The Blur marketplace and a new game from Yuga Labs are likely to move the needle.
As NFT trading on Ethereum’s network has recently picked up again, the fee market is slowly getting back to normal.
On-chain analytics company Glassnode says that the average price of gas used to power Ethereum transactions has been between 10 and 20 gwei over the past 9 months. This month, the price had risen to 38 gwei, which was higher than during key bear market events like FTX’s collapse in November (36 gwei) and Binance’s “bank run” in December (24 gwei).
“The incremental nature of the gas demand suggests an early resurgence of network activity may be underway,” wrote Glassnode in its weekly newsletter on Monday.
Gas prices change based on how many people want to add their transactions to the next Ethereum block. This means that costs go up as more people want to do this. In this case, the new demand for gas seems to be mostly caused by more activity on Ethereum’s NFT market.
Specifically, gas used by Ethereum NFT transactions has increased by 97% for two consecutive months, approximating levels last observed during the “NFT boom” between mid-2021 and mid-2022. Blur, an NFT marketplace introduced in October that has now surpassed OpenSea in terms of trading volume, is largely responsible for this increase in activity.
“The recent attention surrounding Blur has led to a surge in demand for block space, resulting in increased fees for validators, and more ETH being burnt via EIP1559,” explained Glassnode.
Other things that drive NFT activity are new projects from the biggest names in the industry, like Yuga Labs’ Dookey Dash game and last month’s announcement of Doodles 2.
However, the adoption rate of the Ethereum network remains low. The number of newly generated addresses remains 40% lower than it was 12 months ago. This suggests that existing NFT users were responsible for the recent increase in NFT activity, rather than new users.
Not all sectors of the Ethereum ecosystem are experiencing a revenue increase. In an interview with Decrypt on Friday, Julian Holguin, CEO of Doodle, stated that the competition between OpenSea and Blur is limiting the cash available to many NFT initiatives that rely on secondary royalties.
Content Source: decrypt.com
Cover Image Source: cnbc.com