NFT Markets Dwindling Ethereum Gas Amid Fee Crisis
- NFT markets no longer lead in Ethereum gas consumption, accounting for just over 3% of all gas usage.
- Despite Ethereum’s transition to proof of stake (consolidation), high gas prices persist.
- Investors are looking at alternatives like , which are more cost effective due to Hydra’s recent upgrade.
In a remarkable shift in Ethereum’s gas consumption patterns, non-fungible tokens (NFTs) are no longer prevalent as the top gas consumers on the network. Data from crypto analytics platform Nansen revealed that last week NFT markets accounted for just over 3% of all gas consumption. In stark contrast, the decentralized exchange used more than ten times that amount, registering 31.99%. To highlight the development, Nansen tweeted:
Gone are the days of NFTs topping the charts for gas consumption. This week, among the top 20 gas consumers, OpenSea and Blur are less than 10% combined, and against all gas consumers, NFT markets were just over 3%. In contrast, Uniswap was 10x more – 31.99%. pic.twitter.com/4NUF6Yb3eX
— Nansen (@nansen_ai) May 19, 2023
This shift occurred despite the ever-rising price of Ethereum gas. Such price increases are not new to the Ethereum network but have become uncommon since Ethereum’s transition from a proof-of-work (PoW) protocol to a proof-of-stake (PoS) system, a move known as consolidation, was completed in September 2022.
Despite initial hopes that this transition would lower gas fees, recent events seem to tell a different story. One trader reportedly paid up to 64 ETH, worth approximately $118,600, in fees for a single transaction.
Ethereum network congestion and gas price hikes have been attributed, in part, to heavy activity caused by increased trading of meme coins, such as PEPE tokens and Floki Inu. This has led to a surplus of transactions and thus higher gas prices.
The Ethereum community has responded to these challenges, and Layer Two (L2) scaling solutions have been proposed to lower gas prices. Layer 2 solutions such as state channels, plasma chains, and aggregations aim to offload some of the computational workloads from the main Ethereum blockchain, thereby reducing the need for and cost of gas.
Rising gas prices have also prompted investors to turn to alternative networks, such as Cardano. The introduction of the upgrade of Hydra, a layer 2 protocol on the Cardano blockchain, has made the network more attractive to investors by addressing the issue of scalability.
Post-NFT markets that have shrunken in the use of Ethereum gas amid the fee crisis made their debut in the coin issuance.