Ethereum predominates NFT trading irrespective of the continued scaling of emerging and new competitive blockchain platforms. The NFT ecosystem has adopted and continues to ride on the Ethereum bandwagon for several reasons. Ethereum co-founder Vitalik Buterin’s proposal to move the NFT ecosystem to layer 2 (L2) solution supplements reduced gas consumption and fee on Ethereum main net has fueled its massive grip in the NFT domain.
Shift into Layer 2 (L2) Solution
The growth of the NFT ecosystem in the Ethereum blockchain meant high gas consumption, fees, and commission. The proof of work consensus algorithm used by Ethereum to verify the transactions uses lots of energy. However, shifting to the L2 protocol can reduce energy consumption. According to Buterin, the organized transfer of the NFT ecosystem to Layer 2 is the solution to reducing gas-free and commission. L2 is a scaling protocol built on the existing Ethereum network to reduce transactions costs paid by users during their transactions on the platform. It focuses on resolving high gas fees and slow transaction speeds. Every NFT transaction is bundled, rolled together, and submitted simultaneously to Ethereum main net.
A recent example of an NFT platform powered by the Ethereum Layer 2 protocol is Immutable X, which offers gas-free minting and trading. The adoption of the L2 solution has enabled Immutable X to provide a platform that trades, shares, earns, and collects complete gas-free NFT on Ethereum.
First Smart Contract Platform
Ethereum, being the first smart contract platform for NFT, continues to provide scalable solutions for pursuing NFT trading. Irrespective of the newfound prominence of other alternatives, Ethereum blockchain, has maintained centrality around NFT. Ethereum was the first blockchain to have placed NFTs in the metaverse, spinning credibility and reliability with its constant multi-faceted development and innovation. Ethereum has large market capitalization compared to its competitors like Solana, Polygon, Binance, Tezos, etc., accounting for 90% of the NFT trading volume.
Growing User Base
The infrastructure of the Ethereum network boasts a solid foundation for NFT trading. Since the launch of NFTs on the blockchain, Ethereum has dominated the space due to its sync and access to many services and apps. The Ethereum NFT platforms are connected to Metamask — a crypto wallet, making the process of buying and selling NFTs easy. According to a report by Cryptoslam, the number of Ethereum NFTs users has grown to 344,349 unique buyers by January 2022. The existing pool of bleeding-edge L2 researchers or NFT experiments has expanded the Ethereum network organically, improving its credibility over time.
Best Liquidity for NFT projects
Liquidity is a major aspect that cannot be ignored while working in a decentralized space. NFT projects have solidified their foundation on Ethereum blockchain for its superior liquidity facilitated by its established infrastructure. Most NFT projects find it easy to trade on Ethereum due to its high liquidity model. The liquidity of the Ethereum network has created opportunities for everyone, including NFT users, new NFT projects, and NFT traders.
Secured and Layered Network
The first NFT project on Ethereum was launched in 2015; it was indeed quite ahead of time. With Ethereum bridging the gap and dominating the metaverse space regarding NFTs, it has created a highly secured network compared to its contemporaries. It has maintained a positive track record of securing NFTs creating permanent state storage. The resolution of the high gas fee facilitated by the L2 protocol further adds to the confidence of the NFT traders on the Ethereum network. Over time, innovations have helped in scaling up the Ethereum model.
Final Words
Ethereum was the first blockchain platform to have launched NFTs and continue to predominate the space for all the right reasons. The concern regarding energy spent and the high gas fee is fading slowly with the integration of the Layer 2 (L2) protocol. The advances around the L2 network mark Ethereum as a predominant space for existing NFT projects and support new projects.
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