong contender in the current NFT scene. Even analysts at JPMorgan say so!
Integrations, Compatibilities, Decentralization
Vitalik, perhaps the most well-known co-founder of Ethereum, famously said in a conference in Argentina:
If Ethereum fails to scale, then Ethereum definitely failed. If Ethereum succeeds at scaling, but it turns into something centralized, then I think it also failed. If Ethereum succeeds at scaling and at being decentralized as a blockchain, but nothing interesting gets to build on top of it and no one actually gets any value from it, then it also fails.” ~ Vitalik B.
In my eyes, all of this points back to integrations, blockchain compatibility, whilst keeping the blockchain decentralized. While it looks like a perfect solution in theory, rolling it out is easier said than done.
Firstly, integration with other DApps is extremely important when it comes to developing a successful blockchain. As implied by Vitalik, both Solana and Ethereum need to see more DApps readily going into their respective ecosystems, making use of solutions by these blockchains to perform different tasks on a more specific scale.
In this aspect, I’d say Ethereum reigns as an integration expert. With L2 protocols (which help speed up the network) such as Polygon, ZK-Rollups which help with scalability, as well as Defi protocols like AAVE all on the Ethereum blockchain, it is far more sophisticated than the current Solana ecosystem.
Blockchain compatibility is very similar to integrations, but in this case, we focus more on what apps can be used with the blockchain, they need not necessarily be built on that specific blockchain. In my opinion, most wallets and crypto exchanges have effectively reached out to Solana and Ethereum, so this isn’t a problem in either blockchain. However, there are significantly more Ethereum-focused NFT marketplaces at the moment; though this could change in the future.
Finally, we come to decentralization. Ahh… the elephant in the room nobody wants to talk about, but here we are. Decentralization in essence is all about staying away from organizations, scary hedge funds, and capitalist firms that can establish a monopoly in the ecosystem. So, giving back the governance and monetary power to the masses.
However, both blockchains rely on their respective foundations, the Ethereum and Solana foundations, to push for certain updates and activities in the space. While Vitalik has been pushing for a more decentralized Ethereum (perhaps following Satoshi’s footsteps?), Solana has been criticized for being one of the “most centralized in crypto”, with the Solana foundation and other VCs or partners running the blockchain.
For this category, Ethereum gets the W.
What This Means For Flippers
So, I guess Ethereum is the winner then, case closed…
Not so fast; especially if you’re an NFT flipper.
NFT flippers are fundamentally the opposite of patrons of the arts. While art patronage is all about appreciating the scarcity, significance, and literary value of a digital piece, NFT flipping is all about appreciating how well an NFT can fatten your wallet.
In other words, NFT flippers buy digital assets with high potential for quick growth, with the aim to sell them for a profit. So, since the artistic value is usually irrelevant when it comes to NFT flipping, is Solana or Ethereum better for this?
As with all things in life… it depends.
Scalpers are NFT flippers with short-term goals in mind. So let’s say a day or two, one week tops. If you’re trying to make a quick buck out of NFTs, it is 100% possible, and it is plausible too. But just be prepared to lose everything, because FOMO goes both ways.
Here are some things scalpers look out for:
- Hype. Pure, ape, degenerate hype, and FOMO.
- Active community. This means a high following on social media platforms (Discord, Twitter, Telegram) as well as literal LFGs in the chat
- Clear roadmap, pro, “doxxed” team. This just makes the project more legit.
For scalpers, the hype is everything. Hence it is worth the grind to get whitelisted, buy an NFT during the pre-sale, and sell it at a profit once the NFTs are listed in the secondary market.
Since buying and selling of NFTs are more erratic for scalpers, the lower gas fees and faster TPS on Solana make the process more efficient and much cheaper. If you’re a scalper, the Solana blockchain should be your choice.
Investors and Market Movers
If you’re an investor or market mover (large capital), Ethereum will be the better choice simply because of volume.
Typically, you would invest in an NFT for a longer period. Perhaps the NFT is an access key to private areas or VIP lounges, and this is your investment into that space. Or maybe the NFT is part of a Defi game that would be released in a few months…
When you’re going for something more long-term, stability is key. Ethereum, having greater potential for NFT price swings and yet being more stable than Solana, is thus suitable for you.
For example, if you bought an Ethereum NFT at 0.1 ETH and sold it for 0.2 ETH, it would be equivalent to you making 3 SOL (at current prices). Well, we don’t often see projects swing 3 SOL up, simply because there is a lack of volume on the Solana blockchain.
Those Watchers On The Sidelines
After reading all this, you suddenly realize you hate both Solana and Ethereum. They’re just too big too fast, maybe they don’t even deserve the title NFT King, only hype-lord.
Well, other blockchains are emerging in the NFT space, fast! Projects like Tezos and Cardano have their own blockchains which are NFT-compatible, and ever trying to steal more projects onto their ecosystem.
NEAR Protocol and Binance Smart chain are also doing the same, though they aren’t really similar to other conventional blockchains. Even projects like Polkadot seek to connect different blockchains and perhaps get rid of centralized intermediaries when it comes to NFT-connectedness.
If you’re willing to put your crypto outside the top 2, feel free to explore these rather new but potential-packed blockchains.
So, who snags the NFT crown? For now, I’d say Ethereum still reigns as the NFT King, due to its insurmountable influence on the NFT market. If Solana disappeared today, it wouldn’t be long before another protocol like Cardano took over. But if Ethereum gets destroyed… NFTs will also meet their doom.
Ultimately, the choice is yours! Which blockchain will you choose? And most importantly, do you believe that Solana and Ethereum will be still standing strong 5, 10, 20 years into the future?
That’s for all of us to believe, and time to tell.