Many artists and content creators are moving to Tezos to launch, buy, and trade NFTs (Non-Fungible Tokens) as Ethereum’s fees are becoming a problem. 90% of NFT minting happens in Ethereum, and as NFTs become more popular, the Ethereum network has seen a considerable amount of workload, elevating gas fees to hundreds of dollars per transaction.
Why Are NFTs Ditching Ethereum and Moving to Tezos?
The Ethereum Network has seen a tremendous amount of network activity this year, and a large chunk of that activity are NFTs transactions. As more content creators join the NFT movement, the more people join the network, resulting in elevated gas fees.
OpenSea is the leading NFT marketplace at the moment. The platform has generated record sales this year —last month the amount of NFTs transacted was $3.4 billion, 10x the amount in July. But being an Ethereum-based platform, it hasn’t escaped from network congestion and spiked gas fees.
Many crypto and DeFi analysts have argued that alternative high-performance blockchain could end up owning a considerable piece of the NFT market. We have Solanart, for example, which is Solana’s decentralised NFT marketplace, which is generating record-breaking NFTs sales at the time of writing. Cardano, founded by Ethereum developer Charles Hoskinson, is also supporting NFTs creators with a more flexible, lower-cost, and high-throughput platform.
Tezos is another platform where content creators are setting up shop. Kalamint is Tezos’s NFT marketplace where we can see several projects being auctioned, from hundreds of dollars to tens of thousands. Recently, it was announced that an NFT series about the life of famous American rapper Tupac will be available in Kalamint soon.
What is Tezos?
Tezos is a Proof of Stake (PoS) decentralised protocol with support for smart contract programmability and building dApp (decentralised applications). Tezos was designed to address some of the technology hurdles of today’s blockchains, like low throughput, centralised systems, and high gas fees.
The DeFi community saw great potential in Tezos, giving the protocol a successful Initial Coin Offering (ICO) in 2017, raising over $232 million, which is 10x the $20 million target amount. The funds were used to accelerate the launch of its mainnet a year later.
Tezos has its own utility token — XTZ, dubbed Tez or Tezzie. The token is used to pay for fees, staking, and to provide voting rights to its holders. XTZ holders can lock their tokens to become validators, receive rewards and voting rights. Validating blocks in the Tezos network is called “Baking.” Block validators are called Bakers, and they‘re required to hold at least 8,000 XTZ which is considered 1 roll of Tez. The more rolls you have as a baker, the higher is your probability to bake blocks and earn baking rewards.
What Are NFTs?
Non-Fungible Tokens are digital assets powered by distributed ledger technology (DLT). These crypto assets represent unique pieces of digital representations that can range from digital wearables and clothes, fashion, avatars, to pieces of lands that are sold at hundreds of thousands of dollars. While NFTs are currently booming in the market and taking social media by storm, we can track the first NFTs to the year 2017, with the launch of the Bitcoin trading cards.
NFTs represent ownership of unique items. To ensure the product is unique, every minted NFT has a standard stamped on it. 90% of NFTs are minted on the Ethereum blockchain with the ERC-721 standard. These standards are smart contracts that allow tracking the owner of a specific asset. NFTs have property certificates and can’t be duplicated like other forms of digital files. Once you buy an NFT, it belongs to you.
Many celebrities are jumping on the NFT bandwagon. We can name a few like Snoop Dogg, Steve Aoki, Kings of Leon, or DJ 3LAU. All of them have launched tokenized products, like albums, songs, collectibles, and more, all of them under the NFT category. On July 5, the NFT market registered a record-breaking surge by netting 2.5 billion in sales, a massive amount considering last year only $13.7 million NFTs were sold.
When is Ethereum Shifting to ETH 2.0?
Ethereum 2.0 is an upgrade for the Ethereum ecosystem designed to enhance Ethereum’s capacity for scalability, network throughput, and bring a new gas fees system that will hopefully reduce the transaction cost.
ETH 2.0, also called Serenity, has been in development since 2014, and it wasn’t until this year that Ethereum developers finally hinted at a possible date debut, which could be by mid-2022 or early 2023. The announcement has filled DeFi and Ethereum hopes for an enhanced ecosystem, an enthusiasm that has been reflected in the amount of ETH locked in ETH 2.0 deposit contracts. As per data from Etherscan, 7.7 million ETH have been staked in the network so far, totaling $25 billion.