Ethereum is the 800 pound gorilla in the room when it comes to NFTs (non-fungible tokens), both as the first blockchain that enabled NFTs and in terms of market size and value, with collections like Bored Ape Yacht Club attracting in the million dollar range and attracting celebrities ranging from Justin Bieber to Jay-Z. But investors who want to cast their eyes further afield will find that NFT ecosystems are growing on other blockchains as well, especially Solana (CRYPTO:SOL). While the Solana NFT market is still nascent and a fraction of the size of the Ethereum NFT market, it is growing rapidly.
As a quick reminder before moving forward, NFTs are essentially tokens on a blockchain like Ethereum or Solana that represent ownership of a single asset. These assets can be anything from a work of art to a character in a play-to-earn (P2E) game or even a digital plot of land in the metaverse.
How it works?
Buying Solana NFTs is a simple process. You will need a Solana wallet, such as Phantom, which is the most important and can easily be downloaded as a browser extension. You can then go to one of the main NFT Solana exchanges, like Magic Eden or Solanart, and browse the collections there. Magic Eden currently dominates this space, with $144 million in volume over the past 30 days, compared to Solanart’s $9.37 million over the same period. When you see one you are interested in, all you have to do is connect your wallet, make sure you have the necessary amount of SOL in that wallet, and then you can buy. You will need to approve the entry of the token into your wallet, then the NFT will appear in your Phantom Wallet shortly after in the “Collections” section.
Check the stats
Solana has established itself as the second most prominent blockchain for NFTs and is gaining momentum.
In February, Solana recorded a total volume of $149 million with an average price of $470 per transaction. There were 316,000 transactions with 54,434 unique sellers and 81,793 unique buyers. While total sales volume fell by almost $200 million in January, this was also attributable to the price of Solana which fell about 50% from early January to February, so sales were all at a much lower dollar denominated price.
The important trend to watch is that unique buyers have exploded since last summer when NFTs first went live on Solana, from 14,579 in August to over 80,000 in February, an increase by more than 500% in just six months. The total number of transactions increased by a similar percentage, from 63,873 in August to 316,800 for the month at the end of February. These trends are important because they indicate that more individuals are entering the Solana NFT ecosystem instead of just a few whales buying and selling among themselves, indicating that Solana NFTs are gaining popularity among individual investors. Additionally, the growing number of transactions indicates that once involved, these investors are transacting more frequently, which means that there is a good level of activity and volume for Solana’s NFTs.
Again, while Solana is not yet competing with Ethereum in the multi-million dollar sales arena, there have now been three NFT sales for over $1 million on Solana. The record NFT sale on Solana is for a Solana Monkey Business NFT for just over $2 million last October. Other sales of over $1 million were another Solana Monkey Business NFT and an Ape from Degenerate Ape Academy. Other popular projects include the Catalina Whale Mixer, Boryoku Dragonz, Baby Ape Social Club, and Portals, a metaverse real estate project on Solana.
Can Solana’s NFTs continue to grow?
As with any form of artwork or collectible, there are many collections that will fail, but also some that will appreciate over time.
Solana NFTs still have a long way to go before they reach the same mainstream profile as Ethereum NFTs. But they got a lot of traction in just a few months of existence. A key factor that could propel Solana NFTs even further is that transaction processing fees on Solana are much lower than “gas fees” on Ethereum.
These are clearly speculative investments and only for risk-tolerant investors who are comfortable putting a small amount of money into them, but I believe Solana NFTs will continue to grow over time with the Solana blockchain at as more developers rely on it and more users interact with it. The increase in unique users and volumes over the past few months is a key trend that bodes well for Solana’s NFTs.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.