What happened to Polygon’s massive NFT ecosystem?

by James · October 19, 2022

This time a year ago, Polygon was the second largest chain by number of NFT users, which Footprint Analytics counts as a wallet address that has bought or sold an NFT asset at least once in the previous month.

Growing from almost zero percent market share of NFT users to 48% in just 6 months, it looked like Polygon could easily become the dominant chain for NFTs.

However, since the start of the bear market, the situation has changed, with Solana becoming the second most important ecosystem for digital assets.

Note: The chart above does not include transactions in Element, a marketplace that has become a major force for Polygon, meaning it does not accurately represent the number of Polygon NFT users currently. It is still valid to see the growth of Solana.

Polygon’s NFT collections, most of which are listed on OpenSea, Aavengotchi and Element Market, are now less traded and make up a smaller percentage of the market than before. Significantly more users trade on Ethereum and Solana.

Number of Marketplace Collections by Chain Note: Footprint is currently working on adding more marketplaces, e.g. Element and Playdapp Marketplace, which are popular for Polygon collections.

Number of active collections by chain over time

Table of Contents

Why did Polygon’s NFT ecosystem adoption explode a year ago?

Polygon was launched in 2017 as a blockchain scaling solution for Ethereum. Using a modified proof-of-stake consensus, the protocol could process transactions quickly and affordably compared to congested, costly Ethereum.

Around the beginning of the last bull market, Layer 2s was the main contender to solve the blockchain scalability problem. Polygon was the leading innovative solution in this category of products. For most people at the time, it was a safe guess that Ethereum would remain the underlying infrastructure of the blockchain, with improvements built on top of it.

But over the past year, the narrative changed. Developers and analysts began to foresee the possibility of “Ethereum killers” – new chains with their own languages, consensus mechanisms and technologies. Instead of attaching an HOV lane to a freeway to improve traffic flow, these new projects promised to design roads for new use cases, like NFTs and GameFi, from the ground up.

Solana launched in 2019 and quickly became a dominant Ethereum killer Layer 1. Crypto revolves around hype cycles; it took several of these before people came to Solana.

The green dashed line is a baseline for searching for “polygon” the shapewhich remains constant.

The chart illustrates how Polygon was able to use its first-mover advantage to gain traction in several previous hype cycles. While Polygon remains a solid, innovative protocol with an extremely active project base and strong token performance, Solana continues to attract more interest.

NFT enthusiasts, and especially smaller creators, flocked to the upstart Solana ecosystem and its community-driven marketplace, Magic Eden.

This exodus from Polygon to Solana becomes apparent when comparing OpenSea transaction data from the two chains from the same period side by side.

Summary

Polygon is still doing amazing things in Web3, but it is clear that it is no longer the top choice after Ethereum for NFT projects. While some of the charts above don’t show the full picture (which looks somewhat better for Polygon when Element Marketplace and Playdapp Marketplace are included), it’s clear that Solana has attracted most of the hype in the NFT industry.

This piece was contributed by the Footprint Analytics community in October 2022 by: [email protected]

Footprint Community is a place where data and crypto enthusiasts around the world help each other to understand and gain insights about Web3, the metaverse, DeFi, GameFi or any other area of the new world of blockchain. Here you will find active, diverse voices that support each other and drive society forward.

Source: OpenSea Ethereum – Polygon – Solana