https://ift.tt/33JLJCa Morgan: Solana will overtake Ethereum on NFTs

Nikolaos Panigirtzoglou, managing director of the investment bank JP Morgan, in a letter to investors in recent days has expressed a negative opinion towards Ethereum, which has lost about 30% from its highs at over $4,800 reached in November, and is “threatened” by Solana in the NFT sector.

Ethereum’s dominance in the NFT market declines

According to the bank’s manager, the dominance of the Ethereum blockchain in trading non-fungible tokens has fallen from 98% to 80% in recent months. This fact is a wake-up call for the blockchain founded by Vitalik Buterin, which is facing fierce competition from other cheaper and more sustainable blockchains, such as Solana, Avalanche, Cardano and Polkadot.

“It looks like, similar to DeFi apps, congestion and high gas fees has been inducing NFT applications to use other blockchains”,

Panigirtzoglou stated.

Solana will overtake Ethereum

According to JP Morgan’s team of researchers, it is Solana in particular that has taken a large share of the NFT market from Ethereum in recent weeks. JP Morgan does not exclude that Solana could very soon overtake Ethereum in the NFT market.

If this trend continues in 2022, as it seems it will, it could have a serious impact on Ether’s price.

“If the loss of its NFT share starts looking more sustained in 2022, that would become a bigger problem for ethereum’s valuation”,

Panigirtzoglou argues.

The problem of excessively high transaction costs

For some time now, Vitalik Buterin and his team of developers have been looking for a solution to the problem of too high transaction costs on the Ethereum blockchain, which has led many developers and start-ups to choose other, more sustainable and cheaper blockchains.

The problem is said to be mainly caused by excessive network congestion, due to the slowness of about 15 transactions per second compared to 1000 for Solana). According to experts, this problem could perhaps be partly resolved when the new Arrow Glacier update goes live in June.

It is precisely the explosion of the NFT market that has contributed to Ethereum’s problem, to the benefit of much more sustainable and cheaper blockchains such as Solana.

The explosion of DeFi and NFTs increases Ethereum’s problems

2021 was certainly the year of the explosion of DeFi and NFTs, which recorded absolutely incredible volumes, at $100 billion and $41 billion in capitalization respectively in 2021.

Also according to JP Morgan analysts, Ethereum is also losing market share on DeFi, although it still retains over 90% of the market. The total value locked on Ethereum, according to Coinbase, would be double that of the value locked on the other ten major blockchains combined.

But just as Solana in the NFT market represents a dangerous rival for Ethereum in the near future, so does Cardano, dubbed by many experts as the “Ethereum killer”, as it is gnawing away at Ethereum’s blockchain in DeFi.