NFT’s comeback? Dominance on Ethereum Returns to 22%
Data shows that non-fungible token dominance on Ethereum has returned to 22%, suggesting that NFTs may be making a comeback.
NFT dominance on Ethereum has been climbing lately
According to the latest weekly report from Glassnode, NFT dominance on Ethereum had fallen to just 13% just a while ago. The “dominance” here is based on the percentage of the total gas consumption on the ETH network that a particular transaction type is using right now.
When the value of this metric increases for a specific type of token, it means that the token now makes up a higher portion of the total gas consumption on the Ethereum network and thus sees relatively higher usage from holders than the others. transaction types.
Since ETH has a very diverse ecosystem thanks to its smart contracts, the network hosts a large variety of transaction types, each corresponding to the different applications built on the blockchain. Some of the most popular such applications include ERC20 tokens, NFTs, bridges, MEV robots and DeFi.
Here is a chart showing the trend in the dominances of two of these Ethereum transaction types, NFTs and Bridges, over the last few years:
The value of the metric seems to have gone up for non-fungible tokens in recent days | Source: Glassnode's The Week Onchain - Week 2, 2023
As the graph above shows, NFT dominance on Ethereum had fallen to just 13% not too long ago, after remaining at high levels throughout most of 2021 and 2022. This decline meant interest in these tokens faded among investors as not many transactions of this type took place. However, in the last few weeks, the gas consumption of NFTs has observed a sharp upswing as their dominance is now around 22%.
“By and large, the leading NFT markets and projects have maintained a primary foothold on the Ethereum mainchain, and so far there has not been a noticeable migration of existing NFTs towards bridges and other chains,” the report explains.
“Bridges” here refer to applications that connect two blockchains and facilitate transfers between them. From the chart, it’s clear that their usage has dropped significantly over the past year and a half, with their dominance dropping from a peak of over 8% in August 2021 to below 1% today.
This decline may be due to the high-profile bridge cuts that took place in the past year. Glassnode notes that the reason NFTs have not migrated to bridges and other chains is because of these hacks, as well as the fact that gas fees have been lower on the Ethereum network recently.
In terms of pure volume figures across the entire market (that is, including all networks), NFT’s weekly average trading volume has almost tripled since the November lows (as the chart below shows), suggesting that there has been a general renewed interest in these tokens recently.
Looks like the USD volume of these digital collectible tokens has significantly increased recently | Source: NonFungible
ETH price
At the time of writing, Ethereum is trading around $1,300, up 9% in the past week.
ETH has surged up | Source: ETHUSD on TradingView
Featured image from Andrey Metelev at Unsplash.com, Charts from TradingView.com, Glassnode.com, NonFungible.com
