Deep Dive Into the Solana NFT Ecosystem (I): Marketplaces and Key Metrics

Introduction

The explosion of interest in NFTs over the past 2 years has led to a proliferation of blockchains vying to become the go-to destination for NFT creation, issuance, and trading. Solana, with its high-performance infrastructure and low transaction fees, has established itself as a leading player in NFTs. Today, Solana is the second-largest NFT ecosystem after Ethereum in terms of NFT transaction volume.

It has been quite the rollercoaster ride for Solana NFTs. In our Year Ahead report, we wrote a brief note on how Solana NFTs faced an existential crisis in November 2022 with the fall of its largest backers: FTX, Alameda Research, and Sam Bankman-Fried. At that time, fear was plentiful and many NFT founders were seriously considering moving their projects off Solana to another chain. In hindsight, that was a test of character, and so far it appears that Solana has passed — the Solana community has shown its resilience and bounced back strongly. The ecosystem is as vibrant as ever.

From our research, we have reason to believe that the Solana NFT ecosystem will continue to thrive and grow in the coming months. Many interesting opportunities will present themselves for those who are watching carefully. We’ll first dive into the current state of Solana’s NFT ecosystem and usage metrics. We’ll also examine the strengths and weaknesses of some of the key marketplaces currently operating within the ecosystem.

For more on Solana, you can refer to our Pro reports covering its infrastructure development and recent price surge.

A Different Culture on Solana – Driven by Traders

In all honesty, it was somewhat surprising to see NFTs develop into such a vibrant ecosystem on Solana. Solana was initially designed as a blockchain to support sophisticated financial applications that required extremely fast and cheap transactions that would not have been able to be run on the existing Ethereum infrastructure. Today, Solana NFTs rival Solana DeFi in terms of interest and activity. We could even say that NFTs are carrying the ecosystem (chart above from our Infrastructure Year Ahead report).

General-purpose blockchains that succeed in gaining user adoption are often able to nurture and grow a vibrant NFT ecosystem. Innovative and interesting NFT projects bring in thousands of new users to the chain. NFTs drive a significant portion of usage on blockchains and are one of the largest growth areas for block space demand. OpenSea and Ethereum have shown how true this is.

It is worth noting that NFT ecosystems on different blockchains develop a separate set of cultures, values, and interests. This is driven by the nature of the users as well as the unique characteristics of the blockchain.

For example, Ethereum NFTs are driven by whales and have a strong focus on high-value PFPs and art. Ethereum is perceived as the most secure chain for NFTs and has a strong Lindy effect, which means that collectors are more comfortable storing high-value NFTs on the chain. Many of the top collectors on Ethereum are crypto OGs who made their wealth during the early crypto bull runs and DeFi summer before there was traction on alternative L1s like Solana and Avalanche.

In contrast, Solana NFT participants are typically newer to crypto and bring a very different energy and vibe. Many may have missed getting in early on Ethereum NFTs before being priced out. They are drawn in by cheaper NFT prices on Solana, which they perceive as their opportunity to make life-changing wealth. The Solana NFT ecosystem is driven by traders who are more financially incentivized and trade a lot more often compared to Ethereum NFT users. Hence, there is demand for more sophisticated financial features in the tools that they use, such as stop losses and take-profit order types on NFT marketplaces.

Solana NFT Ecosystem – Key Usage Metrics

With this in mind, let’s dive into some key metrics.

Compared to the peak of the broad NFT bull market in early 2022, Solana has grown significantly in market share, rising from 6% to 14% of total NFT sales volume in less than a year. Some of this is amplified by the steep contraction in 30-day NFT sales volume on Ethereum