There was a time not that long ago when it seemed most of the NFT industry was content to wait for a better Ethereum to reduce costly gas fees many say are a barrier to growth. No longer.
Increasingly, marketplaces of all ilks are migrating to side chains as a stopgap solution, or in some cases, moving off the network altogether. Such moves allow transactions to be processed off the Ethereum blockchain, eliminating gas fees that can sometimes cost more than the product someone is selling.
OpenSea, one of the largest NFT marketplaces, paired their $1.5 billion valuation announcement with news that creators would now be able to mint, buy and sell NFTs on the Polygon blockchain.
CEO Devin Finzer said it’s a necessary step for growth of the ecosystem.
“The challenge right now is that if you are buying something for $2, you typically have to pay at a high transaction cost on top of that,” Finzer said. “And so you can’t really have the full spectrum of activity and engage users who don’t want to necessarily spend hundreds of dollars upfront, right?”
Others are eschewing Ethereum altogether.
Case in point: Virtually Human Studios just snagged a $20 million round led by TCG and Andreessen Horowitz for its NFT pony racing game, Zed Run. The ponies gallop along, powered by the Matic network.
Case in point: matic network POLYGON…didn’t use ethereum???? been on matic as far as I can remmember….
And Pastel, which just raised $5 million, built their NFT marketplace on their own blockchain. To Anthony Georgiades, COO and co-founder of Pastel, Ethereum wasn’t built for NFTs, so why shoehorn a solution onto it?
“Ethereum is a great general purpose computer,” Georgiades said. “But the Ethereum blockchain, just the way the nuts and bolts work, it’s not necessarily great for “purpose built applications”, like NFTs.”
Georgiades said building Pastel on its own network also allowed them to construct better security solutions, like tracking duplicate NFTs or fraud.
“There’s a lot of developer bandwidth that’s going towards maybe trying to solve some of these transaction fee issues with side-chains, or storage situations with para-chains and whatnot. But at the end of the day, it seems like a lot of putting a bandaid on the broader problem.”
For some project specific marketplaces, it’s proven to be a big boon. Dapper Labs’ NBA TopShot is built on their native blockchain, Flow, and arguably kickstarted much of the frenzy surrounding NFTs in the spring, scoring more than $500 million in sales in a few months time.
Axie Infinity, from Mavis Sky, is likely to overtake Top Shot in the coming weeks en route to $700 million in sales, which rocketed when they moved off of Ethereum to their own sidechain, Ronin.
Still, Ethereum’s planned upgrade to a proof-of-stake system should aid many of these issues, experts say. It’s just not happening fast enough.