ETH or Solana’s NFT: The chicken-and-egg problem

The NFT market has returned to calm after the continuous turbulence of the past half month. The NFT project on the ETH chain ushered in the cold winter of the whole week. In contrast, Opensea, the largest NFT trading platform, supported the NFT on the Solana chain. The transactions brought more unique projects into the eyes of most people. YugaLas, which has long been "dominant" in the trading volume, also lost in the past week. SolanaNFT led by Okay Bear began to rise, and even Okay Bear The imitation discs of the Internet have begun to reach the top frequently, and major social media have shown mixed attitudes towards this phenomenon. Mr. Fox, the NFT columnist of Real Vision, summarized the NFT market dynamics in the past week, and conducted in-depth analysis and reflection on the "new trend" brought by Okay Bear. Rhythm BlockBeats translated the original text as follows:

review

Simply put, over the past seven days, the NFT market has begun to gradually rebuild from the chaos it suffered last week. At present, although progress is relatively slow, it does not mean that everything has started to stagnate. Looking back at the signs of the past week, we disassembled the information for an analysis.

In the past week, we have seen that the overall NFT market is in a sideways state, but there are still some NFTs whose floor prices have risen, let's take a look at the screenshot below.

But the situation for some NFTs has gotten worse this week, especially in Fidenzas, Ringers, and Azukis, where the floor prices of these projects have dropped significantly.

For Fidenzas and Ringers, these losses are a pullback from the massive gains experienced by both projects last week, as well as declines for other NFTs. Many believe investors are shifting their ETH away from speculative avatar-like NFTs and into longer-term NFTs like digital art as fears of a major bear market in the NFT market mount; hence the uptrend in Fidenzas and Ringers As shown below:

(The floor price chart of Fidenza within 30 days, the chart is taken from flips.finance)

(The floor price chart of Ringers in 30 days, the chart is taken from flips.finance)

As far as Azuki is concerned, although they have nearly doubled from the floor price of almost 8ETH, they are still experiencing the aftermath of the "Rug Pull" incident by Zagabond, one of the founders of the project. Here is their floor price for the past 30 days:

(Azuki floor price chart within 30 days, taken from flips.finance )

After the negative news, there are still many positive signs. In addition, Bored Ape Yacht Club, PROOF Collective, Moonbirds, Mutant Apes, CloneX, World of Women and Meebits all showed upward trends, while Doodles, VeeFriends and Gutter Cats also saw relatively small declines. Among these projects, many are also due to the good news. For example, Yuga finally gave us some clarity on their metaverse, The Otherside, by releasing a short clip of the Otherside gameplay. A few details about next steps for The Otherside have been released, though the information is already well known. The key point is that Kodas will be able to separate from land in the future, and land resources will be dynamic and changeable, and they will be used for construction, trading and development over time.

Moonbirds tweeted out a very cryptic gif. Many see this as a reward for their first nesting in about a week. In terms of the action side of the project, these were the main developments in the NFT market on the ETH chain last week.

Okay Bears

Okay Bears is an avatar NFT project on Solana, and it is also one of the most eye-catching projects recently.

When we think of NFT, we rarely think of which chain this NFT is issued on, for several reasons:

It doesn't have much to do with NFT itself, unless it's a utility that uses it in many apps or games for a lot of transactions. However, the vast majority of NFTs that the market is accustomed to are avatars, and after purchase, they do not need to be transferred frequently.

However, the biggest reason why we rarely think about which chain our NFT is on is that almost all NFTs we know today exist on ETH, so most people will subconsciously feel that NFTs should be issued on ETH.

If the above is why we only consider NFTs on Ethereum, then the next question we have to think about is why NFTs on Ethereum can continue to be the most popular, while building on Solana and Immutable X (Ethereum 2 Layer network) and other projects on the public chain without gas consumption, but it is difficult to obtain the same level of attraction?

One thing is certain, this is not a decision about practicality, as Solana and Immutable X offer the same experience as Ethereum, but much cheaper. Again, this isn't entirely price-oriented, as while SOL's price is much more volatile than ETH's, the savings in fees through the former will certainly reduce the impact of that volatility. On Immutable X, if users prefer to use ETH, they don't even have to use L2's Token IMX for transactions.

Interestingly, we have also seen very similar dynamics in other areas of NFT, such as disputes over platforms in the secondary market. Although LooksRare provides users with a more economical and favorable trading environment, its accumulated users still only account for a small portion of OpenSea's daily active users.

