Solana And Ethereum: The Competition Of Two Forces In The NFT Market

During the recovery period of the NFT market in the fourth quarter of 2023, Solana and Ethereum were the two Blockchains that witnessed the most impressive recovery. In this article, let’s join Weakhand in clarifying the competition between these two forces in the NFT market.

Before entering this article, everyone can refer to some of the following articles to understand better.

• Outstanding trends of the NFT market in 2023
• NFT Market Recovers, Which Blockchain Is Being Left Behind?

Market Overview

Q4 2023 saw a general recovery in the NFT market. Up to now, NFT trading volume on Ethereum has increased fourfold since the lowest point set in September 2023, while NFT trading volume on Solana has had a more impressive growth with about 10 times. As NFT trading volume recovers, we also see significant growth in the floor price of NFT collections. Below we will go into detailed statistics about the two markets.

NFT marketplace on Ethereum

NFT trading volume bottomed out in September 2023 with only 143 million USD, accompanied by a decline in trading volume and a series of bad news across the entire market. At that time, there were many articles giving negative information about the market such as: NFTs are worthless, the NFT market is dead,…

However, since October 9, 2023 we have seen a significant change as weekly NFT trading volume on Ethereum has seen a staggering 380% growth. This strong increase mainly comes from the Blur Season 2 airdrop taking place on November 20, 2023. Blur incentivizes users to bid, list, and lend NFTs on their platform to receive an airdrop reward of BLUR tokens. This prompted NFT traders to actively participate in trading in the weeks before Blur Season 2 ended and thereby helped the NFT market on Ethereum become vibrant again.

While weekly NFT trading volume on Ethereum is up 380% from its 2023 low, it is still down 89% from its all-time high set in March 2022. The NFT market still has a long way to go and in 2024 we could see the next recovery from the Blur and Blast airdrops in May 2024.

Regarding the competition of NFT Marketplaces, although OpenSea launched OpenSea Pro to compete with Blur in April 2023. However, up to now, OpenSea Pro only has 9% market share in terms of NFT trading volume on Ethereum. Meanwhile, Blur still maintains its #1 position on Ethereum, mainly due to its first mover advantage, Airdrop rewards, and UI/UX design.

For example, Blur uses an Order Book system that allows NFT traders to gauge the depth of a project’s price floor better than any other market. Additionally, combined with the lending protocol directly integrated on Blur, it gives NFT traders the tools to execute complex trading strategies. Looking forward to 2024, Blur’s position is strengthened with the upcoming season 3 airdrop expected in May 2024. This campaign is expected to further encourage the participation of NFT traders on the Blur platform.

Although the recent spike in NFT trading volume is attributed to the original users in the market, there has been no participation from newcomers. Notably, despite being the number 1 platform for NFT traders, the number of weekly traders on OpenSea has decreased by 86% compared to the all-time high set in January 2022. This shows that there is still a large number of investors who have not re-entered the market. So while Blur is the leading NFT Marketplace platform, it is intended for professional traders and observing OpenSea’s share of trading volume is important to gauge retail investor participation during this period. next time.

NFT marketplace on Solana

NFT trading volume on Solana also bottomed out in September 2023 with only 30 million USD that month. In the first half of October 2023, the market was not much better and the rebound only appeared in the second half of October.

Tensor can be considered a version of Blur on Solana launching in 2022 offering users complex NFT trading strategies. The Tensor Season 2 airdrop ended in August 2023 and the next airdrop will take place in January 2024. Therefore, this also becomes part of the reason for promoting NFT trading activities on Solana, but unlike on Ethereum, Tensor is not yet a dominant name on Solana and airdrops have not become too attractive compared to with what Blur brings.

Therefore, the main reason driving the explosion of NFTs on Solana is the impressive growth of the SOL token and the explosive airdrop activity on Solana. The above two things have boosted user participation in the Solana ecosystem, especially the NFT segment with many projects that have witnessed impressive growth dozens of times.

Although the NFT ecosystem on Solana has seen a faster recovery than on Ethereum, compared to the peak in May 2022, this number is still down about 60%. Like Ethereum, Solana has a strong NFT ecosystem, providing users with good trading experiences. Overall, the NFT market cycle on Solana could be similar to that on Ethereum and driven by cutting-edge trading platforms like Tensor.

Change in Market Share of NFT Marketplaces

Platforms like Tensor and Blur have grown rapidly and are capturing a large portion of NFT trading volume on Ethereum and Solana. The participation of these two platforms has encouraged users to contribute liquidity to the market with reasonable Airdrop strategies.

Before the emergence of Blur and Tensor, traditional NFT marketplaces like OpenSea only allowed users to bid without the additional attractive Incentive rewards. This causes buyers to lack motivation to submit competitive offers, causing liquidity to stagnate and be easily dispersed.

In 2023, Blur had a 67% market share of total NFT trading volume on Ethereum. Before the appearance of Blur, OpenSea accounted for 80% of the market share in transaction volume but currently only accounts for 29% of the market share on Ethereum.

When it comes to Solana, in 2023, Magic Eden is the dominant NFT Marketplace platform on Solana with around 51% in terms of trading volume market share. Ranked second on this list is Tensor with 41% market share of transaction volume.

Although Magic Eden came first and dominated on Solana, in recent times, especially towards the end of 2023, the trading volume on Tensor has surpassed Magic Eden. From October 1, 2023 to January 1, 2024, NFT trading volume on Tensor rose to the top with NFT trading volume 50% higher than Magic Eden.

Tensor is expected to surpass Magic Eden in 2024 when the platform is about to conduct the next airdrops and other Incentive programs to attract liquidity. Through this we can see that Tensor and Blur bring a big impact to the NFT market and prove that this is the right direction for market demand.

Solana And Ethereum: The Competition Of Two Forces In The NFT Market

In 2023, Ethereum dominated the NFT space with over 90% market share in weekly NFT trading volume for about 60% of the year. One thing to note is that this figure does not include Ordinals and BRC 20 trading volumes on Bitcoin and this article only focuses on the two NFT trading markets Solana and Ethereum.

During the period from May to September 2023, as mentioned above, Ethereum accounted for the majority of transaction volume and Solana only accounted for a mere 10% market share in terms of transaction volume. However, a breakthrough has happened since November 2023 with the strong rise of Solana, accounting for 22% – 37% of the total NFT trading volume on the market.

When looking at the growth in the number of users on these two Blockchains, in 2023, the number of NFT users on Ethereum saw a sharp decline of 73% while the number of NFT users on Solana saw an increase. grow 200% and surpass Ethereum by December 2023.

Although the growth of the NFT market on Solana has benefited from the sharp increase in SOL prices and the Airdrop boom has attracted a large number of users into the Solana ecosystem. But with adequate, guaranteed infrastructure quality and the current level of hype, this is a springboard to help the NFT market on Solana explode in 2024. As for Ethereum, this is a big guy and still holds the number 1 position in the NFT market at the present time. Although we have not yet witnessed a strong explosion because there is not a large enough catalyst and this can be found in the upcoming Blast and Blur Season 3.

summary

The NFT market structure is changing significantly with the rise of cutting-edge NFT Marketplaces like Blur and Tensor. In addition, we also see the strong rise of the NFT market on Solana, promising to bring an attractive competition for market share in 2024.