- Gas usage by NFTs on Ethereum falls, signaling shifting usage.
- Major NFT marketplaces like Axie Infinity and OpenSea see reduced gas consumption.
- Higher Ethereum gas prices may contribute to declining NFT activity.
Recent data indicates a significant drop in gas consumption by non-fungible tokens (NFTs) on the Ethereum blockchain. This signals a potential shift in NFT usage. NFT trading was huge back in 2021, where is it going now?
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On-chain analytics platforms have reported that gas usage by NFT marketplaces has been on a consistent downward trend since its peak in 2021. In particular, with major players like Axie Infinity and OpenSea experiencing substantial reductions in gas consumption, this is inevitable.
According to Glassnode, NFT marketplaces have seen a sharp decline in the past two years, contrasting with 2021 when NFTs dominated Ethereum’s gas usage. In May 2023, NFT marketplaces accounted for just over 3% of the entire gas consumption, a significant decrease from previous levels.
This coincides with a surge in Ethereum gas prices, leading some to speculate that NFTs may have been driven by ‘excess liquidity’ resulting from pandemic-related money printing. Presently, gas consumption by NFTs continues to decline, with major NFT marketplaces contributing only about 1.85% of the entire Ethereum network’s gas consumption.
The Reason Behind the Drop
In detail, this trend raises questions about the dynamics of the NFT market, as users appear to be shifting towards a more passive approach to holding their NFT assets, moving away from active trading.
Specifically, higher gas prices on the Ethereum network could be a contributing factor to the decline in NFT activity. The increased transaction costs might deter traders and prompt them to rethink their strategies.
While the NFT market continues to evolve, its long-term prospects remain uncertain. The fervor and intense speculative activity that characterized the NFT landscape in 2021 seem to have subsided, leading to a more measured and passive approach by users.
Traders must closely monitor the trajectory of gas consumption by NFTs to better understand the ongoing changes in the NFT ecosystem. As with any emerging technology, the NFT space is likely to experience periods of fluctuation and transformation as it matures.
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