Ethereum's Dominance in the NFT Sector Stands at 90%
- Ethereum has been the clear leader in the non-fungible token (NFT) space.
- Ethereum has the most robust infrastructure for NFTs
The Ethereum blockchain is currently the dominant player in the non-fungible token (NFT) sector. According to data presented by CryptoMonday.de, Ethereum accounts for 90% ($645 million) of all Q3 2022 NFT trading volumes.
This dominance is likely due to Ethereum's well-developed infrastructure and its wide array of dApps (decentralized applications) that support NFTs. Jonathan Merry, CEO of CryptoMonday, agrees with that analysis.
Speaking on the site's data presentation, he said:
Ethereum's share of the market indicates that investors are confident in the platform's ability to grow and scale. It also has a first-mover advantage, which can be difficult for other projects to overcome.CryptoMonday CEO, Jonathan Merry
A Cut Above the Rest
From the onset, Ethereum has been at the forefront of the NFT revolution. In late 2017, it became the first platform to host an NFT game, CryptoKitties. This game was a huge success and helped popularize NFTs among mainstream users. It has since become home to a wide variety of NFT games and applications, including Gods Unchained, Decenter, and 0xWarriors.
Other platforms have also begun to support NFTs, but none have been able to match Ethereum's level of activity. For example, Bitcoin's Lightning Network now supports "colored coins," which can be used to create NFTs. However, there has been little development in this area, and Bitcoin's Lightning Network currently accounts for a tiny fraction of all NFT trading volume.
Ethereum’s Advantage in NFT Development
There are several reasons why Ethereum is dominating the NFT sector. First, Ethereum has a well-developed infrastructure that supports NFTs. This infrastructure includes wallets, exchanges, and other tools that make it easy for users to buy, sell, and trade NFTs.
Second, Ethereum has a large community of developers working on new dApps that use NFTs. This community is constantly creating new games and applications that expand the possibilities of what can be done with NFTs.
Finally, Ethereum has a strong brand name associated with innovation and creativity. This brand name attracts developers and users looking for new ways to use blockchain technology.
Ethereum Dominates NFT Sales Though With A Small Margin
NFT sales in Q3 tell a different story than the market share numbers. Ethereum is still the dominant NFT chain, but it only represents 26.22% of total NFT sales. This difference is because high-end collectibles are disproportionately represented on Ethereum.
On the other hand, Ronin and ImmutableX - two chains focusing on Web3 games and gaming dApps - are emerging as significant alternative markets for NFTs, with 18.81% and 23.12% of total NFT sales, respectively. Flow (17.6%) and Wax (8.4%) round out the top five NFT sales platforms.
Interest in NFTs is Still Growing
It's no secret that the NFT market took a beating in Q2. With the collapse of the Terra ecosystem and the ensuing CeFi liquidations, trading volume took a 33% hit, falling from $12 billion to $8 billion. Sales count also declined, dropping 29% from 28 million to 20.23 million.
Q3 continued the trend as the trading volume plunged 75% from Q2, coming in at just $2.5 billion. However, on-chain metrics such as sales count and rising adoption in billionaire industries suggest that there’s still a healthy demand for NFTs. In fact, predictions indicate that Q3 will outgrow Q2 by 6%.
Despite the sharp decline in NFT trading volume, the number of unique traders is still positive, having increased by 36% compared to the previous year's third quarter. There are more than 2.2 million unique traders today, suggesting that there is still a strong interest in NFTs. It is possible that as the market stabilizes, we will see a return to higher trading volumes.