JPMorgan Says Ethereum Is Losing NFT Market Share to Solana

The bank cites Ethereum's high transaction fees and congestion.

AccessTimeIconJan 19, 2022 at 12:07 p.m. UTC
Updated May 11, 2023 at 7:17 p.m. UTC

Ethereum’s dominance in non-fungible tokens (NFTs) is shrinking because of congestion and high gas fees, JPMorgan said in an analyst report.

The network’s market share of NFTs has dropped to around 80% from about 95% at the start of 2021, analysts led by Nikolaos Panigirtzoglou wrote in the note published last week.

Since August, the Solana blockchain has been capturing the most NFT volume share at the expense of Ethereum, the bank said, noting that was when the NFT market started a major expansion. Ethereum has also been losing market cap share to Solana in line with the declining NFT volume share.

Because NFTs are the “fastest growing universe in the crypto ecosystem,” Ethereum’s share of this market is likely to be more important than its share of decentralized finance (DeFi), according to the note. Earlier in the month, the bank warned that Ethereum’s dominance of DeFi was also at risk as the scaling of the network needed to maintain its dominance could arrive too late.

JPMorgan cautions that if Ethereum’s loss of NFT market share continues in 2022, it could be a bigger problem for its valuation.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Author placeholder image

Will Canny is CoinDesk's finance reporter.


Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.