High gas prices killing NFT projects
Ethereum, the second-largest cryptocurrency, and the largest NFT ecosystem is experiencing massive growth in recent months sending ETH to new all-time highs, beyond $4,600 as of writing. With the influx of new members, more NFT projects, and investors piling in, Ethereum is experiencing a congestion problem.
Transferring and swapping tokens between accounts have seen incredibly high fees, but it is the gas fees that are holding up transactions on the NFT market. Gwei, the unit that measures the cost of transactions on the Ethereum network, has seen a sustained period of high fees. At the time of this writing, according to Ycharts.com, we are seeing Gwei at an average of 186 which roughly translates to about an average gas fee of about $250! This is an increase of 209% from the previous year.
It is no surprise though. Cryptocurrencies have become more mainstream, spoken about on television news programs, rife in market articles, as well as landing across government agencies in just about every country. Ethereum is the second-largest cryptocurrency as well as one that implements a large utility was always bound to be congested as the numbers scaled upward. A layer-2 solution with Staking nodes and a concept called Sharding may certainly alleviate the high fees, but this has yet to be implemented outside a testnet for the ecosystem. On top of this, it looks as if we might have to wait until about June of 2022 to see any real results. The developers behind Ethereum have publically walked back on a few dates stating, sometime in 2022. Your guess is as good as mine.
So for right now, the typical NFT collector on Ethereum may have their wallets zipped up tight in hopes that the gas prices will fall. If the market is any indication, with another possible bull-run in the midst, these collectors may be stuck at the pump paying for gas.
This however is not a universal problem as there are many networks that allow for cheap transactions. Solutions like Polygon, Solana, and Cardano are a few options for the NFT collector. Here at Single Point Gallery, we have been enjoying the new markets surrounding Cardano NFT, or simply CNFT.
Although the markets are not as hopping as the ones we see on Ethereum, there are plenty of fantastic projects being rolled out every day. Some with eye-popping art such as TheCardRoom’s mutation series, or perhaps something with a bit more functionality like Mocossi Planet’s attempt at the first virtual pet on the Cardano network. But the best thing about these alternatives is the fees. With a typical transaction costing a mere .2 ADA, about $.41 at the time of writing.
We can clearly see the advantages of these networks through the transaction fees alone. But the CNFT community is growing by the day and is fast becoming the preferred network here at Single Point Gallery. In the future, gas fees may never be an issue for any network, but for now, we’ll be focusing on Cardano projects until Ethereum can allow a lower entry for newcomers.