JPMorgan analysts said NFT artists and collectors are moving away from the Ethereum network. According to the team of analysts led by Nikolaos Panigirtzoglou, competing blockchains are splitting the market share of ETH. As Somagnews, we convey the details of the report.
These altcoin projects split the share of Ethereum (ETH)
JPMorgan said that Ethereum could weaken against competitors like Solana in the NFT sector due to high transaction fees. According to the bank’s analysts led by Nikolaos Panigirtzoglou, Ethereum’s share of volume in NFT trading fell from about 95% to about 80% at the beginning of 2021. In a note sent to customers last week, Panigirtzoglou said, referring to apps built for DeFi:
Similar to DeFi applications, congestion and high gas fees encourage NFT applications to use other Blockchain infrastructures. If the loss of the NFT share starts to look more sustainable in 2022, this becomes a bigger problem for Ethereum’s valuation.
The bank’s global markets team shares that the Solana network, in particular, has been stealing from Ethereum’s dominance in recent weeks.
Why does migration occur?
Newer blockchains like Solana are now taking action to lure NFT developers with much lower transaction fees. Other networks, such as JPMorgan, Wax or Tezos, are also struggling for leadership, he said. DeFi applications enable financial transactions through “smart contracts” without the need for intermediaries. However, when it comes to both NFTs and DeFi, Ethereum remains the dominant blockchain by far. According to estimates by Coinbase analysts last week, the total value of projects locked onto the Ethereum network is approximately $156 billion. That’s almost double the sum of the next 10 networks.
Despite the huge TVL volume, Ethereum is working hard to find a solution to its high gas fees. However, a major network upgrade known as “sharding” aimed at adding more capacity to the network won’t be done until early 2023.