As prices plummet and sales slow, many in the NFT space believe that we’re entering a bear market. While others believe that this dip is only temporary, it’s a stark contrast to bullish market that saw NFTs mint overnight millionaires over the course of 2021.
Recent activity reports on the Solana blockchain more or less corroborate this industry-wide trend. Legions of artists have been flocking to the platform, only to find their work collecting digital dust.
A surplus of sellers
In April of 2022, there were under 400k unique sellers on the Solana blockchain. In May, that number rose to a staggering 1.1 million as OpenSea — the largest NFT marketplace on the web — integrated Solana into their platform.
This integration made Solana available to a larger number of users and made the blockchain a stronger competitor in the space. This new competition is good for a few reasons. First, Ethereum — the de facto blockchain for NFT transactions — isn’t the most environmentally friendly blockchain. Further, gas fees on the Ethereum blockchain are pretty high.
Solana NFTs, on the other hand, come with low fees and a far more energy-efficient blockchain under the hood. This has made Solana an attractive alternative for anyone hoping to enter the space, as evidenced by a recent surge in its userbase. This past May, the total number of transactions on Solana hit an all-time high, reaching over one million in that month alone.
So, what’s the problem? There were just 167k unique buyers on the blockchain during that same period. In other words, there are far, far fewer buyers than there are sellers on Solana. And that’s not all. Sales volume on the blockchain dropped from $294 million in April to around $250 million the following month.
It remains to be seen what the market will look like moving forward, as NFTs are still a relatively new concept to the wider public. Despite how hard it is to make predictions on where the market will go, some figures in the community see the market’s current condition as an important stepping stone to future growth.
As stated by Binance CEO Changpeng Zhao, the market’s current state should make it easier for observers to spot projects looking to cash in, as opposed to forwarding the space as a whole. In that sense, the massive surplus in sellers currently active on Solana may not be such a bad thing in the long run. Looking at this through a more optimistic lens shows that more and more people are seeking a way to engage in the NFT space without contributing to its potentially negative environmental impact.
Currently, we’re still waiting on Ethereum’s merge to happen, or when the blockchain finally transitions towards the more energy-efficient proof-of-stake verification model. Until then, the more users on greener blockchains, the better.