Ethereum is one of the most popular blockchains for NFTs, but due to limited capacity and hefty gas fees, Ethereum NFTs are out of reach for many NFT enthusiasts.
Why are gas prices at an all-time low?
In many respects, especially in the last year, NFTs have become the go-to investment for many crypto aficionados. The value of the NFT market grew beyond estimates as cryptocurrency market capitalization plummeted.
OpenSea’s revenue surpassed $5 billion in January 2022, demonstrating its amazing growth. Despite this, one thing stayed largely constant as the NFT industry grew: the expensive Ethereum gas fees. A simple explanation of how gas costs operate in the Ethereum blockchain: to process a transaction, you must pay a gas “processing” price, but there is a bidding war when multiple individuals want to process transactions at the same time. Gas rates change over time dependent on demand, and on March 9, 2022, the Ethereum blockchain’s gas fees plummeted even more.
The average cost of an Ethereum transaction is 0.0045 ETH ($15), according to new statistics from Arcane Research, which is the lowest since August 2021. Furthermore, this is not an unique instance; there has been a link between the price of Ethereum transactions and the price of Ethereum coin.
As Ethereum gas fees fall, the general NFT market is left with a lot of issues.
Less on-chain activity has negative consequences.
The Ethereum blockchain has received a lot of bad press for a long time due to exorbitant network charges caused by network overburden. The average gas price on this blockchain was 0.0042 ETH at the time of writing (early hours of March 9).
Improved use of L2 protocols such as Polygon, Optimism, Arbitrum, and others could be one of the reasons for the decrease in gas fees. One of the likely causes for the fall in transaction fees on the Ethereum blockchain is a reduction in on-chain transaction activity as L2 protocols gain popularity and critical acclaim.
Ethereum has become one of the most widely used blockchains for NFTs. It supports a wide range of NFTs and DeFi applications, and persistent interest in NFTs and DeFi is one of the causes for high gas fees for long periods of time.
Is there a slowdown in the NFT market?
NFTs have been the rage for the past few months, and millions of people have jumped on the NFT bandwagon. Many in the sector believe that the general crypto market is approaching a “bear market,” and that gas prices are on the decline. Investor interest, transaction volumes, and asset value may all be affected as a result of such an occurrence. As time passes, speculations will give way to reality, and the patterns in gas prices will hopefully become clearer.
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