Transaction share of NFTs on Ethereum
The NFT industry appears to be a major player in the blockchain universe, and more specifically, at the heart of the Ethereum blockchain.
How does this manifest itself? Are NFTs an important part of Ethereum activity? Will Ethereum be the most used blockchain for NFT projects?
NFT transaction volume vs global on-chain transaction volume
2020 NFT transaction value vs total Ethereum blockchain transaction value
(Black is the NFT transaction volume, yellow is the total transaction volume of the Ethereum blockchain)
First, it’s important to note that the graph above has two independent variables: NFT transaction volume and total Ethereum blockchain transaction volume. There seems to be no apparent correlation between the two.
In addition, it can also be noted that the weekly average NFT transaction volume is extremely low compared to the total transaction volume on the Ethereum blockchain; the weekly transaction volume on the Ethereum blockchain exceeds 5 million, while the NFT transaction volume is 12 Ten thousand.
(From top to bottom, the total amount of NFT transactions; the total amount of Ethereum blockchain transactions; the ratio of the top and bottom)
Compared to previous years, during 2020, NFT transaction volume has dropped significantly. The reason for this relative decline is the rise of sidechains. Sidechains can allow projects and encrypted game publishers to provide players with a large amount of off-chain interactions without high costs and reduce latency. Nft development company At the same time, projects and encrypted game publishers only need to interact with the main chain for key transactions, such as assets in user wallets trade.
NFT market size vs crypto market size
From a transaction perspective, it can be seen that the NFT industry is still small compared to the total on-chain activity.
Now that NFTs are seen by many as a store of value, how does the market capitalization of NFTs compare to the market capitalization of major cryptocurrencies? Is the NFT market growing every year?
Note: The market value of NFTs is calculated according to the formula, that is, the total supply of each NFT Ticker X the average value within one year, and takes into account the relative liquidity rate of each NFT Ticker. The annual cryptocurrency market capitalization is calculated based on the average daily cryptocurrency market capitalization over a year.
It can be seen that in 2019, NFT achieved solid growth during the crypto winter: NFT accounted for more than 1% of the entire Ethereum market value, and it also had certain benefits to the Bitcoin market value.
The comparison between the stable value of NFTs and the two major cryptocurrencies should be interpreted. During 2020, the value of BTC (Bitcoin) and ETH (Ether) has grown significantly, which is a testament to the solidity of the NFT industry, even though the NFT ecosystem is much smaller compared to the other two.
The impact of ETH prices on the NFT market
Almost like other cryptocurrencies, ETH has seen wild swings in value during 2020, rising from $107 in March to more than $650 by the end of the year. Will fluctuations in the value of the Ethereum core cryptocurrency have an impact on the NFT industry and market? If yes, is the effect positive or negative?
Compared with the basic cryptocurrencies in history, the independence of the NFT industry proves that this young ecosystem will continue to liberate, continue to develop, mature, and achieve self-sufficiency
The last quarter of 2020 saw a significant increase in the number of NFT buyers/sellers as the value of ether recovered and network costs fell in tandem. It is difficult to attribute this surge to one of these two factors alone.
Transaction volume vs ETH price
Weekly NFT volume vs ETH price in 2020 In contrast, there is no direct correlation between ETH price and transaction volume. On the contrary, as the price of ETH continues to rise, the transaction volume has dropped significantly in the past six months.
The report believes that this phenomenon is related to two factors: the pre-sale of NFT projects that began in the first half of the year.
Additionally, when the price of a cryptocurrency is relatively low, buyers and collectors take the opportunity to fill their portfolios with new assets. If the market were benchmarked against ETH, dollar sales would not be too high by any means, so the dollar price of the asset would automatically increase.
In conclusion, crypto winter seems to be a good opportunity for collectors and NFT buyers to expand their portfolios, potentially storing this acquired value and using it when prices increase.
ETH transaction volume vs ETH price
The sharp spike in ETH transaction volume in September has more to do with falling gas fees than rising ETH prices.
This September peak is likely due to Ethereum’s release from unprecedented network congestion that has put the market on standby. This surge coincided with a drop in the price of gas fees, allowing ordinary users to return to the market.
In this particular context, most users who want to buy and sell NFTs will have to wait for the price of network fees to drop before taking action.
When it comes to NFT, it is inevitable to mention Ethereum, and when it comes to Ethereum, it is impossible to bypass the Gas fee. What is the gas fee? How will it affect the performance of NFTs?