In recent years, the crypto industry has changed a lot. A lot has happened, especially with smart contract platforms like Ethereum. For example, in 2017 and 2018, Ethereum was still mainly used by initial coin offering (ICO)– Projects Used for fundraising purposes. By contrast, applications from decentralized finance (DeFi) and the non-fungible token area dominate the Ethereum blockchain today.
Some of the alternative smart contract platforms (Phantom, Terra, binance Smart Chain, Solana) have since tried to build on this success. To do this, they develop their own blockchains, which are often less decentralized and secure, but in turn cheaper and faster.
Tier 1 alternative blockchains such as Terra (LUNA), Binance Smart Chain (BSC), Avalanche (AVAX), Fantom (FTM) or Solana (SOL) have successfully gained significant market shares in the DeFi ecosystem.
information from Coin98 Analytics It showed that the first-tier alternative blockchains now account for more than a third of the capital held in DeFi protocols.
But while Terra and Co. Despite having some success, especially in the DeFi sector, the situation in the NFT sector is very different.
Ethereum is responsible for over 90 percent of NFT trading volume
Ethereum has so far managed to maintain its market share in the NFT sector. Consequently 2021 NFT User Review 1 confirmation At the end of last year, Ethereum and its scaling solutions (such as Polygon, Ronin, and Arbitrum) still accounted for more than 90 percent of NFT trading volume.
Of course, it is possible that alternative smart contract platforms will gain more market share in the NFT sector over time. Surprisingly, however, NFTs, which have so far been particularly popular with small investors compared to DeFi, are still primarily traded on Ethereum.
Despite the high transaction fees, many retail investors don’t seem to shy away from buying NFTs on Ethereum.
Reasons for the dominance of Ethereum
1. The largest infrastructure and community
Ethereum was the first smart contract platform in the crypto space and has built the largest blockchain infrastructure and community over the years. Because of this, users have access to a much larger number of decentralized applications and NFTs within the Ethereum ecosystem. In addition, there is significantly more capital in the ETH network than in other smart contract platforms. This is a great feature for NFT traders as they can trade NFT in relatively more mature markets.
2. The most active developer community
Additionally, Ethereum has the largest and most active community of developers and NFT creators. Whether it is about The latest sizing solutions or experiments The next generation of NFTsEthereum is the center of the NFT world at the moment. Mass reproduction or imitation of this talent is not easy. Therefore, it is much more difficult to reproduce the success of the NFT ecosystem than in the DeFi area.
3. The longest date
Another reason for the continued dominance of ETH is that the Ethereum NFT scene has by far the longest history. already in general In 2015, the first NFT projects were built on Ethereum And for many NFT collectors, older digital collectibles like Crypto Kitties or Crypto Punks are valuable precisely because of this.
4. The most secure smart contract platform
Ethereum has also maintained a perfect uptime throughout its lifetime. Thus, the network has the longest and most proven track record for reliably securing NFTs.
5. Highest quality NFT projects
Due to the underlying security and history of many NFT projects, NFTs on Ethereum are considered by many to be the most desirable NFTs out there.
So, when it comes to users wanting the best NFTs from the most interesting projects, NFTs from other blockchains can’t quite match in terms of their perceived quality.
Things can change incredibly quickly in the crypto space. So it is entirely possible that Ethereum could lose some of these important advantages to its NFT ecosystem over time. However, for the time being, the benefits are still widespread, and scaling solutions like Polygon make ETH transactions low-cost, similar to the layer one blockchain. So the fight for market share in the NFT sector should be much more difficult for the first layer alternative blockchains than for the DeFi area.
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