So why is this happening? Why do NFT market participants consistently choose the more expensive approach when there are cheaper alternatives readily available?

I think there are mainly two reasons:

chicken and egg problem

Yes, Solana, Immutable X, and LooksRare all save users more money than their competitors, but there is still a lack of product on these platforms. In the case of Solana and Immutable X, most new NFT projects are still based on ETH, which makes it difficult for these alternative chains to establish a first-mover advantage. Because people only buy NFT on the ETH chain, no one is issuing NFT on other chains, because no one is issuing on other chains, people can only buy NFT on the ETH chain, and because people only buy on Ethereum, Etc., etc.

While a bit beyond the scope of today's discussion, the same is true for LooksRare. In theory, it would be more cost-effective for buyers and sellers on LooksRare than on OpenSea to execute the same transaction, but many people do not do this because OpenSea's competitors lack real and valid pending orders. If you want to sell NFTs, your priority is liquidity (really being able to sell NFTs), so you will always choose OpenSea over LooksRare. Due to the lack of real and effective pending orders, it is difficult for buyers to find more suitable deals. Because no one is placing an order, no one is buying, because no one is buying, no one is placing an order, etc.

User's Subjective Experience

Even though a lot of news has been introduced that using other chains can be much cheaper than using the ETH chain, people still prefer the ETH chain which is known for its high gas costs.

Another theory for this is that, at the end of the day, we are human beings who, at our core, crave and enjoy enriching experiences. It all goes back to the origin. Obviously, choosing ETH is the more expensive route to invest in NFT, but it is still the top public chain. It seems that many would rather pay the extra gas in exchange for putting their assets on the world's largest public chain. This is why Rolex watches sell far more than other watches. Yes, they (watches) function to tell the time, but when you use a Rolex to tell the time, you have a unique experience. ETH, like other brands, is currently the largest chain of NFTs in the world. This largely matches the examples outlined above.

We really like using the term "ETH network effect" in Real Vision's coverage because everyone is already on-chain and everyone continues to build on it, which is why so many want Their NFT also exists with ETH. Gas fee is just the cost that many people are willing to pay to join this network for a richer experience.

This does not mean that NFT will not explode on other chains or the Ethereum 2-layer network in the future. All the opportunities require only one special project or product to bring enough traffic to solve the chicken-and-egg problem. And this flywheel of network effects is beginning to emerge on other platforms.

Is this the hottest NFT project we're seeing right now, Okay Bears?

Okay Bears has been hot over the past 7 days. It has become the most successful Solana avatar NFT project so far. Although other Solana NFT avatar projects have had some success. For example, DeGods, SMB, etc. So far, Okay Bears has been the leader in terms of transaction volume and Solana's previous projects, and its project has attracted the attention of all NFT communities.

What makes Okay Bears different? Why are they doing so well?

Sadly, the answer is nothing. Okay Bears is just another avatar NFT project. Their roadmap, or "blueprint" as they describe it, isn't even as nuanced as most projects do today. They promise IRL events, collaborations, future casting, etc. - the same as any other project. There's nothing special about the Okay Bears.

It is not my intention to bash the project. Sometimes it is better to not promise anything and just let the art and atmosphere of the NFT guide the direction of the project. In a way, that seems to be what happened in Okay Bears. Some projects are very lucky and find a magic formula that eventually catches on.

Many critics of Okay Bears have noticed a concerted effort by Twitter holders to promote the project, claiming that its growth has been more or less inorganic. Now, I can't comment on the authenticity of this project on Twitter, but what I can say is that the Okay Bears seem to be the biggest winners in opinion.

While ETH's NFT suffered a huge blow, the entire Crypto market also showed a downward trend. Market participants are actively looking to find other avenues of income. Therefore, funds will only flow to projects with stronger "narratives". In this case, Okay Bears will be the first top-tier Solana avatar-like NFT project, so everyone should be exposed to NFTs on different chains, and everyone needs to grab a bear before the price goes up.

Of course, none of the 12-person team listed on their official website is real-name certified. It's not a good sign for a project's future.

Okay Bears has seen incredible volume in the past 24 hours (more than any other NFT), but fundamentally, there is nothing to suggest the project will succeed. It is worth noting that the rise of NFT is usually not so rational, so although Okay Bears did not create stunning picture quality, it does not mean that it will not continue to rise. I'm not saying that Okay Bears is just a short-term growth, because now they have become a leading project, but it is undeniable that no one wants to find any opportunities to make money in the process of continuous sideways in the crypto market.