Ethereum Dominance of the NFT Market Down to 76%

Although Ethereum still takes the lion’s share in the NFT market, it is quickly losing dominance as more blockchains enter the scene.

Data obtained by CryptoMonday shows that the Ethereum blockchain currently accounts for 76% of the transactions in the NFT space, generating about $13 billion in revenue last year.

Still, it’s clear that Ethereum is quite a force to reckon with, perhaps as a result of its global widespread usage. Even as more blockchains look to leverage the NFT markets, the gap between Ethereum and Ronin, which comes in second, is hard to miss.

Ronin, Axie Infinity’s blockchain, accounted for 19% of the transactions in the market in 2021. The total revenue generated from these transactions totaled a little over $3.4 billion.

Relatively new blockchains leave their mark on the NFT scene

An interesting thing to note is that newer blockchains seem to be triumphing over the older ones. Ronin, which accounts for the second largest share of the NFT market, has been around for a little over a year. The blockchain by Axie Infinity was launched in early February last year.

Another new player with impressive performance was Immutable X, which is the first layer 2 blockchain for NFTs on Ethereum. The blockchain was launched in April 2021 and accounts for 1% of the NFT transaction volume, amounting to about $87.3 million. But, there have been increasing announcements of NFT projects migrating to the platform, so Immutable X could well be on its way to a rapid expansion.

The other top-performing blockchain is Flow whose volume of $827 million is 5% of the total transaction volume.

Declining dominance due to network congestion and high gas fees

Ethereum’s dominance on the NFT scene has been declining over the last few months. An earlier report by JP Morgan showed that the dominance levels had dropped from 95% in early Jan to about 80% by the month’s end. The bank cited congestion and high gas fees as the reasons behind the decline.

JP Morgan further expressed concerns if the blockchain’s dominance continued its downward trend, which is what we are seeing now. The bank argued that a gradual decline in dominance would present more significant issues for Ethereum’s valuation.

Could the merge be the solution?

It is worth noting that the upcoming Ethereum 2.0 merge could be the missing ingredient in the blockchain’s success. The upgrade, which is set to happen in the few coming months will address the issues of gas fees on the network. If successful, the merger could help Ethereum secure its place as the top performing blockchain, even as new contenders rise by the day.